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.

dustries for some time to come will be
associated with the exploitation of the
natural resources. For year at a time,
In the Western branches, loans may ex-
coed deposits. Instead of drawing
funds from locality the Canadian
banks have pumped money in-which
means that the farmers NAV borrow
larger amounts and at lower rates of IN
terest than farmers in comparable sec
tons of the United States.
A branch system enables the most eff
fective utilization of credit resources.
The farmer in Canada requires borrow
ed money principally over the growing
season and repays his banker In the
Fall. The funds then can be used TO
finance the lumber operator, who eouips
his camps In the Fall and repays his
banker later, when the cut is driven
down the rivers to the sawmills The
WOODEN goods manufacturer produces
throughout the Spring and Summer
months, but does not obtain the pro-
ceeds Of his sales until the following
Winter, so that his financing will dove
tail with that of the cotton goods fac
tory owner.
The fact that there are but few banks
In Canada-11 In all, with doing
the bulk Of the business-has led
many persons to raise the charge Of a
banking monopoly. Few understand
what this means. but all are supposed
to shudder. A banking monopoly might
be supposed to express itself in extor-
tionate rates Of interest or in the
favoring Of one industry or set of Dor
rowers against another. Such policies
would, Of course, from the point Of
view Of the bank, be suicidal, and In
neither does monopoly express itself In
Canada.
Rates Of Interest Differ.
Rates Of interest are low-lower than
In the United States-and there Is no
proof that any section industry or in
dividual has not had the credit which
could be legitimately used Rates Of
dividends on Canadian bank stocks have
ruled lower than those for national
sanitation of the absence of a n1onop-
oily.
The size Of the Canadian bank makes
possible q certain amount of financial
backing. In which aid has been extend
ed to the promotion of railroads, pulp
and paper industries and fisheries. It
Is impossible for the average bank In
the United States to give the same sup
port or direction to business expansion.
Under the branch system capital may
be modified and applied to aid COM
mun1ties and projects on the frontier
of business where opportunities as we'll
as needs are the greatest.
A further advantage of the Canadian
system of branch banking is that the
banker becomes familiar with economic
conditions in all parts of the Dominion,
with a national rather than a sectional
point Of view. The typical banker is one
who has entered the employ of his
institution as young man, is advanced
to be the manager OF a small branch,
is shifted to larger unit, serves some
time abroad and finally Joins the head
office staff with an unbelievably
thorough knowledge of conditions and
men In the Dominion. With his promo
tions have come increased responsible
ties, for which his training has been
excellent preparation.
Restrictions Confront Banker.
As q branch manager he probably
possessed the discretionary power of
lending from 81 900 to S5,000 for loans
up to $4,000 he would refer to the
district superintendent Of branches and
for loans above this sum to the head
Office. Such applications may be passed
upon quickly. since those at the head
office are well acquainted not only with
economic conditions throughout the
Dominion, but with every business man
of Importance in Canada. Credit is
much more Of a personal matter than
would be thought possible in a branch
system. The typical American banker
is completely involved in the local stu
alton and is unable to see developments
in his own community in their true
perspective in relation to developments
elsewhere. He becomes involved In the
local speculative hysteria, whether in
wheat, real estate or securities, until
too often the whole credit structure
collapses.
The corrective of the situation leading
to the bank failure epidemic. of the
sectional disparities in interest rates
and In the amount of available credit
is the development of branch banking
systems under suitable public super
vision and regulation. To be most effec-
tive branch banking should be extended
over an economic area which is so
varied In its economic interests that OPP
portunity will be presented for the shift
ing about of funds, for the maximum
utilization of credit resources and for
the diversification of loans, industrially
and geographically.