Western news and the Libby times. [volume] (Libby, Mont.) 1920-1933, 1933-03-30


State Banks the crisis then upon
the nation, 1t has
since become apparent that 1t had
permanent phase that surely is gong
10 carry on far Into the future in the
shape of a bitter controversy. Ihere
Is no longer any doubt that the emer
gency program was based on plan
for a unified banking system for the
country, and that, of course, means
ultimate death for the state banking
structure.
We have long had national BANK
Ing system, made up of financial instie
buttons that were chartered By and I'm.
der the control of the comptroller OF
the currency in the treasury. We also
have had the state institutions that
were chartered by and under the con
troll of state authorities and existing
by virtue of state laws. There has
been long continuing effort TO gel
them together. but always 1t has been
futile because for the most part the
national banking laws were more rigid
and the prerequisites higher than the
state banking laws required.
It Is interesting therefore, to note
how the creation of the federal reserve
system back In 1914 made some In
roads into the state banking field by
providing means whereby those banks
could ioin the national banks In the
federal reserve system. There re-
mained advantages to the state banks,
however. and one of the means used
to offset some of those advantages was
the passage of the so-called McFadden
act In 1927. This allowed national
banks to have branches within the city
where their parent bank was located
Various efforts have been made
since that time to enlarge the branch
banking privileges OF the national
banks. but to no avail. There was an
enlargement of those privileges In the
bill by Senator Glass Of Virginia that
was passed by the senate inthe# last
congress, although 1t died the death OF
rag doll In the house OF represent
atives.
Now comes the emergency banking
law, however. with provisions designed
to solve the crisis In our c0untry's
financial structure but with some 9th.
or sections furthering the interests OF
the national banks. The latter sec
lions were completely evershadowed.
Most people paid little attention to
them. The main object OF the legisla'
ton was to get the banks open. The
bill was put through congress In the
record speed OF one day and the state
banking interests, hitherto Old guard
against new encroachments, were In
position where they could do moth
Ing.
Actually, the situation resulting
from the passage OF the emergency
law, aside from the provisions for
making currency available, Is tire
mendously long step on the part of
the federal government toward sqneez-
ing out the state banks. IL does so by
making available many more adyan-
tages for the national banks and state
banks that are members of the fed
eral reserve system than they ever
have had before. In other words,
state banks which were able to meet
federal reserve requirements could
hardly remain outside Of the system.
Several hundreds of the $4,000 of them
have been admitted to the system In
short space OF time.
There are few officials or members
of congress who will admit that there
Is big drive ON to
For Unified accomplish great
Ranking system unified banking sys-
tenn. Their silence,
however. does not conceal the fact.
State. banking representatives who
fiocked to Washington during the
banking holiday In order to protect
themselves recognized 1t. They be-
gan lighting, but 1t was too late The
law was passed.
Their claim was, ana Stlll Is, tnat
the emergency banking act and the
regulations issued under II for the re
opening of the hanks beginning March
10 resulted In state banks being cast
adrift They were given mighty little
consideration. Ii looks like they will
receive less hereafter. SO It's the sur
vival OF the flttest for them.
This does not mean that the state
bank In your community is going tx
die. The scheme which Washington
observers believe they see and which
the state bank representatives CLAIM
has been worked out operates slowly
1t Is intended to develop far flung
system whereby the small countr,
banks. will be absorbed slowly. per
haps becoming branches of large
banks. Banking facilities will be con
tinued wherever there Is need TO
them, because II the need exists prof
can be made out OF bank. Where
fore, there will be an eventful purchas
of hundreds of the smaller banks ant
conversion OF them into branches.
Thus, the basis of the controvers
comes into view. There is one schoo
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