Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-03-31
BANK CONSULTATIONS
BY FREDERIC J. HASKIN.

merger with the great Brooklyn Trust
Co. The ideas stirring in the minds Of
the bankers at the head Of these in
situations may well be imagined The
National City was first, the Chase sec
ond and the National Bank OF Com
merce third. Now the National Bank
of Commerce, through its merger with
the Guaranty Trust, overtops them all.
II consultations Of this sort take
plaSe In New York, then Pittsburgh,
Cleveland and Chicago will almost Ger
tainly follow suit The Continental and
Commercial National Bank of Chicago
now is the largest bank outside of New
York. BY making judicious mergers 1t
might attain to the New York class.
This is the more probable in view of the
fact that Chicago Is engaged in q strug-
gle to become an out-and-out rival Of
Wall Street as money center bringing
the Chicago Stock Exchange into direct
and effective competition with the New
York Stock Exchange in bidding for
business.
Status Of Trust Companies.
These developments have broad ma
tional interest, for tremendous potential
effects upon the Federal Reserve system
are involved. It Is thought that, as the
result Of the latest New York CONSOLE
dalton, the National Bank of Commerce
will yield UP its national charter and
become Q trust company. Trust COM
panies may engage in more different
kinds of business than national banks.
This would not necessarily mean with
drawal from the Federal Reserve Sys-
tenn, but the tie would be looSer.
A trust company may withdraw from
the system at will; a national bank
must, by law, remain a member. Should
consultations result in general disap-
prevail of Federal Reserve System poll
cies, and, as trust companies, the great
merged banks withdraw from the sys-
tenn, its power to control credit would
be very appreciably diminished. Colos-
sal sources Of credit would be utterly
beyond its control.
There are other reasons why this
two-billion dollar bank just created
should interest all Americans. Both
have intimate associations with the
National Government.
The National Bank Of Commerce be-
gan business In 1889 as the Bank OF
Commerce. As the Bank Of the United
States had just previously closed its
hectic career, the new institution ex-
pected to become the fiscal agent Of
the United States. AS matter Of fact,
it has consistently worked closely in CO.
operation with the Government. espe-
cially in the great financial panic OF
1857, and again during the Civil War.
when President Lincoln placed much
reliance upon its financial aid to the
Union cause. 1t gave full cooperation
to the Government in the World War
as well.
The Guaranty Trust Co. was or
ganized as the New York Guaranty &
Indemnity Co. in lS64-during the Civil
War. It grew steadily, and in 1896
opened a branch in London, being the
first American financial institution to
open a foreign ONCE. About 1910 1t
came under the influence of J. P. Nor
gan, and about that time absorbed the
famous old Morton Trust Co. and the
Fifth Avenue Trust Co. Growth then
was very rapid. During the World War
the Guaranty engaged in widespread
activities, but was particularly active in
the selling Of Liberty bonds. 1t holds
the record Of selling more Liberty bonds
In four out OF the five drives than any
other financial institution In the entire
Nation.