Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-09-19
Washington, D. c., Sept. 16.-The

1lSnt Tor the establishment OF
branches Of national banks has been
renewed in congress by the Introduce
ton by Representative McFadden.
chairman Of the house committee On
banking and currency, Of a bill per-
hitting such banking expension. It
Is a matter of popular interest for
two reasons First, it represents a
curious contest between local institu-
tional pride end the protection Of To-
cal 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
argument 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 Work might wish
to establish a branch in every city in
the United States and in many small
towns. Under existing law it cannot
do so, but II 1t could. it would get the
deposits and the business OF many
more customers than now 1t can COM
mand. Therefore its profits would
increase. 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 probability
they would, if permitted by law to dc
so.
They claim that for the law to
permit them to establish such
branches, so that the milk mar In
Omaha could deal with a great bank
ing institution az readily as John
Rockefeller or any other New York
er can, would be a move in the di-
~rection Of efficiency. Under existing
law, a national bank may end only
a limited proportion of its funds to
one borrower. A man may have u
big business In q 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 bark
In a distant city. i. - j,..
.- Increased Loan Facilities.
With a 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 he
on the same basis as business with
the home office. The loan would be
limited, not to the capital Of the
branch but only to the capita! Of the
whole vast system Of paren. 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 ia
handle its loans.
The national banks say that there
would be a great saving in a branch
BANK system because Of a diminished
overhead expense. There are 10000
banks OF all sizes in the United States,
each with q president, subordinate
officers and boards of directors. This
means that each Of the 5 1000 banks
has an overhead which must be paid
for by the public, as all profits OF
any business, must, in the final, an
aiysis, yprint from the public. Now.
IL there were but 1000 big banks.
there would be but 1000 sets Of, pres
idents, officers and directors and
much Of the overhead would be
saved.
There would be perhaps q. 900
branches 20 b 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 1t IL con.
trary to every tenet sof A~mericanism