Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-10-13
RESERVE GOVERNOR
OPPOSES BRANCHES
Bailey Fails to See How Hold
ing Companies Can Pros
per in Big Deals.
BY JOHN r. SINCLAIR.
Special Dispatch to The Star.

| KANSAS CITY, OCTOBER 12.--C%oV-
ernor w. j. Bailey Of the Federal Re-
| serve Bank OF Kansas City was rs years
old last Friday. The employees Of the
! bank contributed and 10 cents each
with which to purchase flowers for his
! office. When I entered 1t, IL looked
more like conservatory than an ONCE
of the governor Of the tenth Federal
Reserve district.
! You ask me about branch banking
and large bank holding companies
what / think of them. Well. am
against them" said the governor. II
don't see how any holding company. no
matter how big or powerful, can buy
bank and pay two and three times as
much for the stock as 1t was ever sold
| for and expect to succeed. Somebody
has got to hold that bag.
"Of course. many people do not uT1-
derstand just how these things work.
But know of one bank whose stock
was never sold at above $3.50 per share
that went into holding company re-
Gently at $500. Now do you suppose that
the new management can increase earn
| ings to make up Tor that difference?
can't see It, admit that belong b
| the old school," continued the governor.
Il have been banker for 40 years. or
Western country has developed ara
i grown great because Of the courage, de-
| termination and vision of the early
| bankers. cannot for the life Of me see
| how this new form Of chain banking lis
| going to help our situation in Kansas.
| So far we have had very little merging
and branch bank operation, but to me
it's not a healthy situation"
But we have chain stores--why not
chain banks?" asked.
There is vast difference between
selling goods and selling credit. Credit
is the life blood Of the Nation. It's
! most important and vital factor. The
man or men who control the credit of
| the Nation control the Nation. So while
have no objections to q well managed,
| eficiently run chain store system. Wig
| orously oppose concentration and still
more concentration in the field of credit.
And am not afraid to tell the world
how view this matter"
| Governor Bailey is one of the oldest
| in point of service, of the governors In
| the Federal Reserve system.
Hoover Speech Recalled.
Business men of Kansas City still
| talk about the speech which President
! Hoover made in Kansas City four years
4 ago this month on the need Of inland
waterway transportation for agricul-
ture and industry.
In that speech the then Secretary
of Commerce made the statement that
water carriage was the cheapest of all
forms Of transportation for many types
Of goods.
Broadly, 1000 bushels Of wheat can
| be transported 1,o00 miles or the sea
/ or large lake steamers for $40 to $50;
by modernly equipped Mississippi barges
| for $50 to $70 and by the railroads for
| $50 to 5000. These estimates are
based not on hypothetical calculation
but on the actual going freight rates,
said Mr.. Hoover.
He went even further and declared
that vast dement's would accrue to the
Middle West If the business interests
would get unitedly behind a systematic
J practical waterways development Of the
| Mississippi and its tributaries.
| "On the Mississippi system, which in
cludes the Missouri River, he said, ''the
| engineering questions are behind US.
We know what we should do. We
we can accomplish by comparatively
| trivial cost compared to the benefits"
Dredging Channel.
So the Government is at work dredg
| ing a six-foot channel In the Missouri
is completed--and 1t should be Ia an
other year-the work win be concluded
i up to Sioux City, Iowa.
| But the business interests In Kansas
| City, knowing the possibilities Of ade-
quate waterways transportation Ia the
| future, are now agitating Cor q nine
foot channel upon the completion of
the six-foot channel.
ITS the most important job before
Kansas City and the territory tributary
| to 1t at this time" said j. G. Nichols
! in discussing this matter with the
writer. Give us q nine-foot channel
| to Kansas City and the freight rate
| handicap under which we have been
| working viii to large extent disap-
pear"
Kansas City banks have not been
caught up in the merger movement that
has affected the banking situation In
other parts of the Middle West and
Southwest. Its bankers are observing
the developments in other sections, but
are watching 1t with keen, critical eye.
On the whole, however, there Is no
movement within the city among the
larger banks to join hands.
Banking Resources.
At the present time Kansas City,
Mo-. has IL national banks, with total
capital of $9.050. 900; surplus and un-
divided profits, as of october 4 Of ST..
40,000 and deposits Of $147,755 900.
The city's trust companies and State
banks have almost the same totals.
600. surplus of $s.749,000 and deposits
Of $152,645 900.
1T am interested in an inperSonal
way in the merger Of banking capital
said E. F. Swinney, president Of the
First National Bank. But only In an
impersonal way. am not going into
any mergers or holding companies or
chain lines-not while I remain In the
bank. Every banker must figure out
his own future. ! am satisfied to 20
along as an independent banker, giving
the business men of Kansas City such
service as I can in direct, personal
and eficient way. I do not see how
any one can do more, whether he hap.
pens TO be part Of q tremendously
big chain or not. am In favor of the
unit bank. have no interest in any
other banking set up"
The First National is one of the two
leading banks of the city, with deposits
on October last OF $50, 366, 900 and
capital and surplus of $5,221 600.
Two banks in the city-the First Ma.
tional and the Commerce Trust Co..
together have about SO per cent of the
deposits of the city. The Commerce
has capital and surplus Of $9,000,O0e
and deposits Of 500 ,239 900.
When asked James M. KempeN
president of the Commerce Trust Co,
regarding his attitude toward the neH
banking set-up which seems to be ex,
panding so rapidly throughout the coun.
try, he replied:
IT have not taken any arbitrary posi-.
ton in the matter. It Is dificult for
any one to predict what definite trend
banking viii take In the future. We are
watching the movement with the very
greatest interest would not care to
say just at present what my future
attitude will be. It seems to me that
no banker who has observed conditions
in the past five years can fail to realize