Evening star., 1926-04-04

snsszsa1zas SlaaAsenas1aaaAA sources OF Soo,-
| <,roR PEPPER 000. 900 ,000. These
banks, both ma
iional and State. are the units of our
| system. Considering the number of
units and the vast area to be served,
| it is Inevitable that there should he
| struggle of opinion between 1ndlNld-
ualism and Capitalization.
an a solar system we recognize CEN
| trifugal and centripetal forces. In
! political science we contrast local
| self government with imperialism.
| In the field of banking. according to
| temperament or selfinterest. we
argue for a more rigid system of cen
| trail control or for a greater freedom
| of action on the part of each unit.
System Is Foundation.
after a generation of agitation and
f.'ter 10 years of discussion of
measure designed to substitute har-
mony for conflict, the Federal reserve
| act was passed. Today says an
authoritative writer. the Federal re
serve system stands as the very
! foundation of American commerce,
more powerful in resources than any
banking system in human history.
with with a record Of unsurpassed
service to the Nation in tine of unique
| trial.
Both because it is so strong and
also because it is an effort at har-
mony. it is inevitable that the system
should be violently attacked. Some
Of it's critics are informed; some are
ignorant: some make helpful and con-
structive suggestions: others seek to
tear down and trample. Eut far down
in the strata that underlie the dis
cussion is the eternal opposition be-
tween the desire for order through
control and the craving for freedom
| through lack of it. The problem, as
always, is so to organize as to get
necessary order and at the same time
to retain necessary freedom. The
Creator solved this problem for the
| universe when He devised the law OF
| gravitation.
Acute Controversy Now.
cat this moment we have before
the Senate an acute controversy over
| branch banking. In % States, State
banks are permitted to have branches.
In California branch banking has be-
come such an important matter thac
single institution has about 14l
branches scattered all over the State.
National banks have no authority TO
establish or maintain branches. The
| pulsory members of the Federal re-
| serve system. The State banks are
optional members. If the present con-
dition continues here in States per-
mitting branch banking the competi-
| tive conditions are uneven.
IF the national banks are given
| branch banking powers, the anti
branch banker holds that they are
being started on dangerous ana
unsound career. II the Federal re-
serve act is amended to provide that
State institutions must drop their
branches or keep out of the system,
the branch banker holds that he ls
being unjustly deprived either of a
privilege given him by State law or
Of his optional right to take advantage
of the Federal system.
"Feeling runs high and we have not
vet worked out tho answer. Possibly
we can do so on the. following basis:
Authorize national banks in cities to
have city branches in States where
branch banking is permitted; permit
State banks with their present law
fully existing branches to consolidate
with or convert into national oanks
and keep their branches, and allow
state institutions which have branch
es to enter the Federal reserve sys-
tenn Tor to remain in it, with their
branches. but to establish no new ones
| outside of city limits.
Wrestling With Problem.
THE Senate is wrestling with this
problem now. We realize that we are
handling a subject which is loaded
with dynamite. and we are treating
it with corresponding care and re-
spect. We want to improve and lib
! cralize the national banking act, but
we want to be fair to the State insti-
| tutions and do nothing to 1nJure the
| Federal reserve system.
at is popular nowadays TO think
| of a bank as run for the personal adj
vantage of its officers and the private
| profit of it's stockholders. Doubtless
| there are banks which have this con-
| ception of their function. L venture
| TO think that no bank could flourish
/ which had any other objective than
| community welfare. 1t is a peculf-
| arity true of banks that 1t is glo-
rious thing to have a giants strength.
| but is a tyrannous thing to use it
| like giant.
No Part of Money Trust.
THE men who run our banks are no
part of money trust. Their pur-
pose is not to accumulate and op-
| press, but to earn and serve. 1t is
| not any easy thing for a bank to
serve "a community wisely. To steer
a safe course between narrow re-
! dictionary policy and a weak and good
natured surrender to eager demands
for credit is the test for intelligence
and chara acter.
THE inescapable fact is that there
| is no substitute for character. You
may talk loud-you may act shrewd-
ly-but if you have not character
which rightly combines the ideal and
the practical you cannot effectively
serve your community or your coun-
try. There is no substitute for char
acter in the management. of bank.
Legal regulations are important; in
telligent inspection and control is es-
sential, but if people want to abuse
their banking privileges they cannot
! be restrained by all the bank exam
| iners that ever did their duty.
Just as obedience to law is better
than law enforcement, so character
| in the government of a bank or re-
| public is the basis of safety for the
depositor or the citizen