Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-10-06
STATE BANKSF|GHT
Chain PROPOSALS
Smaller Units See Encroach-
..ment on Their Territory
- in Pole Plan.
BY JOHN F. SINCLAIR.

OF Pennsylvania.
1t is all very we'll to suggest that the
only contest now in the banking field
is between those who believe in branch
banking and those who do not, but this
is not quite true. The first objection
which will have tdebe overcome is that
which has been raised by State bank
ing officials for a generation. It's i'm
piled in the question which Mr.. Gamer
on raises, and it is further brought out
IN bas relief In the resolutions which
the State bank division of the American
Bankers Association adopted at their
meeting in San Francisco last week.
State bank offlcials, to put it badly,
want the Federal banking officials to
leave them alone, and to work out
their own problems in their own way.
They do not want the national banking
group to gain prestige and power at the
expense Of State banks.
Oppose Branch Banking Plan.
In their resolutions they not only
expressed opposition to the branch
banking plans suggested by Controller
of the Currency Pole, but they stated
that if any committee of experts is ap-
pointed by Congress to study the whole
banking problem they would expect at
least one half of that committee to-be
selected from their membership.
I'VE are not undertaking to pass
laws affecting the national banking
system, nor to do anything that viii
interfere with their carrying on a
friendly strife with us for banking de-
posts. Why, then, cannot they. do
the same by us?" is the way Mr.. Cam
eron puts the case for the State banks.
Everyone knows that the United
States has two systems of banks, one
under national supervision and charter
and the other under State supervision
and charter. The former is not con-
trolled in any way by State legislation.
1t derives its powers from the national
bank act and the amendments made. to
it from time to time by Congress.
State banks, however, derive their
power from the Legislatures of each of
the 48 different States. Some have
more power than others. depending upon
the liberality of the laws. Many States
make very much more favorable ar
rangement for their State banks than
| the national Government has made
for national banks within that State.
So all through the years, since the
Civil War, there has been contest--a
rather vigorous and at times bitter
| contest-between these two opposing
! groups
Has Maintained Prestige.
Up to date the State group has been
successful in maintaining its prestige.
In 1919 the first figures to show a
consolidated and comparative statement
of the banking resources in both groups
was compiled. 1t showed that the State
banking resources Of all the 48 States
amounted to SIS 1855, 900, 900. The ma
tional banking resources at the same
time amounted to but $20,799, 600, 600.
| So the State groups were little over
! five millions ahead.
Tow, 10 years later the State banking
| resources have gone up to S43, 644, 0O0,-
| 600, while those of the national banks
have reached s29, 021 900 900. So the
State banks in resources are over $l4,-
| 600000,0 900 ahead.
To put 1t another way: State bank
resources have increased S17679, 0o0,-
900. during the last 10 years, while the
| national banks resources at the same
! time have increased but 1922 .000, 600.
/ This record shows that the State bank
| resources in the decade just passed
| increased nearly $4,000, 000, 900 mere
than the national bank resources IN
creased.
So the State banks have held their
own. In recent months the drift from
national to State charter has caused
some anxious days in Washington.
Many of the national banks, in the
recent mergers with State trust COM
panies. have given up their national
charters and continued under State
charters.
Worcester County Case.
| The Worcester County case, in which
| it was decided by the United States
Supreme Court that national bank
| would have to receive from the State
mil n
trust, has been largely responsible Tor
| this drift away from national charters.
Two States-California and North
| Carolina-have met the situation by
State legislation.
But how about the as others? Unless
| the Legislatures of these 46 States pass
F., appropriate legislation to meet the OBJ
| jections and difficulties raised by the
Worcester case. It would seem logical
to believe that the drift away from ma
| tional charters would continue.
Controller of the Currency Pole sug-
gested a wider area for national banks
| in which to operate branches, but this
| does not meet the situation so far as
the difficulties raised in the worcester
case are concerned. State action alone
can meet that difficulty successfully.
The State banking authorities, there
fore, would seem to have the upper hand
in determining policy. Congress, of
course, can do a lot to bring public
opinion to bear on any intolerable stu
alton that may arise. -
Compromise Necessary.
Congress might feel. for example, that
the Federal Reserve system was lin
danger. as State banks are not COM
PEELED to join. If the drift toward State
bank charters continues the Federal Re
serve could easily become a shell, dorni-
mated by State action.
Say that the State banks for: some
reason or other decided to withdraw
their membership from the Federal Re-
serve system-and say further, that at
the time they had within their control
more than rs per cent of all the bank
ing assets of the country. Then what?
Obviously, it would make a very en-
barrassing situation for the Federal Re-
serve system.
So before this question of unit bank
ing or branch banking gets under way
very much further, the other one, Just
as important, will have to be taken1in
hand. That IS. a compromise will have
to be reached between those who favor
national bank charters and those who
favor State bank charters.
If that truce can be worked cut
satisfactorily to both groups, then thu
next step can be undertaken.
(Copyright, 1929. by North American News
paper Alliance) 80
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