Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-10-22
BRANCH BANK SYSTEM AS SURE
TO COME AS CHAIN STORES TO
CONTINUE IN AMERICA-BABSON

Wellesley Hills, Mass, Oct. 81, 1922.
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 discussing has devel-
oped. Roger W. Babson was inter
viewed regarding the probable out
ONE.
"Of course the discussion is the
natural outgrowth of the establishment
of the federal reserve banks. Before
the days of the federal reserve sys-
teTn," a y Babson, "a branch bank or
ganization practically existed, although
it was an unconscious n invisible or
g~anization. For instance, the small
hank in Indiana took orders from its
correspondent bank in Indianapolis:
and the indianapolis bank took its
orders from a stil bigger bank in New
York. The heads of a few of the New
York banks would hold a conference
at the home of the late J.. Pierpont
Morgan or ut the home of 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 dis
tricts. There were no contracts or
stock control existing between the
banks, but there was an invisible con-
troll which was very powerful. With
the organization of the federal reserve
banks, the clearance of checks at par,
and the legislation against i~nterlocking
~directorates, this control was gwen a
tremendous Jolt. No longer is it much
of an object for a country bank to
keen a deposit with the large city bank.
Thus there has been a gradual drift
ing 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
wear. when money rates have been de-
cIining. the large city banks have dis
tinctly felt the loss Of their former
power. Hence, they are looking around
for some plan to get their country
following back again.
Reserve System Working
IneFP is no uOpV VI pIS" VI
the federal reserve system, which is
functioning very satisfactorily. The
men connected with the federal reserve
hanks are active and ambitious. They
are building permanent and substantial
banking houses and are accommodating
great They are issuing re-
ports and other publications which APP
neal greatly to the country banks. The
larger city banks are distinctly wor-
ried about this and are looking for
some other means for recouping their
prestige. They first turned their atten-
ton to foreign trade organizations.
Foreign trade was the keynote at the
American bankers convention two
years ago. The foreign trade business.
however. has not panned out as well
as the banks had hoped it would, and
our recent tariff has given almost a
death blow to what little new foreign
trade we had. Thus, the banks hopes
in this regard are not very sanguine
at the moment. Another attempt has
shown itself in the organization Of