The Kennewick courier-reporter. [volume] (Kennewick, Wash.) 1914-1938, 1922-10-26


ing the past year, when money
rates have been declining, the
large city banks have distinctly
felt the loss of their former pow
er. Hence, they are looking around
for some plan to get their country
followers back again.
There is no hope of breaking
up the Federal Reserve system
which is functioning very salts
factorily. The men connected with
the Federal Reserve Banks are
active and ambitious. They are
building permanent and substan-
tial banking houses and are ac-
cumulating great resources. They
are issuing reports and other pub
locations 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. Foreign Trade was
the key note at the American
Bankers Convention two years
ago. The foreign trade business,
however, has not PANIED out as
well as the banks had hoped it
would, and our recent tariff has
given almost death blow to what
little new foreign trade we had.
Thus, the banks hopes in this re-
gard are not very sanguine at the
moment. An other attempt has
shown itself in the organization Of
separate Investments companies
and separate Acceptance COM
pan. These have been organized
by many of the larger banks and
most Of them are operating sue
cessfully. Banks are finding these
Investment companies more pro-
fitable 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 or
ganization 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
question; but the drive is on and
my guess is that such branch
banks are as inevitable as the
chain store.
GAIL the banking systems of
Europe are developed on the
branch bank idea. The big banks
of England, France and Germany
have their branches in hundreds Of
cities and towns. One Of the fin
est branch systems in the world
exists in Canada, just over the
the United States line. In Mon
treal 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, I doubt
seriously whether the branch bank
system is as good for the country
as the present system. On the
other hand, we know that the pre-
sent tendency Of eliminating the
small farmer and substituting the
renter in place of the owner is
not for the good Of the country.
The development of chain store
systems which are slowly crowd
ing out the individual retailer is
not good for the country.
"On Christmas Mr.. Henry Ford
sent me an autographed photo
graph on which he wrote these
words: Eliminate absentee owner.
ship and industrial problems will
solve themselves He is correct
in that absentee ownership is 8
present difficulty with our indus.
trial organizations. AS the chair
store grows, a similar difficulty
will develop which we do not have
4 with our individual retail system
and as a system Of branch banks
grows, there will be that same
difficulty with our banking sys.
tenn. Yet l believe these changes
are inevitable. Branch banks will
be established throut the country
and Congress will enact such 1egis.
lation as is needed to make this
possible"
"Mr. Babson was then asked
what the effect of this would be
on bank stocks and he replied that
it should be a benefit to bank
stocks. There are enough banks
in the country districts at the
| present time. Hence, the city
banks will be wise enough not ia
start new ones to serve as their
branches. Instead the city banks
will buy control Of the better coun-
| try banks. This will develop new
and active market for country bank
stocks. Small banks in growing
communities will be in special de-
mand. Their stocks will surely
sell higher. At the present time
most bank stocks sell on book
value without any consideration
of the value Of good will AS soon