The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1924-06-02
RESERVE BANK
system IN
PERIL
State Banks Menace to Ma
tionaI Banking Act. Says
Senator Pepper
nv HARRY GTJCACK
BY HARRY .GUGACK.

Declaring that the national bank
ing system is facing an emergency
which threatens tits very existence
and ultimately the existence of the
Federal Reserve System" the SEN
ate Banking and. Currency Com.
mittee has submitted it's report to
the Senate in support of the Nc.
Fadden- Pepper bill revising the ma.
tional bank act.
Senator Pepper, who will seek the
passage of the bill in the Senate
during this week, declared the Leg
islation is urgently needed to pro-
tecI national banks from the inroads
OF competition from State member
banks of the Federal Reserve Sys-
tenn, which are operating under
charter powers granted by the State
legislatures. ~ s4
The report declares that the pres.
emit situation is due to the fact that
the national banks, operating under
the law of 1864, with amendments,
lack the necessary charter powers
10 give the most complete modern
banking service. They are depend.
ent solely upon Congress for these
grants of power, and two kinds of
legislation are urgently needed at
this time, one to permit national
banks effectively to carry on the
banking business and the other to
protect them in so far as Congress
can do from the inroads of com.
petition from State member BANKS
of the Federal Reserve system
which are operating under charter
powers granted by the State legis.
latures.
1.-THE enactment of this bill into
law will, it is believed, put new life
into the national banking system, !"
the report sets forth. "The cumu.
lative~ effect of its provisions will
produce a situation in the Federal
Reserve system where the rights of
the national banks will be more
nearly on a par with those of the
State member banks. When the
Federal Reserve act was amended
to let State banks come into the
system with their full charter
powers, the national banks, operat.
ing under the old National Bank
act Of 1864, found themselves, as
compulsory members of the Fed.
eral Reserve system, placed at a
considerable disadvantage. Many
of these State banks are operating
under modern banking codes. The
amendments which had heretofore
been made to the National Bank
act We're not sufficient to enable
the national banks to compete on
terms of equality with such State
member banks, while at the same
time they were compelled by law
to bear the chief burden in sup
porting the Federal Reserve sys.
tenn"
The bill, which is supported by
Comptroller of the Currency Henry
M. Dawes, the Federal Reserve
Board and banking organizations
generally, is on the calendar of both
Houses and has a chance of enact
ment into law during the closing
week of the session.
The bill is designed to meet this
emergency by amending the national
banking laws in several important
particulars and by putting certain
restraints on branch banking by
state member banks in the Federal
Reserve System" said Senator Pep.
per in his report from the commit
tee. THE legislation here recon-
mended would permit national banks
to have more freedom in CARRYING
on the banking business. The en-.
larged powers granted in this hill
are along conservative lines and
nothing Is permitted which has moi
already been demonstrated to be
sound bankif1g