Evening star., 1930-05-21
OBLIGATION SEEN
IN BRANCH BANKING.
A. B. A. Committee Finds
Views of Bankers Changing
on Disputed Question.
Special Dispatch to The star.


forecast in q review and report COW
ering group, chain and branch bank
ing developments prepared by the Eco
nomic Policy Commission of the Amer
lean Bankers Association and made
public here today by the chairman, r.
s. Hecht, president Hibernia Bank and
Trust Co., New Orleans, La. The re-
port, however, after referring to the
proposal of Controller of the Currency
j. w. Poole that national banks be
given branch banking powers within
the trade areas surrounding their
places of operation, expresses the opin-
ion that I'VE do not believe that So
called 'trade-area' branch banking is
likely to gain the support of any large
percentage of the banking fraternity"
"The Economic Policy Commission
feels that the most important develop
ment that has affected American bank
growth of multiple banking organiza-
tions in the form of group, chain and
branch banking systems" the report
says. I'VE present this report as an
unprejudiced economic study and have
no theories. or policies to urge at this
time"
Rapid Changes in Banking.
Rapid changes in the banking world
along the lines of failures, voluntary
liquidations, amalgamationS and new
organizations have caused substantial
changes in respect both to group and
chain banking as well as to individual
unit banking during the past six
months, the report declares.
Ia f10-
tions have taken in not only many ad-
ditional unit banks, but also q number
of smaller bank groups as q whole"
the report says. There have also been
numerous consultations between strong
bank groups. Furthermore, many in
stances. have come to our attention
where consultations of groups have
been followed by consultations within
the group of banks that duplicated or
oversupplied facilities in given local.
tiles. These have been factors tend
ing toward stronger, more compact
banking, whether from the angle Of
individual unit banking or from that
of group or chain organizations.
They have also tended to increase
the volume of banking resources now
held in group and chain systems at a
faster rate than the increase in the
number of systems or of member banks.
garding 269 group or chain systems,
comprising 1922 member banks and
| SIS, ,285 100000 In aggregate resources.
There are only six States and the Dis
trict of Columbia where We do not find
any group organizations.
I'VE have been in touch with the
managers of many important groups.
Aside from the obvious economies of
centralized operation and control, a
Of Ornns loo hno dc
very frankly tell us that they do not
feel that the system has been in opera
tion and tested long enough to justify
them in making positive or sweeping
statements as to It's advantages or dis
advantages as Compared with unit
banking in the larger economic view
point.
Advantages Are Noted.
"The banking and currency commit
tee of the House, which is conducting
an investigation into banking develop
ments, has called a number of operating
heads of some of the great group
systems. These men declared that they
found, under certain conditions. definite
operating and economic advantage in
both group and branch banking over
independent unit banking. Some
thought group banking was only a
transitional stage, that branch banking
was preferable and If it were permitted
| on an extensive enough scale they would
change their groups over to branch
systems. Others held that group bank
ing was preferable as being more flex-
ible and maintaining greater local indie
pendence and contact.
Some held that the ideal plan was a
combination of the two, with group
bank units for localities strong enough
to support complete banking institutions
and with branch offices extending fur
ther out into the smaller places requir-
ing banking services but not large
enough to support complete banks.
banking declared that nevertheless they
! believed there would always be room for
vigorous independent unit bank COM
petitorS.
The comptroller of the currency
recommended that national banks be
given branch banking powers within
trade areas His theory is that this
would strengthen the national banks,
extend the benefits of city banking to
| country districts and allow national
banks TO adapt themselves to modern
regional economic developments evil
denced in the spread OF group and
chain banking in some sections of the
country through what might be desig-
mated as economic trade areas, COM
| prising sometimes several States.
Gov. Young's Views.
"Gov. Young of the Federal Reserve
Board appeared to be in general agree
/ ment with the comptroller. AS to null
tiple banking, he said that there were
"a ,645 banks and 3,547 branches, total
of 28,192 banking Offices: that in this
total, $3.50 offices were either branches
or bank members of groups or both
leaving 81 ,839 banking institutions that
might be definitely termed independent
unit banks. having no branches and
in no way connected with group aftilia-
tions. He said all the banks had total
loans and investments of $58.500, ,000, 900.
of which the group and branch systems
held $30, 900 900 900, or more than half.
While he expressed himself as in favor
of 'trade-area' branch banking, he was
| opposed to Nationwide branch banking
at present. However, he said that, ul-
timately IL bankers became trained and
experienced In the larger technique of
trade AREA banking he thought It
would in time evolve Nation wide
branch banking under control of rela-
lively few banks, but he did not believe
this would mean monopoly or lack OF
competition. He favored branch over
group banking, which. he said, how
ever, represented an economic develop
ment along 'trade-area' lines and would
spread unless checked He did not ad-
vocate a check unless something else
were substituted, and he thought trade
area branch banking would serve this
purpose.
1.-THE inquiry is now in the stage Of
gathering information as to the major
issues. Branch and unit bankers are
now being heard. The indications are
that the issue as to branch banking
will not be joined for some time. 1t
would. therefore, seem best to wait be-