Evening star., 1938-02-10

been grossly mis- ~
Informed and he ,,,
ought publicly to '1 ''
acknowledge his error.
It is a serious thing to be talking
about banks these days anyhow. 1t
was loose talk about banks through
r. F. c. loans which brought us the
bank holiday of just flve years ago
this month. Obviously, if there is
panies In the banking field, public
hearings will have to be held
and If the banks that are owned by
holding companies consider themselves
stronger than their rival banks in
the local communities. these facts will
have to come out in the open, too.
It will be asked then: Are all the
banks in the various States affected
% strong that their financial condi-
tton and all the details of their
management can be thrown open to
congressional inquiry now?
Found Helpful.
My impression is that the holding
companies" in the banking field ought
to be called helping companies" and
that they are helpful rather than
hurtful to the people Of their commu-
mites and that there is no abuse
among them which cannot be cured
BY wise regulation either by Federal
or the State governments, or both,
and that abolition of bank holding
companies at this time would be a
mistake.
For one thing. the total deposits of
the bank holding companies are not
more than about SC. O,0O0. 900 out OF
the total Of $50,000, 100000 in our
banks. but it is a sizable total to
tamper with by legislation at this time.
A careful study of the powers Of the
Federal Reserve Board and the con-
uoller Of the currency shows that the
holding company banks are under
considerable regulation already. They
must submit to examination Just as
DO other banks. Upstream" loans
are prohibited. A holding company
must get from the Federal Reserve
Board 3 permit to vote the stock OF
The member banks in its group and
70 obtain a permit must make certain
agreements and understandings with
tae supervisory authorities.
Ample protection for the public Is
thus provided by law to stockholders,
70 depositors, and to the public as a
whole. What, then, is wrong? Is it
possible that the banks Of a holding
company perform some service that
Is actually useful to their communities
and which some other banks do not
or cannot supply? Is this not a mat
Ter OF competition rather than con-
eentrated control?
Take one holding company which
happens to be very successful in its
operations. 1t owns virtually 100 per
cent OF the stock of each Of its con-
6ituent banks. But the holding COM
pany itself has about Is, 900 stockhold-
ers, and no man or family owns as
much as s per cent of the holding
company.
Officers Really Trustees.
IN other words, the stockholders.
who are scattered far and wide, and
who know the responsibilities of double
liability that attach nowadays to the
ownership of bank stocks, have organ
lied q helping corporation" which
looks out for all the shareholders and
depositors as q unit. The officers are
really trustees for all these scattered
stockholders and can be removed by
majority vote. Capital from the help
ing corporation can flow to the mem.
Der banks at any time needed.
But the helping corporation" ac-
tually makes money-which may pos
sibly be its principal crime. It pro-
v1des management and supervision and
maintains. several departments for all
the member banks and thus is able to
make group purchase of securities.
furnish technical advice to the smaller
banks, act on behalf of its members
economically and exchange credit in
formation and plans for economical
operation and trust department pro-
cedure.
. All the resources of this particular
group Of banks put together would not
equal the resources of any one of the
big New York or Chicago banks, and
Il the holding company in question
were dissolved the member banks
would be paying tribute to Wall Street
through heavier expenses not now in
cured to carry on New York transac-
tons.
Big Banks Foresee Profit.
Mr.. Roosevelt may not know it but
his plan to abolish helping COM
panies" in the banking field is not at
al In disfavor among the large banks,
Who will profit by it, and If concen-
tstion Is q sin, nothing has been said
Jet about the much larger amount Of
deposits concentrated In single.unit
banks In the big cities.
The truth is the helping compa-
MES" insist on autonomy for each of
their own member banks. They do
not Is a rule engage in any line Of
activity except banking and do not
become involved through interlocking
directorates with outside interests. But
they attempt to serve a commercial
q. area and 50 successful have some of
them been that they have had appli-
cation from other banks in their vi
entity to be permitted to join.
Political Domination Sought?
Is 1t possible that Mr.. Roosevelt
wants to nationalize all the banks
some day, and through the r. F. c.
vote their stock in holding company
> Of the Government, controlled by one
man? The helping companies" with
their member banks are strong enough
today to be independent Of Govern
ment influence and dictation for polit-
-ical purposes. II that's the real reason