The Birmingham age-herald., 1923-11-07
CURB ON BRANCH BANKING PROPOSED.
Chicago Man Says Such SyS- tenn Will Drive Out Com
 munity Bank

CHICAGO, Nov. GA proposal ot curb branch banking through prohi- bitory regulations by the federal reserve board was submitted to the McFadden joint committee inves- tigating federal reserve membership today, by William J. Rathje, rep resenting the American Bankers as- sociatfon, and the national associa- tion opposed to branch banking.
 The congressional committee com pleted it's Chicago inquiry today, moving tonight to Omaha, where morrow.
 Questioned by Representative Stea- gall, democrat, of Alabama, as to the reserve boards authority to exclude from membership in the reserve sys tenn any bank operating branches, as was suggested by MT Rathje, the wit ness, declared there was no such au- thortiy but urged that some vigorous action against "the system" be taken at once
 Branch banking will drive the small independent community banker from America, MT. Rathje said, and in their stead would spring up a system of hundreds of branch banks controlled by two or three leading national groups. He condemned the California system, under which state banks are permitted to operate as many as 70 branches, and urged the necessity for federal statute clarifying the present situation Is regards national banks. Committee members indicated the question would be suggested for the consideration of the banking and currency committees of both houses of congress.
 Opposes Par Clearance.
 The testimony of H. J. Mortensen, representing the Wisconsin Bankers association, offered the recommenda- ton that many of the smaller state banks of his territory might be brought into the federal system by the abolition of the par clearance system, under which all remittances through outlying banks are cleared at par without charges. This arrange ment, the witness said, was costing country banks, relatively large amounts, and was, therefore, an in- fluence against their adhering to the federal agency Gov. James B. Me- Dougal of the Seventh reserve bank questioned the validity of the argu- ment, inasmuch, he said, as the re- serve system now performs large l part of the transportation service | which formerly was paid for by the
 individual banks out of their ex- change receipts.
 E. H. Wolcott, banking commits sioner of Indiana, told the commit tee he believed the federal reserve system to be the most wonderful l financial institution ever created" and advised against additional legis- lation which might impair the eff | ficiency of the system. The principal reason winch kept most non-members
 out of the system, he found to be a 1 purely selfish one, since the refusal usually is based upon the fact that the Federal agency pays no interest on reserve deposits of member banks. Praise Reserve g System. 6 0
 | Virtually the same views were re- corded by R. H. Weber, assistant chief | bank examiner for Illinois. He added to the growing list of causes which work against a greater membership in the resreve system, the fact that dividends on federal reserve stock are limited by law to per cent. The feeling that agricultural paper Is not eligible rediscount at federal re- serve bank, was another factor, he said.
 Denial that political influence inn peded the work of the reserve system was made by Representative Wingo, democrat of Arkansas today follow ing the suggestion of a country bank CT that the federal reserve system should be removed from politics" Representative WlnBO cndlleISSu the l statement of the witness with the declaration that he did not know of a single thing in Washington farther removed from politics" On the oc- cosion of a recent important appoint ment to the reserve board, Represen- tative Wingo said politics would have dictated reappointment; but President Harding had the courage to disregard all the political influ- ence which was brought to bear, and appoint a man he believed qualified and suited for the office"
 o O O Coming To Montgomery.
 A. D. Welton, representing the Con- tinental and Commercial National bank of Chicago, urged that the re- serve system be confined exclusively to purely banking practice, and not permitted to develop into far-reach- ing economic agency seeking to con- trol political levels. It was not prop erly organized for the latter func- tion, he Said, and would only impair it's usefulness along other lines in so doing. The reserve system was