Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-23
PLEA FOR RESERVE SYSTEM
MADE BY RICHMOND BANKER
Oliver J. Sands Comments on Growing
Popularity of State-Organized Insti-
tutions-Urges Unified Plan.
BY the Associated Press.

BY the Associated Press.
OLD POINT COMFORT, Va, June
22.-The threatened disintegration OF
the national banking system in favor OF
banks organized under State laws and
the importance of supporting the Fed
eral Reserve system were stressed by
Oliver ]. Sands, president Of the Amer
lean Bank d. Trust Co., Richmond, In
an address prepared for delivery today
before the thirty sixth annual conven-
ton Of the Virginia Bankers Associa-
ton here.
IF we are unable" Mr.. Sands de-
clared in his address, ito prevent the
gradual disintegration Of the nation--l
banking system on account Of the
greater attractiveness Of banks organ
ICED under State laws, we must en-
deavor to bring these State banks into
tenn and to get as nearly as possible
uniform State laws governing the bank
ing business"
Unified Banking System.
Mr.. Sands address dealt with the
future of the national banking system,
the maintenance of the Federal Reserve
system through voluntary membership
Of State banks, and "a more reason
able distribution Of the earnings to
members Of the Federal Reserve bank. ="
In speaking Of unified banking sys-
tenn Mr.. Sands said: "A banking sys-
tenn with units throughout the entire
Nation which derives its power from
the same source, such as our national
banking system, Is believed by many to
be for the best interest Of this country.
It Is directed and operated under laws
and rules established at one central
source, and in case of emergency or
of necessity united action can be gotten
for the relief and benefit Of the whole
country. Therefore, the problem Of the
perpetuation Of the national banking
system has been very important and
serious one to many.
III this problem could be solved,
there could be no further question as
TO the Federal Reserve system maintain
ing its present position and keeping pace
with the growth and development OF
the country"
There has been, Mr.. Sands said, q
continual drift away from the national
banking system for many years.
Growth Of State Banks.
"The growth Of State banks has been
much greater In proportion than the
growth Of national banks" he con-
tinued. I'm 1884 the aggregate re-
sources Of the national banks Of this
country were rs per cent Of the total
commercial banking resources. In 1926
that proportion had dropped to 46 per
cent. So notwithstanding the growth
Of the national banking system In that
period 1t did not grow In proportion to
the growth of the State banking system
THE growth Of banks In the fifth
Federal Reserve district since the eStab-
1iehYnont NJ tha EaAaPal paearya evakav,,
Is probably typical Of the conditions
throughout the country, with the ex-
ception that in many districts where
there are located some of the larger
banking centers, ! am sure that the
proportion Of increase In State bank
capital would be much larger, but in
the fifth Federal Reserve district the
national banks showed an increase from
1914 to 1923 In capital and surplus of
$65 100000. whereas the State banks
have shown an increase in capital and
Of the national banks showed an in
crease Of 13l per cent, while the re-
sources Of the State banks showed an
increase of 1T0.7 per cent.
THE increase" Mr.. Sands continued,
''in the State banks capital and re-
sources Is brought about largely by the
Federal Reserve system being made
available to those banks. Large ma
tional banks consolidating with State
banks and trust companies have re-
tanned the State charters in order that
they might not lose any Of the broad
powers granted under State charters
and to carry on the flduciary business
without legal restrictions, etc. These
large institutions, however, would not
be willing to continue In the CONNER
cial banking field without membership
In the Federal Reserve system"
Reserve Bank Capital.
To provide capital for the Federal
Reserve banks, Mr.. Sands said, every
national bank was compelled to become
ing system and to subscribe to the
capital stock Of the Federal Reserve
bank in q sum equal to 6 per cent of
the paid-up capital stock and surplus
of such bank, one-half Of which was to
be paid in and the other half subject to
cali.
"State banks were given the privilege
Of membership, and by amendment to
the law from time to time and in order
to induce them to become members
they were offered privileges which were
not granted to the national member
banks"
Concerning the preservation Of the
national banking system Mr.. Sands
sa!ds IF 1t is absolutely essential for
the perpetuation Of the Federal Reserve
system that the national banking sys-
tenn be preserved, 1t is most apparent
that some very important and prompt
action be taken to make national bank
charter desirable and attractive, for II
| 1t Is true that there Is nothing left for
the national bank but its profit In cir
culation and the prestige Of being q
national bank we can look forward to
the future disintegration Of that Sys-
tenn"
Unification Of the banking system OF
the country Is possible through the
Federal Reserve system, said the speaker.
I'VE are drifting very rapidly toward
q voluntary membership In the Federal
Reserve system, and 1t should be the
duty of al who desire TO see 1t per-
petuated and to hold the dominating
place In our banking system which II