The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-06-06
Trends
Kreisle Gives View
on Dual Banking
System.
BY VINCENT LYONS
Iimes financial Editor

M dAAAEoo A@tAfNANN AN@N~t~ 80
II before the Indiana Bankers
Association convention BY Msgnus
J. Rreisle. president. tends 70 in
dicate the difference Of opinion
which exists In regard to the pend
ing banking bill. sponsored by the
Roosevelt Administration and. more
specifically. Mariner S. Eccles.
governor Of the Federal Reserve
Board
Although the bill. as passed b.
the House. does not include the
provision making IL mandatory for
state banks 70 Join the Federal Re
serve system" Mr. Kreisle de-
clared. there Is still danger that
this provision again will be in
corp0rated before the bill reaches
final passage"
At present all national banks OF
the country are members Of the
Federal Reserve System In the
case OF state banks. however. II Is
ND 20 the individual institution 10
elect whether Il shall become a
Federal Reserve member bank or
not. The Eccles bill. as originally
drafted. required all members Of
the Federal Deposit Insurance
Corr. TO become affiliated with the
Federal Reserve System BY 1897.
CONSEQUENTLY. every state
~ bank In the country. under
this measure, eventually would be a
member OF the Reserve System.
After a series Of conferences this
particular provision was deleted
from the bill but, as Mr.. Kreisle has
stated. there Is still a possibility
that 10 will be included again when,
as and II the measure IS passed
Mr. Kreisle Is today on record as
being opposed 10 such a move. Mr..
EcCles Is particularly proud OF It
and there are numerous others who
share his views on the matter For
instance, James II. Perkins. presi-
dent Of the National City Bank Of
New York. the nations second larg-
est institution. heartily Endorsed the
plan In testimony before a sub
committee Of the Senate Commit
tee on Banking and Currency.
In his curt disapprOval Of Fed
eraI Reserve membership for state
banks. Mr.. KreiSle undoubtedly was
expressing the majority opinion OF
members OF the association he
heads. The Indiana Bankers As
ISOLATION consists Of 552 various
banks throughout the state. OF
which l25 are national and AZ
state institutions. II Is significant.
Of course. that Of the 427 state
banks only eight are members OF
the Federal Reserve System
IT is probably true that an es-
pousal or announcement OF the
provision TO make state banks Fed
eraI Reserve members narTOws
down TO the question Of whether the
person giving the opinion is an adj
vocate OF either a single or dual
banking system for the country
With ali state banks drawn I'M
der the cloak OF the Federal Re-
serve System a concrete step VIII
BE- taken toward Welding the bank
ing structure into a single CO.
hesive fabric. Outside Of the fold
the banking picture Is composed not
OF two systems but 49: a differ
ent Set-up for each state. plus the
the national system.
hnnn
highly publicized. and perhaps
magnified. in the last few years. A
large amount OF the trouble Origi-
mated as a result OF the lack OF uni
form laws. The best testimony OF
this that BY far the bulk of bank
failures in the last few years we're
OF institutions outside the fold OF
the Federal Reserve System
TT is interesting to note that
Il many OF the bank executives
who we're rabidly opposed at the
outset to the idea of the govern
ment guaranteeing bank deposits
through the Federal Deposit In
surance Corp. now feel more kindly
10 that development. And the
prime reason for their changed at
titude is that the FDIC can well be
the instrument for unifying the
banking system.
The demand that all members OF
the FDIC be members Of the Fed
erai Reserve System is surely a
righteous one when II IS considered
that after ali this government
agency IS attempting TO give the
maximum OF protection TO the de-
poSitOrs o. the private institutions.
And. in return for that protection.
- would seem that IL is justified in
asking chose institutions TO con-
for-u TO uniform standards Of
soundness and liquidity.
Up TO the present the chief diff
ference between a state and ma
tional bank has been that the lat
ter has had the privilege Of iSSu-
ing national bank notes. A little
over a month ago the AdminiStra-
lion initiated steps TO take away
That power from the national in
stitutions. Consequently. a stronger
argument may be presented for