Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-13
Money of the Nation
Continued From First Page.l

IN some Darts OF the country PIOD~
lem is more apparent to the people
generally than in others. For instance,
in seven States more than 40 per cent
of all the banks in existence in 1870
have failed In six States, during the
last 10 years. between Is and 40 per
cent Of the banks nevc failed. In 20
States about enc bank cut of every ten
has failed since 1920. Most Of these
banks have been country or small town
institutions. The big city banks have
been growing and prospecting. One group
of banks, under single control, made
profits amounting to nearly $S1 ,OOO,O QUO
last year. Vast profits, amounting to
many hundreds OF millions Of dollars s
have been made by other big city banks,
trust companies and their investment
subsidiaries.
In New York City, as this Is written.
the asking price for share OF the STOCK
of one bank is $3,600-with only"
$500 bid! Another banks stock Is SELL
ing at $500 a share. Throughout the
country in the larger cities bank stocks
are selling at sums ranging from $500 to
$1,000 for shares the par value Of which
is only 500
That is on2 side of the picture. Ordi-
narGy 1t would not concern the man or
woman who uses bank merely for the
purpose Of cashing salary check.
Other Side to Picture.
But there are other sides to the bank
ing picture. Unless they are seen and
understood by our people generally and
an effort Is made to remedy the defects,
the consequences to the Nation as
whole will be nothing less than disas-
trous. And when say the Nation Ns
whole" do not mean the bankers or
the big business men of America, but
the vast majority of our more than
120,000,000 people.
am perfectly willing to be termed "a
specialist in apprehension" If only my
efforts to point out the undeniable facts
of the banking situation have the effect
of awakening public interest in a sub
ject that has been neglected.
We have looked at the bright side of
the picture in the growth of the city
banks and the piling up of their enor-
nous profits for a comparatively small
number of stockholders. Now let us look
at the drab facts which affect the great
bulk of the banks and their customers.
Three-fourths of the country's $4,000
banks are located in the smaller com"
munitieS of the Nation. These banks
should serve, and efficiently serve, mil
lions upon millions of our people with
comparatively little risk of loss through
failure of the institutions. Do they?
Let us look at the facts.
In the first place, OF the total bank
ing resources of the United States
amounting to about $4,000, 900, 900,
nearly one-half 1888, 400, 000,000) are
held by $50 banks. In other words, half
of the banking assets of the country are
in The possession of one one-hundredth
of the Nations $4,000 banks. In two
dozen banks in New York City there are
concentrated practically one-sixth Of all
the countrys banking resources. The
capitalization of these "a banks is almost
as great as of the more than 10000
banks situated in towns of 10000 per-
sons or less.
Enormous Concentration.
tration of banking resources such as we
thought We had guarded against by
the enactment of the Federal Reserve
act in 1913. The great financial strin-
gency of 1907 and 1908, when money
currency of any kind-waS practically
unobtainable in many parts of the coun-
try, when business throughout the Ma
ton was Frustrated produced an over
whelming demand from our people for
banking reform. Take the money con-
troll out of Wall Street" was the cry to
which Congress responded several years
later with the Federal Reserve act. That
act has served a useful purpose-it has
given the Nation an elastic" currency,
so that there has been no grave Short
poses. But it has not touched the roots
Of some Of our banking evils.
In the nine-year period from July,
1920, to July, 1929, approximately 5000
banks failed or suspended. These banks
had deposits of $l,500,00 900. Most of
the failures were in agricultural sec
tons. Yet in the great and generally
prosperous States of Ohio. Indiana, ILL
nois, Michigan, Wisconsin, Minnesota,
Iowa and MisSouri-not zone crop"
States, like Georgia or Kansas, with
their cotton and wheat-more than l.
400 banks closed, with resultant loss
and suffering to vast number Of peo-
pie.
Outside the great cities there were
thousands of banks which, while not
falling, were giving little evidence of
the prosperity Of the big metropolitan
institutions. In 1927, for instance
generally good business year through
out the country-nearly 1000 national
banks operated at loss and an addi-
ttonal 1000 earned less than 5 per cent.
Together, these amounted to about four
out OF 10 OF all national banks.
Legislative Question.
In recognition of some of these con-
ditions, in order to strengthen the ma
ttonal Bank and Federal Reserve System,
Congress enacted three years ago a
banking bill which I introduced in the
House Of Representatives. For nearly q
year before enactment there was a
deadlock between the House and the
Senate over 10 words in the bill as it
passed the House. Those words, If en-
acted into lew, would have greatly re-
strtcted the establishment of branches
by banks. In the end the action of
Congress virtually was to permit ma
tional banks to have branches where
the States sanction branch banking
nhNyn In tnI ly4a AHa0k
big cities should have big banks, under
national as well as State charters
But Congress did not thereby give its
approval to the kind of banking groups
that have been born during the last few
years, and which constitute one Of our
great national problems.
The issue now being tried before the
committee on banking and currency of
the House OF Representatives is, in eff
feet, whether the head of q great bank
Ing group, sitting at his desk in Wall
street, shall be permitted to say to John
smith, farmer in South Dakota, I'VE
Will not permit your bank to lend you
money" or say to Richard Roe, nier-
chant in California, You must cut
down your loan and pay a higher rate
OF interest" It Is this issue which, in
the final analysis, will have to be tried
by the American people through their
Representatives in Congress.
The committee of which 1 have the
honor and privilege to be chairman is
proceeding under the authority Of q
resolution which I introduced In the
House of Representatives and which
was passed by that body on February
10, 1880. It authorizes study and in
vestigation of group, chain and branch
banking, to be followed by q report and
recommendations for legislation.
Let us see how present tendencies in
banking may affect the man or woman
in the ordinary walks Of life. Under