Evening star., 1926-03-07
BY CHAS. p. SHAEFFER.

| D1 NHAS. II. Sk1ACF En-.
The testimony at the hearing of the
McFadden bill last month will be in
print early next week and it is proba-
BILE the subcommittee of the Senate
banking and currency committee,
which has the McFadden bill under
consideration, will go into executive
session at an early date and frame
report to the full committee.
AT these hearings no opposition TO
the permissive features OF the Dill,
which amend the national banking act
so as to give increased powers to ma
tional banks, was brought out and IL
Is evident that every one who knows
the plight of the national banks Is
willing to give them q fair chance TO
compete with State chartered banks.
Branch Banking Big Issue.
Nearly all of the testimony at the
| hearings was devoted to the subject OIL
| branch banking. Section OF the
McFadden bill Is intended to permit
national banks located in those states
that authorize branch banking by
State banks at the time OF the passage
of the bill to establish branches WIN
in the limits of the cities In Wnlch
they were located. There appeared 10
be some opposition to restricting the
tional banks to those States In when
branch banking Is now permitted ana
there appeared to be a feeling that
the bill should be so amended as 10
permit national banks in non-branch
bank States to take advantage or any
law that may be passed hereafter au-
thorizing branch banking to be car
ried on.
This provision of the bill that re
stricts city branches or natlonal
banks to about one.third OF the states
and forbids the banks in the other
two-thirds Of the States to engage
in such practice in the future is en-
bodied in what Is known as the Hull
amendment, which was brought for
ward at the instance Of a large num-
ber Of small banks, both national and
State, that fear the effect OF unlim-
tied branch banking. These bankers
seem to think that II national BANKS
in States which do not permit State
wide branch barking at the present
realize that there is no hope or ac'
quiring the privilege hereafter they
will not be any too keen about using
their influence with State legislators
to have the doors to branch banking.
even in cities, opened.
How Amendment Is Viewed.
} AS some Of the members of the COM
mjttee pointed out, the Hull amend
| ment is illogical, because it VIII grant
privilege to national banks in one
} third of the States and forever close
the door to that privilege against ma
tional banks in the other two-thlrds
of the States. There is a feeling that
all national banks should have the
same privilege, provided the laws or
| fotn in Located
permit branch banking to be carried
on. Therefore it seems probable that
the bill will be changed so as to per-
nit national banks located in non
branch banking States to take adVan-
tage of any laws enacted hereafter by
those States and establish branches
within the corporate limits of the cities
in which they are located.
A great deal of interest was mani
tested in section 9, which defines a
national policy with respect to State
wide branch banking by State banks
that are members of the Federal Re
serve System. The proponents OF this
provision argue that as the Federal
Reserve System Is the creature OF Con
| gress, Congress can set up any regu'
. lations it may see fit for the conduct
of business by State banks that are
! voluntary members OF the system. II
. cannot be compelled to join the Fed
eral Reserve System. but they have
been invited to become members under
| such regulations as the Federal Ike
. serve Board may see fit to make.
Aims of Section Nine.
Now the purpose Of section 8 is to
! go beyond a mere regulation by the
Federal Reserve Board and establish
3 a statutory provision that Will pre-
vent the further extension of State
wide branch banking by State banks
I that are now or may become hereafter
3 members Of the Federal Reserve Sys
Z tenn, on the theory that any State
e bank which comes into the system
puts itself voluntarily under the con
3 troll of the Federal Government to q
certain extent.
. 1t is contended by some that such q
: law is morally wrong, because the ef
feet Of it will be to restrain State leg
8 islators in the enactment of branch
| banking laws, but the proponents o.
I that section contend that 1t does no.
Z interfere in the slightest degree with
| State legislators or restrict the &C
3 tiyities Of State banks, except wher
2 they desire to become members OF the
. Federal Reserve System. They con
: tend further that unless Congress
does take some positive action TO re
= strain Statewide branch banking with
8 in the Federal Reserve System tha
practice will, in the course OF time
: extend throughout the United States
and, eventually, instead of having g
I system of independent unit banks, we
. will have a system of Statewide ant
Z perhaps country wide branch banks.
Views of Far West.
The testimony of the California
unit bankers shows very clearly that
the tendency Of Statewide branch
: banking is monopolistic and that the
purpose Of the big branch bankers
who have developed their bank sys-
TENS in that State is to control the
money and credit of the communities
in which they operate. They point
out that If these big branch banks are
permitted to remain members of the
Federal Reserve System and at the
: same time extend their branches with.
{ out any limit, it will be a recognition
by the Federal Government of the
. principle Of monopoly in banking
! which is contrary to the spirit of our
laws.
{ Congress has always opposed the
creation of monopolies of any kind.
! A monopoly of money and credit is
far more dangerous than any other
kind of a monopoly, and it is incon-
ceivable that Congress will permit
s. state banks that enjoy the benefits of
. fhe Federal Reserve System to drive
the independent unit bankers out OF
( existence and set up monopoly OF
/, IT, Of 40