Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-09-21
Chairman of House Commit
tee on Banking and Cur
rency Introduces Banking
Bill in Congress
BY FREDERIC j. HASKIN


! fight for 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 bill per
! hitting such banking expansion. 1t
is matter of popular interest for
/ two reasons. First, it represents q
curious contest between local insti-
tutional pride and the protection of
local profits, and second, it repre-
sents a struggle by small bankers
: against big bankers.
| The principal argument in favor
of branches for national banks is eff
! ficiency and service. The principal
argument against such branches is
preservation of local enterprise snd
| 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 York might wish
! 10 establish a branch in every city
N the limited States and in many
| small towns. Under existing laws
it cannot do so, but if it could it
would get the deposits and the bust
ness of many more customers than
| now it can command. Therefore, it's
profits would increase. Many other
/ large national banks-great finan-
! cial 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 per-
| INV RI
! They claim that for the law tc
1 permit them to establish such
! branches, so that the milk man in
Omaha could deal with a great bank
ing institution as readily as John
Rockefeller or any other New York
er can, would be a move in the dl.
rection of efficiency. Under exist
| ing law, a national bank may lend
only limited proportion of it's
funds to one borrower. A man may
have big business in a small town
| His borrowing requirements are
large. His local bank may not be big
enough to accommodate him. There
fore, he must do business with a
bigger bank in a distant city.
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 be on the same basis as bust
ness with the home office. The loan
would be limited, not to the capital
of the branch, but only to the CAPT
tai of the whole vast system of par
ent and branch banks.
ie in ortc 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 1T; there
fore, the big business in the small.
city does not deposit at home but
in the place where there is a bank
big enough to handle it's loans.
The national banks say that there
would be a great saving in branch
bank system because of a diminished
overhead expense. There are 10000
banks of all sizes in the United
States, each with a president, sub
ordinate officers and BOARDS of di'
rectors. This means that each OF
the 10000 banks has an overhead
which must be paid for by the pub
lie, as all profits of any business
must, in the final analysis, spring
from the public. Now, if there were
but 1000 big banks, there would be
but 1000 sets OF presidents, officers
and directors and much of he over
head 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 branches
! merely would have managers and
tellers with no expensive overhead
On the other side of the question
the small banks say that it is con
trary to every tenet of AmerlcanlSm
to permit any great group to crush
out small competitors, wholly ASIDE
from the question of economic vast
age of duplicated overhead expenses
They insist that if the national
banks are permitted to establish
branches, the SMALL independent
banks will be crushed out of bus
mess just as it has frequently been
alleged, small businesses in other
lines have been crushed out of ex
istence by great trusts.
The small banks say that the big
banks would come to towns where
local. thriving banks were situated
| and open branches. The superior in
fluence of the branch of the great
: parent bank would ultimately drive
the little, local banks out of bus
mess. This process would result in
the great banks gradually getting
control of the whole banking bus
mess of the country, creating g
money trust which would contro
credit. A situation would be created
} whereby a small group of bankers
l could decide whether or not credit
t should be extended to business ir
} any part of the country. The bus
mess destinies of millions would be
in the hands of the few powerful fl
nanc.al giants at the head of the
great banks.
This, to be sure, is the sort OF
| picture which is extremely repug
! nant to the American mind and il
is this picture which has prevented
the establ shment of branch banks
! The controversy is an old one. Il
has required in years past. Now
. that Mr.. McFadden's bill brings il
: up again, it is to be expected thai
! the whole ground will be fought over