New Britain herald., 1929-05-06

inersass ta rsssuross has bsea ITO per cent. In spite. of this amazins record. many financters ars said to bs et the opinion that thers MI be . steady aecelsrstioa toward larger banks. The Department of Commsrcs has come to the aid of this move- msnt with the statement that the banks that fail are nearly always very small ones; that about tive. thirds of them had . capital of e25.ooo and less. and about two- thirds were located in villages of less than 1000 inha bitantA
 Tho reason for bank mergers of course. is to bs able to cope with the needs of large industries. The size of the largest loan that may he made by . bank to ono borrower is limited by law to ten per cens of its capital funds. The National City bank in 1888 had . capital Or S7S.. ooo.ooo. 20 that its largest loan was limited to t7,b00.0oo. This seems . rather large loan, but not for soms industrieA Scores of corporations in the country have sales which run into nine figures and whose credit requirements will exceed the loan. ing ability of the largest bank. 70 that it has been necessary to divide the loans among a large number of banks: and it has been necessary to distribute deposits and investment opportunities among the many banks that serve them. The chief impetus for bank mergerA therefore, is to be able to loan larger sums to single industries or commercial enterprises. Big business demands big banka If this is not attained by mergers, 1t is attained partly by increases in capitalization. Some of these capi- tai increases have been large. as was the case with A. P. Giannini and his associates when they took over the Bank of America, which resulted in acapital increase from t6,5O0, 900 to t25. .o00.o 900.
 Some mergers have been stimulat- ed. too, with the desire to acquire branch banks. The passage of the McFadden bank act in 1927 acceler- ated this development. This act pro- vides that upon consolidation of q state bank with a national bank, the consolidated bank may retain all branches which were in operation at the time the act was signed. During 1893 . total of e branches were brought into the national banking system in this manner.
 The bearing of almost continuous bank mergers upon American busi- ness is . fit subject for speculative thought. Important though 1t always has been for an industry to be aligned with 'the proper kind of bank" this alignment is sure to take on increasing importance. Competing business enterprises can be aided or ruined through alliances or lack of alliances with the proper banks. Competition for banking business heretofore has been keen. There has been no monopoly of capital. When credit was declined by one institution there were others seeking sound in- vestmenta AS yet there is nothing to indicate that this free play of capital will be checked. yet the de. veloping consultations. the merging, and the disappearance of once im- portant banking institutions can have but one final result The con. centration of the control of credit, especially in the large banking centers-and an immense power over the major business corporations of the country-and this in the hands of . relatively few men at the head of the biz banks.