Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-11
CONGRESS IS URGED
TO Use CAUTION IN
BANK LAW CHANGES
Council of American Associa-
ton Hears Report on Leg
islative Inquiry.
EARLY ACTION ON BILLS
is NOT ANTICIPATED
Further Probe of Branch, Chain
and Group Systems Is
Expected.
BY EDWARD C. STONE.

Extrene care was urged upon COn-
gress in formulating legislation on
branch, group and chain banking by
the executive council of the American
Bankers Association during the Spring
session just held at Old Point Com
fort, Va.
The committee on Federal legislation
reported on legislative progress to date
and expressed the belief that the House
committee on banking and currency will
not press any of the pending bills until
more complete facts have been devel-
oped.
The bankers council took account of
the exhaustive hearings which this COM
mittee has already held, declared that
the banking situation is the most i'm
portant subject now before Congress
and asked that the House committee
extend its present Investigations to in
clude an examination of all side securi-
ties companies investment and bank
holding companies.
A number of bankers expressed the
view at Old Point that Congress will
move very slowly in dealing with the
branch-chain-g group banking question
and its relationship to the Federal Re-
serve system.
Special Report on Legislation.
Harold X. Downing of Troy, N. Y,
submitted the report to the A. B. A
council dealing with legislation as
chairman of that committee. In con-
nection with branch, chain and group
banking, which is now engaging the in
terest of Congress and the banking pro-
fession Of the United States, the report
said:
"A number of bills are pending re-
laLa4g to group, chain and branch
banking, as well as concerning the re-
spective functions of the Federal Re-
serve Board and the controller of the
currency in matters of supervision. The
subject of branch, chain and group
banking is now under investigation by
the House committee on banking and
currency, which has been holding al
most daily hearings and accommodating
a amount Of testimony with respect
toThe changing conditions in our bank
ing system. The pending bills relating
to ali phases of the subject are only
tentative, and it Is our understanding
that no legislation will be recommended
by the committee until all the facts are
FULLY developed"
Immediately following the receipt of
the report Of the committee on legis-
lation the council unanimously adopted
resolution placing the association on
record as favpring "the examination by
the constituted authorities of all invest
ment, security and bank stockholding
companies In which Federal Reserve
member banks capital or deposit funds
are invested"
At present these various types Of Sc
curity companies. many of them affili-
ated with some of the leading banking
institutions of the country, are not sub
ject to examination.
Rights Lead ID. C. Exchange.
Norfolk g. Washington Steamboat Co.
rights led trading ON the Washington
Stock Exchange yesterday, During the
Saturday session there were seven
transactions, involving TAO rights, all
selling at II.
Trading in other issues was rather
quiet. Small-lot transactions in Column
bia Sand 81 Gravel preferred made quite
large transfers for the week In this
stock, which has long been inactive.
Following are the days transactions:
Anacostia & Potomac r. r. 5s-$l 900
at SO.
Capital Traction 5s--$50o at ss1a.
Capital Traction Co.-lo at rs. 10
Norfolk & Wash. Steamboat rts. wi
ITS at II, 100 at II, Is at II, 200 at II,
400 at II, 10 at II, 100 at II.
Potomac Electric SO pfd.-3 at 1922.
Columbia Sand g. Gravel pfd.-10 at
e5, 10 at 95, 10 at 95, S at 95.
Lanston Monotype-l1 at 124.
Capital Traction Cos at rs, S at rs.
Federal-American Co. pfd.-4 at 100.
Lanston Monotype-1 at 124.
Branch Banking Economies.
One of the most timely books that
has appeared in a long time is 1.-The
Economics of Branch Banking" by
Bernhard Ostrolenk, published by Har-
per g. Bros. The first chapter calls
attention to the sweeping changes that
have taken place in the business in
small towns. Ten years ago the inde-
pendent retail stores-grocery, drug,
etc.-were thriving. Today the chain
store has made a tremendous inroad
into The business of the small town,
This revolutionary change has been
q great blow TO the country bank. The
author shows how the individual local
business men were the backbone of the
local banks. The banks served them
faithfully, but the business they once
gave the banks has been severely cur
tailed. The writer believes that the
small banks of the future must rely on
the farming element for a great share
Of their support. And in many Sec
tons of the country the agricultural
industry is in semi-bankrupt state.
he explains.
The author discusses the many OBJ
jections to the passing of the unit
banking system but at the same time
concludes that branch banking must
come and bring the substitution Of
branches of powerful central institu-
tons The whole book Is highly in
structive and is we'll worth reading both
by the opponents and supporters of
branch banking. Furthermore, the
author admits that the unit bank Is
not by any means over In an era Of
mergers.
Bank Service Grows Rapidly.
The proceedings and addresses at the
recent third Southern trust conference
in Montgomery, Ala, bear evidence
that trust service Is keeping pace with
economic and social development be-
low the Mason Dixon line. Since 1900
the total wealth of the South has in
creased by SAG per cent and the value
of its manufactures by $50 per cent, or
In round figures to $l0,372, 000, 900, ac-
cording to the last available census.
In 1908 there were but 166 trust
companies in the South and relatively
few of that number giving earnest at
tention to trust business. Those in
situations, says Trust Companies Maya
zine, which had the pioneering spirit,
the courage, foresight and equipment