Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-28
THREAT TO GROUP
BANKING is SEEN
Wisconsin Legislative Pro-
posaI Would Limit Member
ships in Clearing Houses.
BY C. NJ. UPHAM.


The first serious legislative threat
against group and chain banking is
contained in a bill which has just
been introduced into he special session
of the Wisconsin Legislature by the
Interim Banking Committee, with the
approval and support Of Gov. Philip
La Toilette.
The bill provides for local Clearing
House Associations, composed of both
State and national banks. Member
ship would be denied, however to
banks 10 per cent CT more of whose
stock is owned by holding company.
All of the privileges within the control
of the State would be granted eX-
clusively to those banks that are mem
bers of the Clearing House Assccia-
tons"
Group Bank Organizations.
The two principal group bank or
CARNATIONS that operate In Wisconsin
are the Wisconsin Bankshares Cor
pcration in Milwaukee and the North
west Transportation Ct Minneapolis.
The former owns the stock of some
SO banking institutions in the State
and the latter controls seven. The
First Bank Stock COOPERATION of Min
neapolis has stayed out of Wisconsin
partly because of the possibility of adj
verse legislation of this character, it is
believed.
If the proposed legislation is en-
acted. even greater interest will center
in the banking proposals that the Glass
subcommittee viii make to Congress
here shortly. If, as is anticipated,
Senator Glass committee recommends
the enactment of law permitting ma
tional banks to engage in Statewide
branch banking, regardless of State
law on that subject, the wisconsin
BankShareS Corporation will be readily
convertible into branch banking sys-
TEN, with the First Wisconsin National
Bank at the head. Unless an even
more extensive grant were made, per-
hitting the operation of branches
across State lines, the Minneapolis
group would have to choose between
having its Wisconsin units diScrim-
mated against in the matter of priv
ileges" or relinquishing control Ct
them.
Governors Message.
Gov. La Toilette in his message to
the legislators pointed out that the
majority of them and all of the State
officers were elected upon platform
pledging them to use the powers
possessed by the State to enable the
people of Wisconsin to keep control Of
the credit which they have created"
The issue involved in chain banking,
the Governor maintains, is who Is to
own and control the money that the
people produce. He insists that the
ownership of banks should be in the
hands of individuals who primarily re-
side in and are part OF the community
life whose money is deposited IN their
banks"
One of the substantial evils of group
banking. the Wisconsin Governor de-
clared, is that it introduces stock pro-
molten into the ownership OF banks.
The enactment of the proposed bill, he
claims, would mean the elimination of
stock speculation and promotion from
banking in Wisconsin.
Gov. La Toilette attacks the parent
bank of our largest chain system" by
the assertion that it has on deposit from
other Wisconsin banks nearly 10 times
as much as it has loaned to other Wis
consin banks.
Bankers who have considered the pro-
posal, prior to its introduction in Wis
Consin, are doubtful as to how serious
the handicap would be to a bank not
a member of a local clearing house
association, by virtue of having priv
neges" withheld.
Congressional Action Watched.
There has been no definite statement
on what these privileges" are. The
one usually in mind is designation as
dep1sitory for State funds. Under pres
ent conditions this is not regarded by
most banks as a particularly valuable
privilege, in view of the fact that secur-
ity must be posted for such deposits and
that interest must be paid on them
Chief interest here centers in the
effect which this action by a State
affecting the activities of a national
bank will have upon Congress when it
considers legislation enabling the ma
tional bank by branch authorization to
circumvent the State.
(Copyright, 1917