Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-12-22
CONTROLLER URGES
MORE CHAIN BANKS
Advantages to Rural Sections
Cited in Annual Report
of Official.
BY the Associated Press.

6y inc AbSOCtaJeu TEeBB.
Urging the extension of branch bank
ing by national banks as q way to as
sure safe and sound system to rural
communities, John w. Pole, controller
OF the currency, declares in his annual
report that such development would
be Of advantage to agricultural COM
munities.
At the same time the controller
pointed to the growth of group bank
ing, in which holding companies have
acquired the stock Of several banks
and the defections Of hanks from the
national fleld to seek broader privileges
under State laws rs reasons why the
national bank laws must be 1iberalized
He said that total resources Of all OF
the Is. 800 banks In the country on last
increase of &54S, 1T, 900 over the previ-
Gus year. National banks, numbering
1906, were shown to have total re-
sources OF SAT ,44O, 228, 900. q decrease
OF 81 ,068, 000,0 900, while the number OF
all banks had decreased in the year
OF the total resources, he continued
$50 banks in the cities had resources
OF $50, 400 DOC, 900, while three-fourths
Of the banks Of the Nation were In
country communities and claSsed as
-,
said, operate with small capital funds
and economic developments since the
war have had the effect Of decreasing
their opportunities to operate at q
proflt.
Country Dep0SltOrs Suffer.
On the question OF bank failures,
Pole said that no important failures
mad occurred among banks in the larger
cities between last January / and No
vember !, and that whereas q deposit
tor IN q large city bank, whether a
wage Garner or business man. has had
Iuil protection, the depositor In the
small country bank has suffered Sc
verely from the inability OF so many
banks to meet their deposit liabilities. =
III Is cause for immediate concern
tnat the operating conditions faced by
country banks show no prospect OF i'm
proVement under the present system
Inere are many country banks nov
operated at loss and many others on
eratlng upon earnings insufficient to
JUSTIFY their capital investment. :
comprehensive study OF the banking
sltuAUon Tor the past nine years clearly
anulcaGes tnat the system Of banking
th- rurGI communities has, broken down
tnrough causes beyond the control OF
munity.' -~~A 0oiiA
Pole said that the causes were OF n
paSlc nature due largely to the fact that
independent local utility and industrial
organizations have moved toward 4
stronger and more centralized form of
operation. which has curtailed the
country banks opportunity for DIVERSE
Tying and extending their business.
Must Hold ADVANTAGE.
Because OF this. he said, group bank
ing had sprung up, with local holding
companies controlling the stock in a
group OF banks. To remedy this situa-
tion, he urged that national banks be
permitted to have branches within
Sne!r Heoe areas, but not beyond the
limits OF the Federal Reserve district
m which they are situated. Such leg
HIAtlOn, ne SAID, must be such as 70
State banks.
The announced legislative policy Of
the so-ealIed McFadden bank act of
FEBRUARY 26, 1927, was parity between
the national and State systems" Pole
continued. The purpose of the bill
was to make the charter powers of ma :
tional banks approximately equal in
operating advantage to those of state
banks. Nearly three years of operation
under that act has demonstrated that
It has failed Of its purpose In this re-
Spect. . Ss
The proposal for the extension of
branch banking which Is here made
would have the direct effect Of estab-
Isnlng . strong system Of banks in the
rural districts, and indirectly It would
lead to the gradual restoration of the
national banks rs the primary system
OF commercial banking In the country. !"
Pole also recommended that Con-
gress enact laws to bring the holding
companies for group banking under
Federal supervision.