The Monmouth inquirer., 1923-10-11
BRANCH BANKS
TO Be LIMITED
National Bank Branches Are Re-
stricted to Receive Deposits
and Cash Checks Only.
ATTORNEY GENERALS OPINION
Congressional COMMITTEES Hears Con-
troIler Dawes Explanation Of
Operation Limits-New York
Banks Not Affected.

Banks Not Affected.
NEUTRALITY-SUSPICIOUS. banks may
establish branches in the cities where
they are located for receiving depos-
it's and cashing checks, but these
branches cannot conduct a general
banking business, according to an
opinion submitted by Attorney Gen
erai Daugherty to Henry M. Dawes
controller of the currency.
Mr.. Dawes announced this opinion
and his Interpretation of it when he
appeared before the joint Congress
sional committee considering plans
to induce state banks to enter the
Federal Reserve system. He called
the permitted facilities tellers' win
dows and intimated that no other ma
jor functions, such as making loans
or purchasing securities. could be
carried on at these windows. The
controller said explicitly that a ma
tional bank should not be permitted
to operate these tellers' windows IN
any states or cities where the state
banks had not similar or greater IA
c~ilities.
The general extension Of branch
banking would result in the elim1na-
ton of the national banking system,
Mr.. Dawes said, and thereby the ulti-
mate destruction of the Federal Re
serve system.
1.-THE relations of the national bank
to operations in branch banking have
been the subject of a very widespread
misunderstanding" Mr.. Dawes said.
'Tn order that the situation might be
clarified and defined, the present con-
troIler requested an opinion of the
Attorney General, which has just been
handed down.
Authorization to national banks to
establish such additional offices will
be of great advantage in certain To-
calities where the state banks are
already extending their services in
this manner.
"If the branch banking movement
cannot use the Federal Reserve sys-
TEN as an instrumentality for its ex-
tension, it will probably never be-
come a great menace, and with the
national banks extended a reasonable
measure of facilities for self-protec-
ton within the limits Of the munich
palities in which they operate the ma
tional banking system and the Fed
eral Reserve system can be maintain
ed in their present status"
Charles S. Hamlin, former governor
of the Federal Reserve Board, said
that So per cent of the eligible banks
of the country were not members of
the Federal Reserve system, and that
these banks, numbering 1881, repre-
scented 25 per cent of the %country's re-
sources. He said it was desirable
that these banks should be members
of the system and that some induce
ments ought to be found to attract
them.
Suggestions advanced to capture
the state banks included:
Permitting banks to deduct out
standing checks in process of collec-
ton in making up their gross de-
posits.
Give member banks a larger share
in the Federal Reserve Banks profits
over 6 per cent.
The imposition of a tax On uncov-
cred Federal Reserve notes.
Senator Glass, who is a member of
the committee, said that there ap-
peared to be very little, If anything,
that Congress might be able to do to
make it more attractive for state
banks to associate themselves with
the Federal Reserve.
New York banks with national
bank charters win be little affected
by the new ruling of Attorney Cen
eral D~augherty, according to opinions
expressed by representative bankers.