Worcester Democrat and the ledger-enterprise. (Pocomoke City, Md.) 1921-1953, 1936-03-13
BANK CHARTERINC
POLICY REVIEWED
State Official Declares Correct
Principles in Licensing Banks
Are Essential for Sound
Banking Conditions

PHILADELPHIA. Sound public
policy in chartering banks was dis
cussed by Carl X. Withers, Comms
sionel of Banking and Insurance of the
State of New Jersey before the Eastern
Conference on Banking Service, held
here recently under the auspices OF the
American Bankers Association. He de-
clared that few questions bearing on
the future stability and security OF our
banking systems loom as more impor-
tant than that OF a sound policy to be
pursued in the chartering OF banks.
Abiding to competitive policies OF
both state and national banking au
thorities to charter the most banks in
the past. he said that this country was
over-banked. and that aside from any
other consideration. economic or other
wise, this condition was brought about
largely through an unwise, unsafe and
unthinking charter policy, alternating
between the state and national sys
TENS. which has marked and ham
pered banking progress in this country
since it's very inception"
Political Influence
He decried political considerations
in connection with the chartering OF
banks. saying; Political influence mas
no more place in banking than it has
in the deliberations of our highesi
tribunal-The Supreme Court of the
United States. Until this is recognized
and brought into being within both our
state and national systems, we may
never feel safe against the shifting
sands of political expedience."
AS to the element of sometimes
ridiculous competition heretofore ex-
listing between the state and national
systems" he said that much may be
said in favor of the progress made in
recent years. In many states there ex
lists a practical working agreement be-
tween local supervising authorities
and the federal authorities, whereby
all charter applications are mutually
considered on a basis of community
need rather than competitive advan-
tage as between systems. In some
states this arrangement goes even fur
Their in the refusal of the one authority
to even consider charter while pend
ing with the other. he declared.
Aside from the competitive and pc.
policy. he continued, there are several
others more individual and local which
merit consideration. Among these he
mentioned honesty of purpose, com
munity need. the character of manage.
ment and adequacy of capital.
Most state laws make reference to
the "character. responsibility and fit
ness" of the incorporators of a new
bank, he said, continuing:
so important do conceive this fac
tor to be, that | place it first among
those for consideration, for unless the
motive is sound. honest and sincere.
there is little likelihood that the result.
ant institution in it's service to the
community will reflect other than the
spirit of its founders.
The Lessons of the Past
TOO often in the past have charters
been granted to promoters pure and
simple not always pure, and by no
means simple. The country was dotted
with such. The experience has been
costly and, it is to be hoped. the lesson
we'll learned, not only by charter-grant-
ing authorities. but the public"
Other factors to be considered as
among the most important in granting
new bank charters. he said. are the
number of institutions already serving
the area, the record OF earnings Of ex.
listing institutions, the number of fail
ures since 1920. and the reasons there
for. public convenience and advantage.
the reasonable prospects for growth
of the community, expectation of prof
liable operation and whether branch
bank could serve as well.
Sound public policy demands that
no new banks be chartered unless
there is a definite. necessitous and
permanent need" he declared. Sound
mergers. consultations and the sen.
sible extension of branch banking are
much to be preferred to any general
movement toward food of new char
tiers. But here again we must guard
carefully against monopoly or I'M.
bridled branch competition, either of
which might become as dangerous as
The organization of new banks"