Evening star., 1926-02-21

ton to the other lG SECTIONS Of the |
bill, which amend the national bank |
act in various particulars for the pur !
pose of improving the charter powers
u national banks.
Bank Has Hundred Branches.
Although Statewide branch banking
Ia permitted by eight states in the
Union, 1t is only in the State Of Cali
cornia that 1t has developed TO the
point Of attracting public notice. In
that State the Bank Of Italy Of San
Francisco has 100 branches scattered !
all the way from the Mexican to the
Oregon boundary lines, and in addi-
ton, controls. through holding com
panles. two other State banks. which
are developing State wide branches
The Pacific Southwest Trust and Sav-
iEgS Bank Of Los Angeles and three
other large State banks have also de
veloped Statewide branch banking
systems and desire to continue to do
so as members of the Federal Reserve
system. over against these great
branch banking institutions are ar
"ayed group of small banks in the
smaller towns and cities organized un-
der the name of the California Leagu
of Independent Unit Bankers. This
group is fighting a life-and-death
struggle not only to preserve their
own existence but to arrest a devel-
opment which will destroy the unit
system of banking in California.
Experts Present Views.
These two groups appeared before
the Senate committee last week and
stated their cases. The case for the
branch bankers was presented first
by DR.. II. Parker Wills, professor of
banking at Columbia University. who
was employed by the California
branch bankers to make an investi-
cation, the report of which he laid
before the committee. This report
appears to be a mass of statistical
mittee will have to study at its
leisure.
John Drum, president of the Mer-
camille Trust Co. of San Francisco.
spoke more specifically in behalf of
the California branch banking sys-
tens. This is the third time Mr.
Drum has appeared before congress
sional committees in opposition to
section 9 of the bill. The gist of his
argument Is that Congress ought not
to restrict the exercise of the char
ter powers of State member banks
after they have entered into the Fed
eral Reserve System. He defended
branch banking as it is practiced in
California.
McFadden Pleads for Bill.
Chairman McFadden of the House
banking and currency committee. at
the invitation of Senator Pepper
chairman of the Senate subcommit-
tee. ably presented the case for the
bill. He gave a short history Of the
Il lI n1
jections thas had been raised to any
provisions OF it and concluded with
the statement that the House of Rep
resentatives had clearly reached the
conclusion that it is imperative al
this time TO make new condition
of membership for State banks IN the
Federal Reserve System TO the erect
that no State bank will be permitted
hereafter to establish any branches
beyond the corporate limits of the
municipality in which the parent
bank is located. He said that II Con
cress did not take this opportuiitS
TO curb the branch banking actVltles
of state banks which are operating
under the guise of the patronage ana
protection of the Government OF the
United States, the time is not far dls-
tanr when these branch banks VIII
he strong enough to assert thelr IN
denendence of the Federal Reserve
Crstem itself and he in a position
thereby to injure if not destroy Ii.
Many Bankers Testify.
Following Chairman Mct adden'
about a dozen bankers took the slaiiu'
each of whom represented unit bank,
two Of which were metropolitan unit
hanks of Los Angeles and one metro
politan unit bank of san Francisco
strong case against branch banking
was made out by these witnesses, VINO
proved to be thoroughly informed on
the subject. These We're SHOTS from
the firing line and the Senate commit
tee appeared to be impressed with the
earnestness and the intelligence OF
these unit bankers as they told the
story of their struggle Tor existence
in the face of the gradual encroacn-
ment of the great branch system.
The paper read by Howard Whipple,
president of the First National, Bank
of Turlock, Calf. was perhaps the
best presentation of the philosophy OF
branch banking which has yet been
made on the subject and the commit
tee appeared greatly impressed by the
clearness in which he presented the is
sue involved in the bill. He stressed
the point that branch banking IN
I
the case. be any different from branch
banking in the other countries where
it is in vogue, such as Canada, Aus
tralia. British Isles and on the Con-
tinent of Europe. He showed how in
these countries it had been lett large
" to the operation of economic law,
with the inevitable result of the alb
sorption of all of the small unit banks
in the rural districts by the branch
banking systems in the large cities.
Banking Monopoly Feared.
He pointed out that there were only
il banks IN the entire Dominion of
Canada, and these were situated in
the two cities of Toronto and Mon
treal, and that of these II. three con-
trolled the banking policies of the Do
minion. The entire agricultural and
industrial area of Canada. from the
Atlantic to the Pacific, outside of these
two cities, is served by branches
which number about 5000. He
showed how also in England about five
banks controlled the situation there.
He brought out that unless a legisla-
tive body, representing the people. in
tervened upon social grounds, branch
banking can lead to but only one re-
suit. and that is monopoly of credit
facilities.
Mr.. Whipple was supported by a
number of other banks, both large and
small in the view that branch bank
ing in California had already started
on the road to monopoly and that if
in the interest of the public Congress
does not prevent the use of the Fed
eral Reserve system as an instrument
in the furtherance of branch banking,
it will only be a matter of a few years
before the entire banking resources
of tho State pf California will he