The midland journal. (Rising Sun, Md.) 1885-1947, 1933-03-31

put forward purely
Would End as a solution for
State Banks the crisis then upon
the nation, it has
since become apparent that it had
permanent phase that surely is going
to carry on far into the future in the
shape of a bitter controversy. There
is no longer any doubt that the emer-
gency program was based on plan
for 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 insti-
tutions 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 a long continuing effort to get
them together, but always it 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 join the national banks in the
federal reserve system. There re-
manned 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 in the last
congress, although it died the death of
a rag doll in the house of represent
ativeS.
Now comes the emergency banking
law, however, with provisions designed
to solve the crisis in our country's
financial structure but with some 9TH
er sections furthering the interests of
the national banks. The latter sec
tons were completely overshadowed.
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 on guard
against new encroachments, were in
a 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 ire
mendously long step on the part of
the federal government toward sQueez-
ing out the state banks. 1t does so by
making available many more advan-
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
Banking System unified banking sys-
TEN. Their silence,
however, does not conceal the fact.
State banking representatives who
flocked to Washington during the
banking holiday In order to protect
themselves recognized it. They be-
gan fighting, but it was too late. The
law was passed.
Their claim was, and still is, that
the emergency banking act and the
regulations issued under it for the re-
opening of the banks beginning March
Is resulted in state banks being cast
adrift. They were given mighty little
consideration. 1t looks like they will
receive less hereafter. So it's the sur
vival of the fittest for them.
This does not mean that the state
bank in your community is going to
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 a far flung
system whereby the small country
banks will be absorbed slowly. per-
haps becoming branches of larger
banks. Banking facilities will be con-
tinued wherever there is need for
them, because If the need exists profit
can be made out of a bank. Where
fore, there will be an eventful purchase
of hundreds of the smaller banks and
conversion of them into branches.
I'M II. "a -