New Britain herald., 1922-10-21


 There has been much discussion re. garding branch banks at the annual convention of, the American Bankers Association which was held last week in New York. Owing the the contro- versy which this discussing has de- veloped. Roger W. Babson was today interviewed regarding the probable outcome.
 "Of course the discussion is the natural outgrowth of tho establish rnent Of the Federal Reserve banks. Before the days Of the Federal Re- serve systam." said Mir Babson, "a branch bank organization practically existed, although 1t was an uncon- scious and invisible organization. For instance, the small bank in Indiana took orders from its correspondent bank in Indianapolis; and the Indian apolis bank took its orders from A still bigger bank in New York. The heads of few of the New York banks would hold conference at the home of the late J. Pierpont Morgan or at the home of Mr. Baker of the First National bank, and decide upon pol icy This policy they would pass along to the large banks of Boston, Chicago, Philadelphia. Indianapolis, et. 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 control existing between the banks, but there was an invisible con- trol which. was very powerful. With the organization of the Federal Re- serve banks. the clearance of checks at par, and the legislation against in- terlockinG dtrectorates, this control was given a tremendous jolt. No long, CT is it much of an object for a coun- try bank to keep a deposit with the large city bank. Thus there has been a gradual drifting away on the part of the country banks from the city banks. The large cities have become more independent Of New York and country banks have become more in- dependent of the large cities. AS long as the money rates were high, this did not worry the city banks but dur ing 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 ambitious. They are building permanent and sub- stantial banking houses. and are ac- cumulating great resource3 They are which appeal greatly to the country banks The larger city banks are dis tinctly worried about this and are looking for some other means for re- couping their prestige They first turned their attention to foreign trade organizations. Foreign trade was the key note at the American Bankers convention two years ago. The foreign trade business, however, has not banned 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
 
 this regard are not very sanguine at the moment. Another attempt has shown itself in the organization of separate investment companies and separate Acceptance companies. These have been organized by many of the larger banks and most of them are operating successfully. Banks are finding these Investment companies more profitable at the moment than their foreign trade adventure.
 "The banks are gradually coming to the opinion. however that they can 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 50 that aycity bank can own system of branch banks in the surrounding cities and towns. Wheth- CT or not this is in line with demo- cracy, Is a very debatable question; hut the drive is on and my guess is that such branch banks are as inevit. able as the chain store.
 "All the banking systems of Europe are developed on the branch bank idea. The big banks of England, France and Germany have their branches in hundreds of cities and towns. One of the finest branch sys-' tems 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 hum dred to three hundred branches in different Canadian cities and towns. As already stated, I doubt seriously whether the branch bank system is as