Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-03
PLEA FOR BRANCH
BANKING IS MADE
Former Government Official
Believes institutions Should
Have Less Restrictions.
BY the Associated Press.

BY the Associated Press.
NEW YORK, September 3.-Charles
Wallace Collins, former deputy control
Ter CT the currency. warns that the FED
eral Government may lose all control OF
banking unless national banks are per-
mitted to go into extensive branch
banking, or all banks brought legally
into the field of the Federal Reserve
System.
In book, Rural Banking Reforms, -
Mr.. Collins reports the drop in infiu-
ence Of the national banking system and
the corresponding increase in promi-
nsnce Ct the State banks.
He sees in the Federal Reserve Sys-
tenn the incipient influences that have
accelerated movement which appears
destined to remove commercial banking
from Federal control and supervision
Mr.. Collins mentions specifically the
legislation of 1917 which permitted State
banks to enter the Reserve system under
liberal terms.
National banks may be strengthened
BY legislation permitting branch bank
ing, Mr.. Collins says. SC that a strong
city national bank could possess branches
in rural districts. Inherent and eco
nonnic weaknesses in small rural banks
make them liable to depressing infiu-
erceS in much greater proportion tnan
city banks, he states.
Cause of Difficulties
When city banks get into difficulties,
a. is usually through bad management,
saws Mr.. Collins, while rural banks get
into trouble not only. for that reason,
but because they cannot so easily resist
economic trends. primarily through lack
of 6iversiflcation III investment, which
quickly freezes when small locality Is
struck by slump.
Mr.. Collins believes branch banking
BY national banks would strengthen
better management and the required
diversification.
Viewing the waning influence OF the
Federal Government in banking, Mr.
Collins suggests that "the flow OF
commerce, foreign and interstate. will
be dependent for financial facilities
upon the State-chartered institutions
More than 60 per cent Of the vol
ume Of commercial banking is now in
the hands Of State banks. Under these
conditions. it is conceivable that the
national standard of commercial bank
ing, lacking support. will drop out and
IN its stead will arise 43 local standards
OF commercial banking. each subject
to the exclusive control Of the local
State Legislature.
1T would be natural under such CIR
CumStanCeS that lnere WO1.C ARISE q
great variety of local barking restric-
tons and regulations upon the finan-
cling of interstate and foreign CONNER
cial transactions. such as would COM
pare with the heterogeneous currency
systems in vogue under State authority
In the period following the demise of
the second bank of the United States
and preceding the national bank act.
Permissive Branch Banking.
"The influence. Of the Federal Re-
serve system as now constituted would
not be effective as a means of eStab-
fishing a uniform system of commercial
banking by State member banks, nor
would State banks remain as members
of the system If it were to their operat-
ing advantage to carry on business I'M
der the State law alone
In advising permiSsive branh banking
legislation, Mr.. Collins says the ''condi-
ton of banking in the vast agricultural
areas of the country has become a
national digrace." If national banks
were permitted branch banking rights,
It would mean an evolutionary dtsap-
pearance of unit rural banks.