Evening star., 1923-07-20
MAY SERVE MORE
THAN ONE BANK
Reserve Board Rules on In
terIocking Directors Have
Vital Exceptions.

The recent regulation OF the Federa
| Reserve Board, which prohibits, under
| the Clayton act, interlocking bank direc-
tors I'm national institutions, which
term is construed to apply not only 10
national banking associations but also
to banks. banking associations. ard
! trust companies organized or operat!n-
under the laws of the United States, IN
Guiding all banks and trust companies
doing business in the District Of Colum
bia, regardless of the sources OF theis
charters is not an ironclad edict with
out provisions, a perusal Of the order
shows.
For instance, the ruling does not sp-
ply to persons who have obtained the
consent or approval Of the Federal Re
serve Board. under the provisions Of the
Kern amendment. which authorizes tire
Federal Reserve Board 10 permit any
private banker or any officer, director.
| or employe Of any member bank or clasF
A director of a federal reserve bank 70
knot more than two other banks bank
ing associations, or trust companieS
coming within the prohibitions Of the
Clayton act, provided such other banks
are not in substantial competition with
such private banker or member bank
| II the institutions involved are not
lin substantial competition. the board
lis authorized. in its discretion. to
sent; but If they are in substantial
competition, the board has no dis
lcretion in the matter and must -
fuse such consent.
| Statement of Principles.
The board has adopted the follow
ing statement of general principles
for it's guidance in determining
whether banks are in substantial
jcompetition within the meaning of
the Kern amendment to the Claytof
acts:
I'm general, two banks Will 10
deemed to be in substantial compe
tition II they actually compete for
considerable amount Of business. =
II a considerable portion OF the busi
ness of each is of the same charsc-
ter and in doing seeking such
business they actually compete for
the same customers or prospective
customers, regardless OF whether o-
not II is probable or possible that a..
interlocking directorate betweer
them would result in injury to the
public by making credit less avail
able.
III the statements ri two banks show
that each has a considerable amount
Of the same class of deposits or loans
and ii appears from the evidence sub
mttted that they are so located as 10
be In a position TO serve the same
customers conveniently, the board
Will presume, in the absence Of evi
dence TO the contrary that they are
in substantial competition. This pre-
sumption may be rebutted, however,
by any evidence showing that they
are not actually competing for such
business. g. e., that they actually
serve different classes OF customers
that the business in question is not
actually sought by one bank, but IS
merely incidental to its other bus!-
ness, or that competition has already
been eliminated through common
stock ownership. The existence OF
! substantial competition, however.
may be shown by evidence other
| than that described above"
Further Exceptions Noted.
Furthermore, the Clayton act pro
vides for the following additional ex-
ceptions:'
They do not apply to mutual saw
stock represented by shares.
| They do not prohibit person from
being at the same time director,
officer or employe Of a national bank
and not more than one other nation
al bank, state bank or trust com
pany where the entire capital stock
of one IS owned by the. stockholders
of the other.
They do not prohibit a person from
being at the same time q class A
: director of a federal reserve bank
and also an officer or director, or
both an officer and director in one
|, | member bank.
They do not prohibit a person who
is serving as director. officer or en-
ploye Of a national bank. even
though it has resources aggregating
| over $4,000, 600, from serving at the
same time as director officer or en-
ploye of any number of state banks
and trust companies, provided such
state institutions are not located ir
the same city of over 100000 inhat
| tanta the National h2pk and dn
not have resources aggregating. in
the case of any one bank, more than
S5,000.000.
May Serve Different Banks.
They do not prohibit a person from
serving at the same time as director.
OFFICER or employe OF any number OF
national banks, provided no two o.
them are located in the same city
of over 100000 inhabitants and no
one of them has resources aggre-
eating over s5,000.00O.
| They do not prohibit a person who
! Is not a director, officer or employs
of any national bank from serving
| at the same time as officer director
or employe of any number Of state
banks or trust companies. regard
less of their locations and resources.
| They do not prohibit a person who
10 an officer or employe but not
director of state bank from serving
as director officer or employe OF 4
. national bank. even though either
, or both of such banks have resources
aggregating over $4,000 000 provided
| both banks are not located in the
same city Of over zoo. 900 inhabitants
| And they do not prohibit q person
who is an officer or employe, but NOT
director, of q national bank from
service at>the same time as director
, officer or employe of a state bank
even though either or both Of such
! banks have resources aggregatfng
over s5.000,00o. provided both banks
are not located in the same city or
! over zoe, 600 inhabitants
Special forms. have been prepared
Il upon which formal application 70
serve two boards should be made 10
the Federal Reserve Board A per
NIT, when granted continues until
} revoked and need not be renewed
Stock Exchange Trading.
, Trading on the Washington Stoci,
Exchange this morning ruled dull and
uninteresting. Railway preferred
gave evidence of strength, thirty-fve
shares f1uctuating between ToIi and
729s. Capital Traction sold at par
and one-half, and Lanston was IN
changed at 75. Traction SIS brought
81.
LEAF TOBACCO RECEIPTS.