Evening star., 1925-01-11

E|,:|'l
FRANK e. GHIsELLI,
Recently named vice president of
Merchants' Bank and Trust Company.
city limits. but since State banks IN
a number OF States were already en-
gagged in this kind Of business and
II had become the local banking
practice, it was absolutely necessary
to the existence OF the national
banks that they be permitted to en-
gage also in expanding their bank
ing facilities in this manner He
pointed out. however, that the bill
would not permit a national bank TO
engage In any form Of branch bank
ing even within city limits in those
States which by law or regulation
prohibit the State banks from engag-
ing in branch banking. and further
that even In those States which per-
mitted branch banking the bill would
limit it practically to those cities
having a population OF more than
100, 600 by the last census. In cities
having from $4,000 to 100000 popu-
would be permitted, and in cities hav-
ing a population from $4,000 to $4,000
only one such branch would be per-
mitted
Old Branches Would Remain.
Mr.. McFadden was very careful to
state, however, that it was not the
intention Of the bill to take away
from any bank any branch which II
had heretofore legally established, re-
gardless of where the branch of the
bank may be located.
So far as the restrictions on State
wide branch banking are concerned,
the principal locality which will be
affected is the State of California,
although a number of other States
permit Statewide branch banking to
the State banks. In California alone
Statewide branch banking has been
developed on lrge scale, two of the
leading State banks there-both
members of the Federal Reserve
system - having more than 80
branches apiece scattered all over
the State. The effect of the bill on
these banks will be that they will
not be permitted to establish any
more outside branches so long as
they remain members Of the Federal
Reserve system.
Mr.. McFadden pointed out the con-
tribution which the independent unit
bank had made to the economic de-
velopment of the United States He
said that the main purpose of the
branch banking provisions Of the bill
was to protect these banks from be-
ing put out of business in one way
or another by the encroachment of
branch banking by the great banks
in the financial centers. He said that
the local development of State wide
branch banking ultimately led to a
monopoly or group control over
credit facilities. He pointed out that
in the Dominion of Canada where
branch banking has a free hand,
there are only about a dozen banks
left. These control thousands of
branches scattered throughout the
Dominion.
Other Provisions I'm Bill.
Mr.. McFadden said he did not wish
his bill to be known simply as a
branch banking measure. There are
many other important provisions In
the bill which have received as great
study and attention as the branch
banking features. The office of the
controller Of the currency, which
banks, in conference with various
groups of bankers and working in
cooperation with the banking and
currency committee of the House
made careful and exhaustive sur
vey of the need for Improvement in
the national bank act. This act was
enacted 1854 and has been amended
very little since that time AS a re-
suit of this careful investigation Mr
Mctadden said that his committee
drafted and reported out this bill
many of the provisions Of which will
strengthen the position of the ma.
tional banks and benefit the bankine
system of the country as whole
These amendments, he said, make
no radical changes In the bankfns
laws, but simply legalize certain
practices of and bestow certain
powers upon the national banks
which have been demonstrated TO be
| absolutely sound and necessary.
Each Section Analysed.
Mr.. McFadden reviewed and ana
! lyzed each one OF these sections
showing exactly what changes were
made. These include the authority tc
| lend money upon first-mortga9e cit,
real estate for a period of five years
Histedu Oh one year, as now; the au
| thority Of State bank to consolidate
| directly with national bank under
| national charter; the right of a ma.
| tional bank to continue in business
| Indefinitely as long as 1t remains solv-
ent, did not violate the banking laws
or whose charter was not repealed b,
/ Congress; the right of national
| bank to be organized at a capital O,
100000 in outlying sections Of large
| cities; the right of national banks tc
pay stock dividends; the legalizatior
| Of the office OF chairman OF the board
! Qualification of the provisions of the
| law governing the amount which 8
! national bank may lend to any one
| person or corporation; the extension
| of the authority of the Federal Re.
serve Banks to rediscount otherwise
eligible paper to an amount in excess OF
10 per cent of the capital and surplus oi
the applying member bank when the pa
per SO offered for rediscount could bt
! accepted by a national bank under
section 5000, Revised Statutes; the
| right to engage in safe deposit bust
ness to the extent OF owning stock IL
g. corporation carrying on that bust
ness in the building in which the
bank is located; and the punishment
| of certain crimes against National anc
! State member banks of the Fedora