The daily worker. [volume] (Chicago, Ill.) 1924-1958, 1931-11-07
Agitators' and
Propagandists'
Column
Capitalization of Financial
Power Increasing

WIIEN the National City Bank absorbs the
" Bank Of America New York;, it marks one
more step in the Capitalization of financial power
which has gone on rapidly during the two years
OF capitalist world crisis
This merger was arranged by Lee Higgnson
& Co, old International banking house in Bos-
ton, who last month took over control of Gil
anninis Transamerica Corp, which in turn con-
trolls the Bank of America New York;. Giannini
is still fighting for his biggest bank--the Bank
of America (San Francisco)-but in New York
this upstart California banker has been showed
out of the picture.
National City Bank of New York is the Sec
ond largest bank in the United States, out
ranked only by Chase National Bank 1t is not
one of the five New York banks controlled by the
Morgan group but it is clearly within the Nor
gan sphere of influence. Merger with Bank Of
America will give the Lee Hgginson controlled
Transamerica Corp. nearly 9 per cent of the
National City Bank stock, which is said to be a
larger block than is held by any other company
or individual Thereby the forces friendly to
Morgan will be greatly strengthened on the Ma
tional City board for the house of Lee, Higgin-
son & Co.. is an old ally of the House of Morgan.
This latest move is the third obvious step this
year in the expanding power of Lee, Hgginson
which is one phase of the widening of Morgan
influence. In April, the leading Lee Hgginson
partner, Frederick w Allen was added to the
board of the Chase National Bank. In June
the foreign telephone interests of the Swedish
Match Trust and the International Telephone
g. Telegraph Corp. were merged; Allen, as
American banker for the Swedish Match Trust
was added to the board of the Morgan-controlled
I. T. & T. All these developments have meant
$50 H. .%s,,as -
power and tightening of the web which binds
together the largest New York banks
Financial power has also been increasingly
concentrated during the crisis by failures and
suspensions among weaker banks. Ever since
the war there has been a high ratio of bank
failures, but until the crash of 1929 these oc-
Cured chiefly among small rural banks During
the past two years national banks and city banks
belonging to the Federal Reserve System have
also been going under.
So in 1890, the bank suspensions numbered
1,345 and involved S64,715,OOO of deposits. In
the first eight months of 1881, they numbered
932 and involved s69S,sl6,Oo0 of deposits That
the crisis is reaching in toward larger banks is
clear from the increasing amount of deposits in
Volved in each suspension, rising from an aver
age of s365,o00 per bank in 1929 to s645,OOO per
bank in 1880 and s75p,0oO per bank in 1881. But
as yet, no first-class bank has failed
Several bank mergers have been carried
through as a safety measure against failures.
This was dramatically illustrated in Chicago
during hectic week of June, 1881 The Nor
gan-controlled First National Bank (Chicago)
prevented the failure of the Foreman banks by
gobbling them up in a hurry The same week,
the Central Trust Co.--controlled by the Dawes
family and indirectly linked with Morgan
merged with the National Bank of the Republic.
Obviously mergers Of big banks and failures
of weak banks have greatly increased the per-
centage of total banking resources concentrated
in the Is or 90 largest that head the list. But
this is only part OF the story of increasing CEN
radiation of financial power during the crisis
Banking failures and business failures have
gone hand in hand. In manufacturing, min
ing, and trade, the crisis has thrown out hun
dreds Of weak concerns and left in existence
only the stronger companies tied to the stronger
banks.
Also where small investors have been able to
salvage any capital from the collapse in security
values thousands Of them have disposed of In
dustrial holdings and either deposited their small
capital in the strongest savings banks or turned
to investment in insurance. Total resources OF
savings banks have actually increased since the
crash of 1929. This piles UP more capital to be
controlled by the leading financiers and their
ieutenants who make up the boards Of trustees.