Evening star., 1926-12-09
TRENDS TOWARD
GREATERBANKS
Expansions and Mergers Are
. Necessary to Keep Pace
7 With the Nation.
BY j. C. ROYL.E.
II II u " HNND ~
Special Dispatch to The Star.

Special Dispatch to The star.
NEW YORK, December 9.-The as.
sets of the United States have in
creased $4,000, 100000 in the last
year. That fact has been a prime
factor In the trend toward capital ex-
pansion and consultations which has
become apparent in the banking bust
ness AS a result of the expansion Of
assets, not only Is more capital re-
Quired to finance the commercial and
industrial activities of the Nation but
this money is required in larger sums.
The two methods employed in the
expansion of modern banking activi-
ties have been strikingly exemplified
in the increase of the capital stock of
the National City Bank and the move
to consolidate the Irving Bank and
Columbia Trust Co., with the Amer
can Exchange Pacific National Bank.
These two moves were preceded by
another large merger, along similar
lines and for similar reasons, which
brought together the Chase National
and Mechanics and Metals Banks.
Large Operation Trend.
The whole trend of American bus1-
ness in recent years has been toward
operations on a larger scale. Mass
produce tIO1, with CUnseQuent low. -llS
Of costs, has been its feature. 1t was
inevitable under this policy that the
financing of industrial and CONNER
cial obligations should require large
sums The banks have had to follow
this trend or lose pace with the pro-
cesSsion.
For example, one New York bank
is permitted under existing laws TO
loan to one individual or corporation
only one-tenth of it's capitalization,
sur Jius and undivided profits. To
day it can loan to one concern ap-
proximately $10.000,000. When the
proposed addition to it's capital is
made, it will be enabled to make
a single loan of approximately
$14,000,0 900.
America and England are financing
the world And world requirements
have necessitated the providing OF
additional banking capital England,
although a small nation, and as one
business man put it. always about
two steps from the poorhouse, has one
advanta ge-she has only about four
big banks, which have innumerable
branches. This is not possible under
existing laws here.
The bankers are as deeply inter-
ested in cutting costs as are makers
of autom obiles or other products, ana
economy is another factor which mas
produced the present poncy Aool-
tional capital means the OpOrtunlty
TO acquire additional business, Wnlch
can be handled without correspond
ING advances in cost. This trend
works right through the business,
since. as one banker expressed 1t,
the bank will get more deposits, ana
thus be able to loan more money
to its customers and make more
profits to acquire more customers
and deposits.
Cost Grows Greatly.
The cost Of donig business for banks
has grown to an extraordinary extent
owing TO the effort of bankers to give
service to customers. Customers now
not only ask but get service Whlch
never would have been thought OF ~
years ago. Nv.
what we really do" said one Ma
tional Citv official today, 'is to run
q department store of banking. We
can and do take care of our customers
from the cradle to the grave. Inc
National City has become the b'gges
bank in the world, yet on January
1t will start a campaign to attract ,
savings accounts. The bank now ha
some $40 900 600 on deposit represent
ing such accounts. Some of the serV
ice departments we operate may not
in themselves produce a profit, bu'
we believe they induce thrift an'
the habit of doing banking business
which eventually will return prof1ts
1t is one of our policies to take the
bars out Of the windows of the bank
and put flowers in"
Bankers closely associated with one
of the mergers emphasized the fact
today that the trend had been in G
way along lines parallel to that o.
the Federal Reserve system. in that it
put the entire huge assets of the con
solidated concerns behind the opera
tions of each of the branches main
tanned