The Coolidge examiner., 1936-03-06
BANK CHARTERING
POLICY REVIEWED
State Official Declares Sound
Principles in Licensing
Banks Are Essential

PHILADELPHlA-S Sound public
pt licy in chartering banks was dis.
cussed by Carl K Withers. Commits
sioner 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 declared
that few questions bearing on the
future stability and security of our
banking systems loom as more i'm
portant than that of sound policy
to be pursued in bank chartering."
Alluding to competitive policies
Of both state and national banking
authorities 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 otherwise, this condi
ton was brought about largely
through an unwise. unsafe and un
thinking charter policy. alternating
between the state and national sys
ems, which has marked and ham
pered banking progress in this coun
try since its very inception"
Political Influence
He decried political considera.
tions in connection with the charter
ing Of banks saying: Political in
hnc y1Ia ip ho nh
ing that it has N the deliberations
OF our highest tribunal-The Su
preme 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 and favor"
AS to the element Of sometimes
ridiculous competition heretofore
existing between the state and ma
tional systems" he said that much
may be said in favor of the progress
made in recent years. In many
states there exists a practical work
inc agreement between local super
vising authorities and the fedora
authorities. whereby all charter ap
plications are mutually considered
o a basis of community need rather
than competitive advantage as be
tween systems. In some states this
arrangement goes even further in
the refusal of the one authority to
even consider a charter while pend
ing with the othar.
Aside from the competitive and
political aspects of our future char
for policy, he continued, there are
several others more individual and
local which merit consideration
Among these he mentioned honesty
0i purpose, community need, the
character of management and ade.
quacy of capital.
Most state laws make reference
t, the character, responsibility and
fitness" of the incorporators of a
new bank, he said, continuing:
$50 important do | conceive this
factor to be, that | place it first
among those fol consideration, for
unless the motive is sound. honest
and sincere. there is little likelihood
that the resultant 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 char.
ters been granted to promoters pure
and simple-not always pure, and
by no means simple. The country
was dotted with such. The expert
ence has been costly and. it is to be
hoped. the lesson we'll learned, no,
only by granting authorities
but by the general public as we'll
Other factors to be considered a.
among the most important in grant
ing new bank charters, he said, are
the number Of institutions already
serving the area. the record of earn
ings Of existing institutions, tn
number of failures since 1920, ant
the reasons therefor, public con
venience and advantage, the reason
able prospects for growth of the
community. expectation of profit
able operation and whether branc
of an existing institution coulC
serve as well.
Sound public policy demands
that no new banks be chartered un
less there is a definite necessitous
and permanent need" he declared
Sound mergers. consultations and
the sensible extension of branch
banking are much to be preferred
to any general movement toward
flood of new charters. But her.
again we must guard carefully
against monopoly or unbridled
blanch competition, either Of which
might become as dangerous as the
organization of new banks"