Evening star., 1926-05-23
McFADDEN BILL COMPROMISE
AND PASSAGE STRONGLY URGED
Bankers Anxious for Measure to Become Law.
Would Accept Distasteful Amendments to Gain
Other Advantages Embodied in Present Proposal

DdnK members OF the eucTdI ItcScTVc
System located in the. other 26 States
that do not authorize branch banking
at this time would not be permitted
to have city branches, even though
the laws of the States in which they
are located are changed SO as to
permit branch banking to be carried
on.
j Senate Cuts It Out.
| The Senate banking and currency
committee cut this amendment out of
| the bill. An effort to restore 1t when
| the measure was under discussion in
the Senate was defeated by vote Of
so to II. Thus the Hull amendment
constitutes a vital point of difference
between the two branches Of Congress
which must be reconciled before the
McFadden bill can become law.
When the American Bankers AS
sociation met in convention in Chi
cago, two years ago an effort was
made to have the association approve
the McFadden bill including the pro-
vision for city branch banking by
| national banks and State banks of
the Federal Reserve System. On two
occasions during the past 10 years
tho American Bankers Association has
gone on record as being unalterably
| opposed to branch banking in any
| form, so that 1t was evident, when
| this question was brought to the at
tention of the convention in Chicago.
a compromise would have to be
effected by the advocates of city
branch banking with the opponents
of branch banking in any form be-
fore the A. B. A. could be placed on
record as favoring the McFadden
bill.
ODpOse Branch Ranking.
The opponents Of branch banking,
consisting Of very large number of
small and medium sized unit banks
located principally in the central
West. said that they were willing to
have the national banks carry on city
branch banking. provided, however.
that the practice could be confined to
those States that authorize branch
banking at the time Of the adoption
Of Federal legislation giving national
banks permission to have city
branches.
The advocates Of the McFadden bill
were SO keen to get the approval Of
the A. B. A. that they accepted this
limitation. and at the request of the
Illinois Bankers' Association Morton
Hull. a Representative in Congress
from Illinois, introduced the amend
The acknowledged purpose Of this
amendment is to close the door for.
ever against national banks and State
bank members Of the Federal Reserve
System. located in States that do not
now authorize branch banking, taking
advantage Of any laws that may be
passed by those States hereafter au-
thorizing branch banking in any form.
The advocates Of the Hull amend.
ment argue that IL national banks
and State bank members Of the Fed.
era1 Reserve System find that, even
though the law of the State In which
they are located is changed to au-
thorize branch banking, they cannot
take advantage Of 1t. it will discourage
them from using their influence with
their State legislature to have the
laws changed SO as to authorize
branch banking. They hope by that
method to check the further exten.
sion Of city-wide or Statewide branch
banking throughout the United States.
and to hold 1t where it is today.
Arguments Of Opponents.
The opponents Of the. Hull amend
ments argue that banking in itself is
purely local or domestic business
and that 1t assumes a national impor.
tance only when banks are used by
the Federal Government to establish
banking systems or fiscal agencies,
such as the National Banking System
and the Federal Reserve System. for
the benefit Of all Of the people. There.
fore. the question Of whether banks
should carry on their business through
q single Office or have branches is
one for the people Of each State to
determine without interference from
any sovereign power outside Of the
State. The McFadden bill in estab.
fishing national policy with respect
to branch banking has recognized the
right Of the people to determine
whether they want branch banking or
not by restricting the city branches
OF national banks and State bank
members of the Federal Reserve Sys.
tenn to those States that authorize
their domestic corporations to have
branches.
Those who are opposed to the Hull
amendments believe that II the peo.
pie Of State determine one year or
two years after the passage Of the
McFadden bill that branch banking is
desirable and pass laws to that effect
national banks and State hank mem
bers of the Federal Reserve System
should be permitted to have city
branches just as similar banks would
be permitted to have branches in
those States that authorize branch
banking at this time.
Federal law that would permit a
national bank in the State of Califor-
MIA to have city branches on the
ground that the laws Of that State au-
thorize branch banking at this time,
and denying a similar privilege to a.
national bank in the State of Penn
sylvania in the future, even though
the laws Of the State are changed SO
as to permit branch banking, comes
pretty near to being "class' legisla.
ton, because Federal laws should bear
with equal weight upon all whom
they are intended to affect. It is CON
sidered unfair, unreasonable, unjust