Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-20
BRANCH BANK SCHEME,
NOT A NEW ONE in u. S.
Relative Merits of Present Trends and
Contentious Discussed-Present
Problem to Congress.

lawful operation at the time of the
passage of the McFadden act. In adj
dition, a national association, providing
the State law Of the particular State
where the national bank Is located per-
mits State banks to do So may establish
branches within the limits of the city
in which the head Office is located,
provided that the city possesses q pop
ulation Of 100000 or more and provided
that the permission of the controller
of the currency has been secured No
branches, however, may be established
beyond the corporate limits of the CITY,
even though the State law might grant
State banks such permission.
Such are the provisions relative to
the establishment Of domestic branches
by national banks. In the foreign field
a national bank, with capital and
surplus of 100000 or more, may
establish branches wherever the for
eign law permits and with the assent of
the Federal Reserve Board. However
restricted they may be at home, ma
tional banks are given the entire foreign
field in which to ply their trade, I'M
restricted so far as the laws of the
United States are concerned. That the
McFadden act did not settle the prob
lem Of branch banking is evidenced by
the hearings now in progress before the
House Of Representatives committee on
banking and currency and by the wide
spread discussion in the public press.
Statewide Policy Adopted.
In nine States and the District Of
Columbia Statewide branch banking Is
permitted, but only in California have
extensive or significant Statewide
branch systems developed. On the 30th
of June, 1929, there were 81 banks in
California, with 1851 branches, Of which
531 were located outside of the city in
which the head off1ce was located. In
IL other States branch banking Is per-
mitted within restricted areas, within
the home city Of the parent bank or
within contiguous territory. Included
among this group Is the State of New
York, with 106 of its banks possessing
682 branches. Twenty States and the
branch banking area, while in the re-
naming 28 States branch banking is
not permitted either explicitly by law or
by court decisions or by administrative
rulings.
Diverse as are Federal and State laws,
manifold as are the limitations on
branch banking, the fact remains that
branch banking does exist in the United
States and that public interest is more
generally aroused on this subject than
ever before. On June 80, 1929, there
were 25,115 banks in the country; of
these 818 operated a total Of 3,440
branches. At least half of the bank
ing resources of the country were in
cluded in the branch systems. There
is very definite geographic concentra-
ton of the branch systems. More than
half of the branch offices are located
in three california, New York
and Michigan. With the exception Of
California, Statewide branch banking
has made little Roadway, and about
two-thirds of the branches in operation
in the United States were located in
the home city of the parent bank.
Branch Banks and Chain Banking.
The legal prohibitions and restric-
tons respecting the establishment Of
branches have been a most important
factor leading to the development Of
chain banking, sometimes characterized
as bootleg" banking. There are many
types of chains: There are those owned
directly by banks or indirectly by afili-
those controlled by individuals, by
groups of individuals, by holding COM
panies and, in a few cases, by invest
ment trusts organized to deal In bank
stocks. A very exhaustive study Of the
Federal Reserve Board revealed that on
June 30, 1929, there were a total of
$50 chains, operating total of 1861
units. These flourish particularly In
those States In which branch banking
Is prohibited or is restricted to a linn
tied area, which apparently is proof Of
the economic superiority of branch
banking, which viii take the form Of