The Western news. [volume] (Libby, Mont.) 1933-current, 1936-06-11
BANK CHARTER|NC
POLICY REVIEWED
State Official Declares Correct
Principles in Licensing Banks
Are Essential for Sound
o. Banking Conditions


PHILADELPHIA. Sound public
policy In chartering banks was dis
oussed BY Carl K Withers. Commits
Honer Of Banking and Insurance OF the
State Of New Jersey. before tho Eastern
Conference on Banking Service. held
here recently under the auspices OF the
American Bankers Association. He de-
olared that few questions bearing on
the future stability and security OF our
banking systems loom a. more impor-
tant than that OF sound policy to be
pursued In the chArtering OF banks.
Abiding to competitive policies OF
both state and national banking au-
ihorities to charter the most banks In
the past. he said that this country was
oyer-banked. and that aside from any
other consideration. economic or other
wise. this condition was brought about
largely through an unw1se. unsafe and
unthinking charter policy, alternating
betwe the state and national sys
TENS, which has marked and ham,
pered banking progress In this country
since its very inception"
Political Influence
He decred political considerations
In connection with the chartering OF
banks. saying: Political influence has
no more place In banking than 1t has
In the deliberations OF our highest
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 81 political expedieuce."
Az to the element OF sometimes
ridiculous competition heretofore ex-
isting 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 practical working agreement be-
tween local supervising authorities
and the federal authorities. whereby
AL charter applications are mutually
considered on I basis OF community
need rather than competitive advan-
tAge a. between systems. In some
states this arrangement goes even fur
Their In the refusal Of the one authority
to even consider a charter while pend
ing with the other. he declared.
Aside from the competitive and po-
litical aspects OF our future charter
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
Dent and adequacy Of capital.
Most state laws make reference to
the character. responsibility and fit
ness" OF the incorporates OF = new
bank, he said. continuing:
so important do conceive this fac
tor 10 be. that | place 1t first among
those for consideration, for unless the
motive is sound honest and sincere,
there is little likelihood that the result
ant institution in its 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
Himple-not always pure. and by no
means simple. The country was dotted
with such. The experience has been
costly and. 1t Is to be hoped. the lesson
well 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 unles9
there La 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 k.anch competition. either OF
which might become as dangerous as
the organization OF new banks
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