Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1922-10-21
:.BABSON DISCUSSES
i. ABSENTEE BANKING
,ic
Believes Branch System Com
=. ing-Doubts Its AID.
a visibility.
FORMER POWER SOUGHT
DAYS Of New York's Invisible
Financial Rule Recalled
by Statistician.
Especial 20 The Times Dispatch.

regarding branch banks at the an
nual convention Of the American
Bankers Association IN New York.
Owing 10 tho contro vcrsy which this
discussing hns developed. Roger w.
Babron was today Interviewed re-
shrd!nG tho probable outcome.
,"Ot course, the discussion is the
natural ou;Growth OF the establish
,ncnt O: the Federal reserve banks.
Before the days OF the Federal re-
serve Bystenl," says MI Babson, "A
brunch bank organization practical
y existed although it was ,an> uu
conscious and Invisible orRarlzation.
For instance. the small bank in In
diana took orders from its CORE
spOmdcNt bAnk in indianapolis: and.
tho Indianapolis bank took its or
dcgs from sim bigger bank IN
New York. The heads -. few OF
;hc New York banks would hold
conference at the home al the Kate
J Pierpont Morgan or at the home
q: MI. Baker OF the FIRST National
Eauk. and decide upon ii policy This
policy they would pass along to the
large banks OF Bcston. Chicago.
Philadelphia, Indianapolis, 81. Louis.
New Orleans, and other large cities.
Tho banks in these large cities would
IN turn pass the same policy on TO
tile small banks In their districts.
There were no contracts OF stock
control existing between the banks.
tut there was AN Invisible control
which was very powerful.
Invisible Rule Gets jolt.
.'With the CgEai!zat!Cn OF the Fed
crAl reserve banks, the clearance OF
cl.ccks at par. and the legislation
against intcrIockins d!rcVioratcs, this
control WAS given :, tremendous JOLT.
80 longer is ii much OF an object
Cor countr! Daik TO keep a deposit
with the large city baak. Thus there
has been u gradual drifting away
on the part Of the cuntry banks
from the city banks. The large cities
nave become more Independent of
New York; and, the country banks
have become more independent OF
Sat large cities. As long AS tho
money rates were high. this did net
worry tho city banks. but during
the past year. when money rates have
been declining, the larS, city banks
have distinctly felt tn" loss OF their
former power. Hence they are look
Ing around for some plan 10 set their
country following back again.
Federal kcscrNc Here Ia Stay.
There Is no hope OF breaking up
tho Federal rescrV system, which Ia
function!nE very satistactorly. Th'
men connected with the Federal 81
eervc banks are active and ann
r;ous. They are building iermAgci.si
md substantial banking houses nnsG
are accumulatins great resources
They are issuing reports and other
publications which appeal greatly 10
the country banks. Tn" larger city
banks are distinctly worried about
this and arc looking for som" other
means for rccoupiug their prestige.
They FIRST turned their attention Il
foreign trade organizations. For
c!gn Trade was the keynote at the
American Bankers Convention Two
years ago. The foreign trade bust
ness. however. has not panue1 gu;
as we'll as tho banks had hoped IL
would and our recent tariff has
given almost q dcathhluw To what
little new foreign trade ", mad
Thus, The banks hopes III thts regard
are no, very sanEu'ne al Tho mo-
rent Another ATTEMPT has shown
itself in the organization of sop
a-atc '.iycstWcuts' companies and
separate 'acce 1taucc' companies
These nave been orEau-'.ed hy.mauy
az the larger hankS' aarG' most II
them arc operating SUCCESSFULLY.
Harks are Nuding these Investment
companies more profitable at the
moment than their foreign trade ad-
venture.
seek rowrr Through branches.
The larks are rraGUU.ly coming
70 the opinion. however. mat they
can recover their. influence with the
country distr!cts only with orrani&"-
tluu 90; branch BANKS. Hence there
IS drive at present to have tne ma
tfnal bank laws amended So that a
cry bank can own d Stein ot hraucA
hfafks ia the surrounding c!i!cs Anl
towns whether or not this Is In
IN. with democracy Is q very de-
tat.nic question. hut The drive is On,
anu my guess is That such branch
hanHs are as inevitable as the chain
store.
"A!l tho banking systems OF Europe
ARE developed on the branch bank
idea The bis banks OF England.
France and Germany have their
branches ~ hundreds Of cities and
towns. one Of the finest branch sys-
tens Ia the world cNists in Canada.
just over the United states line In
Montreal there ARE several big bank $,
ana each %: these has from 100 10 500
branches lu different Canadian cities
and towns. As alrcady stated !
dhrnt seriously whether the branch
bank system Us rs GOOD for the COIN
tFr IS the present system On the
other hand. We knox that th, present
tendency II eliminating the small!
lifN'f ana substituting inc renter in
place % the owner IS not for tn.
good OF tho country. The develop
mont of chain-s'uro systems when
arc slowly erowG,ng out the inai-
vid-al retailer IS not good for the
country
Henry Ford's Slogan.
"One Christmas Henry Fora Sent
mo an Autographed phDiogI.gh on
Which H. wrote these words. ElimI-
nate absentee ownership and indus
TRIAL problems viii solve ucinselvcs.'
lie is correct IN that absentee owner
slip is present d!MeGlty wItn our
industrial Orsauizat!cns AZ the
chain store grove. a similar di;ncully
viii develop which we do no, now
have with our Individual retail sys-
TEN, and as system! 81 branch banks
grove there VIII ho that same dim
Guilty with our banking system. We;
| believe these changes are inevitable
Branch banks VII be established
throughout tic country. ana Congress
VII enact ruch legislation as $
needed 10 MAKE this possible"
MIR. Babson was thcn asked what
the effect Of this woulH DO on bank
stocks. and he replied thar /, Should