Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-09-19

Washington, Sept. 16.-The fight for
the establishment Of branches of ma
.tional banks has been renewed in con-
gress by the introduction by Repre-
sentative McFadden, chairman of the
house committee on banking n cur
Irency. of a bill permitting such bank
ing expansion. It is a matter OF popu-
lar interest for two reasons. First, IL
represents a curious contest between
local constitutional pride and the pro-
lection of local profits, and second, 1T
represents O struggle by small bank
ers against big bankers. i.
The principal argument in favor OF
branches for national banks is eff
cheney and service. The principal ar
against such branches is preser-
walton 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 York might wish to es-
Itablish a branch in every city in the
United States and in many small towns.
Under existing law it cannot do so, but
if it could, it would get the deposits and
the business of many more customers
than now it can command. 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 proba-
bility they would, if permitted by law
to do so.
They claim that for the law to per
nit them to establish such branches,
so that the milk mar in Omaha could
deal with a great banking institution as
readily as John Rockefeller or any
other New Yorker can, would be a
move in the direction of efficiency.
Under existing law, n national bank
may lend only a limited proportion OF
its funds to one borrower. A man may
have a big business in a 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 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 business with the home
office. The loan would be limited, not
to the capital of the branch, but only to
the capital of the whole vast system of
parent and branch banks.
1t is q 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 bust
ness in the small city does not
deposit at home, but in the place where
there is a bank big enough to 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 ftates,
each with a president. subordinate'offi-
GERS and board of directors. This
means that each of the 10000 banks
has an overhead which must be paid
for by the public. 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 the over
head would be saved.
There would be perhaps $4,000 branch
es so the country would be served with
the same number of banking houses,
but these branches morely would have
managers and tellers with no expen-
sive overhead.
On the other side of the question,
the small banks say that it is con-
trary to every tenet of Americanism to
permit any great group to crush gu
small competitors. wholly aside from
the question of economic wastage OF