Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-12
POLE WOULD ADD
TO BANKING ACT
Tells Congress Amendments
Are Needed in Connection
With Branch Banking.

With Branch Banking.
John w. Pole, controller of the cur
rency, in his annual report to Congress,
recommended that the McFadden act
be amended to incorporate the follow
ing:
THAT national banks situated in
such cities be permitted, with the ap-
proval of the controller of the cur
rency, to establish branches within the
limits of such regional trade areas.
THAT the paid-in capital stock Of
such national bank shall be not less
than 100000, and that the ratio Of
capital and surplus to deposits shall be
maintained at not less than l to 10.
The controller of the currency would, In
his discretion, require larger capital
iZation.
THAT the national bank consolida-
ton act be amended so as to permit any
bank situated within the trade area to
consolidate, with the approval of the
controller Of the currency, under the
national charter, but the controller Of
the currency should be specifically en-
powered to disapprove any such con-
solidation upon the ground that 1t
might result in an undue concentration
of banking capital within the trade
area.
THAT there be conferred upon the
controller of the currency such visitorial
powers as may enable him to examine
into the affairs of any corporation
which owns or controls the majority of
the stock of any national bank.
Stock Ownership Restricted.
"That no corporation be permitted to
own the majority of the stock of any
national bank If 1t at the same time
owns the majority Of stock of State
bank.
THAT no national bank be permitted
to make loan upon the security of the
stock of corporation which may own
the majority Of the stock Of such ma
tional bank"
It would be highly desirable to pre-
serve as much as possible the element
of local autonomy in the establishment
of trade areas, provided the areas are
not 50 small as to sacrifice the princi-
pie of economic diversification.
The new policy of branch banking
should be uniform in its operation
throughout the Nation, thereby giving
to every rural community an oppor-
tunity of access to strong city banking
facilities under national supervision and
control.
Elements in Trade Area Banking.
It may, therefore, be said that the
following elements contribute to the
ing:
"a The principal objective is to
strengthen banking operations in the
rural communities.
(2) A secondary but not less positive
result would be strengthening OF the
entire banking structure OF the country:
90 The surrounding geographical
territory economically tributary to a
CITY and for which such city provides
the chief market and financial center
NAV be described as its trade area:
"a Every city may be said to have
a trade area, but not every trade area
is suitable for branch banking purposes.
(5) In order to lay the basis for
sound system of branch banking q
trade area should embrace within lts
physical limits diversiflcation OF eco
nonlic activities in order that nanK
operating branches throughout It's ex-
tent may also acquire dlverslncaCloh
in the security for its loans.
(6l For branch banking purposes,
therefore, only those trade areas should
be chosen which surround cities lmpor-
tant enough to be the commerclal cenCer
of a territory sufficient to meet the re-
ouirements of economic diVerslncatlon'
Status Of City Banks.
IN Since the trade area under dis
cussion Is a regional economic area LOT
banking purposes, the status OF the
banks in a given city will furnish
elIide to its character and extent, par
ficrlarly the number and location OF
the surrounding country banks for
which they are the principal bank CORE
Cs1 It would be a difficult under
taking for a committee composed OF the
three oficials mentioned to select the
principal commercial centers OF the
country for branch banking purposes.
90 Upon the selection OF such Guy
the determination of the boundary Inn
its of its trade area would be question
of fact and could easily be discovered
through a study of It's banking opera
tions and its general trade influence
and position.
The enactment of legislation vesting
authority in the controller of the cur
rency to examine security or investment
companies affiliated with national DanK-
ing associations Is recommended. AncoC
companies are generally so closely allied
with the national association that IL Is
not always possible to ascertain the true
condition Of the national association
without knowing the exact condition OF
it's affiliate.
As to Fiduciary Powers.
The controller renewed his recon-
mendation for amendment to the law SO
as to provide that the exercise OF ndu-
ciary powers shall be one OF the corpor-
ate powers of a national banking assoc
citation, subject to the existing limita-
lions in regard to the State laws. Also
that the controller be given supervision
over national banks going into volun-
tary LIQUIDATION Under the present
law, the controllers authority is limited
to the appointment Of receiver, provid-
ed a bank in liquidation should prove
to be insolvent Further, that 1T be
made a criminal offenSe to maliciously'
or with intent to deceive, make, pub
lish, or circulate any false report con-
corning any national banks or any other
member Of the Federal Reserve system
which imputes insolvency or unsouno
financial condition, or which may tend
to cause a general withdrawal OF de"
posts, or otherwise injure the business
or pood will of such O bank.