Connecticut western news., 1922-10-19
BABSON DISCUSSES THE
 BANKERS CONVENTION
No Hope of Breaking Up Fed eral Reserve System Which Is Satisfactory
SEES BRA CHI BANKS
City Banks Will Buy Control of Country Bank to Accomplish
 This Purpose

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 to the contro- versy which this discussion has devel- oped, Roger W. Babson was today in- terviewed regarding the probable outcome. 4 ...
 "Of course the discussion is the natural outgrowth of the establish ment of the Federal Reserve Banks. Before the days of the Federal Re- serve System" says Mir. Babson, "a branch bank organization practically existed, altho it was an unconscious and invisible organization. For ih- stance, the small bank in Indiana took orders from it's correspondent bank in Indianapolis; and the Indi- annapolis bank took its orders from a still bigegr bank in New York. The heads of few of the New York banks would hold a conference at the home of the late J. Pierpont Nor gan 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 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 control which was very powerful. With the organization of the Federal Reserve Banks, the clearance of checks at par, and the Legislation against interlocking di- rectorates, this control was given a tremendous jolt No longer is it much of an object for a country bank to keep deposit with the large city bank, Thus there has been 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 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 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 fol- lowing back again.
 "There is no hope of breaking up the Federal Reserve system which is snN.x rYtA. men connected with the Federal Re- serve Banks are active and ambi- tious. They are building permanent and substantial banking houses and are accommodating 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. For eign Trade was the key note at the American Bankers Convention two years ago. The foreign trade busi- ness, however, has not banned out as we'll as the banks had hoped 1t would, and our recent tariff has given al- most 8 death blow to what little new foreign trade we had. Thus, the banks hopes in this regard are not very sanguine. at the moment. An other 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 larg- CT banks and most of them are oper- ating successfully. Banks are find- ing 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 country 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 very debatable ques- tion; 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 branches in hundreds of cities and towns. One of the finest branch systems in the world exists in Cana da, just over the United States line. Tn Montreal there are several big banks, and each of these have from one hundred to three hundred branches in different Canadian cities and towns. As already stated,