New-York tribune. [volume], October 05, 1922, Page 8, Image 8

About New-York tribune. [volume] (New York [N.Y.]) 1866-1924

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BranchBanking
Condemned by
Association
Practice Declared Contrary
to Public Policy and
Tending to Create Monop?
oly of Power and Credits
Plan New Organization
Fight Will Be Carried to
Congress and State Legis?
latures After Next Meeting
Opponents of branch banking won n
Tictory of reasonably ?weeping char?
acter at the general, session yesterday
of the American Bankers' Association
when the convention, by a vote esti?
mated at close to two to one, adopted
with only slight modification the reso?
lution presented by the anti-branch
bankers. The amendment, insisted up?
on by representatives of the national
bank division, extended condemnation
of branch banking to Include specifical
ly the practico by state as well as na?
tional institutions.
The resolution, offered during debate
on the question of whether national
banks should be permitted to open and
Operate branches in their municipali?
ties where state banks enjoyed this
privilege, was carried through largely
on the fear of representatives of
country and other small local banks
of the develoDment of monopolistic
control paralleling the British exper?
ience where the entire banking busi?
ness is now in the hands of thirty
nine institutions, with O.f.00 branches,
of which more than 6,000 are con?
trolled by five banks.
The debate, as anticipated, provided
the most keenly contested controversy
that has made its appearance in many
years at a bankers' convention and dur?
ing its course a hint of the bitterness
that has threatened a split in the as?
sociation and a scattering of person?
alities were discernible. The oratory
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and the enthusiasm were reserved for
the presentation of tha anti-branch
bankers' case; the opposition's spokes?
men talked with equal vigor but with
a reliance on the cold logic of the sit?
uation that testified to their convic?
tion that declamatory appeals were fu?
tile to save a lost cause.
"Contrary to Public Policy-*
After a substitute resolution had
been offered and overwhelmingly de?
feated, the convention adopted the fol?
lowing as expressing its position:
"Resolved, by the American Bankers'
Association, that we view with alarm
the establishment of branch-banking in
the United States and the attempt to
permit and legalize brunch-banking;
that we hereby express our disap?
proval of and opposition to branch
banking In any form by stato or na?
tional banks in our nation.
"Resolved, that we regard branch
hanking, or the establishment of addi
? tional offices by banks, as detrimental
to the best interests of the people of
?the United States. Branch-banking la
j contrary to public policy, violates the
basic principles of our government, and
> concentrates the credits of tha nation
? and the power of money in the hands
I of a few."
I Andrew J. Frame, of the Waukesha
; National Bank, Waukesha, Wis., open?
ing the debate, drew first applause as
he asked whether the doom of the
30,000 independent banks of the United
States, which had done more to up
? build this powerful nation than all tho
"cream-skimming monopolistic banks
have done for other nations," was im?
pending. He particularly commanded
Mr. McKenna's nttention as he said
that he had seen old world banking re?
cede from impendent banking freedom
to monopolistic banking, eollossal fail?
ures and appalling losses to depositors.
He stated as the three principal argu?
ments for branch banking the conten
| tions that it served the people better,
that it lessened loses, and that becauso
somo of the states allowed state banks
to operate branches, the national banks
should have some of the "pork."
"Entering Wedge for Monopoly"
In controverting the first two argu?
ments, he cited the figures ot heavy
j losses to bank depositors in England
I and Canada, far exceeding those in the
United States. Legislation putting na
; tional banks on an equality with state
j banks he characterized as merely an
entering wedge for monopoly, asking:
"If a few big state banks, having
branches, can put out of business all
other competitors and the big national
banks are endowed with like powers,
how long will it take to put all the in?
dependent, stato and national banks out
of business ?"
Mr. Frame opposed "Canadianizing"
our banking system; allowing the large
banks to "skim the cream and leave
to the local banks, who create the busi
I ness, the skimmed milk;" urged the
| ?*!imination of this "cancerous growth,*
; '.nd termed branch-banking a calamitj
to any city, state or nation countenanc?
ing it. As the expiration of his timt
illotment caused President McAdanu
',o pound the gavel, Mr. Frame was
-rceted with cheers, shouts of "go on,'
<nd vigorous applause.
Tho sentiment of the meeting alreadj
was clearly registered, although Waldc
-ewcomer, of Baltimore, leading th<
other side, was warmly received.
Appeals for Fairness
Mr. Newcomer made his principal ap
peal to the meeting's sense of fairness
Admitting that the state banks, fa:
outnumbering the national banks ii
the association, could outvote the lat
ter, he urged that if branch bankini
was wrong it was wrong for bot!
classes of institutions and that justici
should require equal privileges fo
both. Five courses were now open t.
the national banks confronted by C0311
petition of state banks operatic
branches, ho said.
"First, it can supinely sit down am
lose its business to its competitor.
"Secondly, it can surrender its na
tional charter and become a state bank
Such a course, if generally followed
i would lead to the destruction of th
; national bank system and seriousl;
! threaten to disrupt the Federal Reserv
; system.
"Thirdly, it can temporarily sur
' render its charter, become a state bank
I absorb a bank with branches, or forn
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Not only are these models cunt on the
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Corsets made to individual require?
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branches and renew its nations
charter.
"Fourthly, it cnn establish branche:
end call them offices.' Both these las
two plans are indirect ways of doinj
what the bank believes to be right, but
are apparent invasions of tho possible
intent of the law.
"Fifthly, it can endeavor to depriv
a state bank of Its unfair power. Thii
latter, however, Is practically imposai
ble. Branch banking is permitted ?3
seventeen states, prohibited in sixteer
and in the other fifteen and in the Dis?
trict of Columbia there is no specifi
provision."
Two objections to branch banking
that it Is unconservative and that it i?
against policy, were disposed of bj
Mr. Newcomer as disproved by ex
perience. All that was sought by th<
nationnl brinks, ho explained, was tha'
they be placed on an equal basiB com
petitively with stato banks in th<
municipalities where located.
Equality for Both
"If you believe that branch bankin?
gs conservative and safe under limite
conditions," said Mr. Newcomer, "i
is your absolute duty to get back of i'
and support strongly a move to gran
under thoso conditions that right t(
national banks, whicli will put them 01
a parity with your state bank mem
bers.
"If on the other hand, you boliev
that all branch banking under all cir
! cumstances is bad banking, then yov
msut not only refuse to support th<
national banks in what they believe tc
be their rights, but must immediately,
demand that every member bank
whether state or national, which to?
day has any branches or offices othes
than its main offices, must forthwith
close those branches and offices or im?
mediately resign from membership ir
this association, as doing an uncon
servative business not approved and
supported -Sy the association. There is
no middle ground."
Samuel B. ?Jeffries, vice-president oi
the First National Bank, St. Louis
took the floor to Introduce tho resolu?
tion, which was seconded by Roy West
of tho Chicago and Cook County
Bankers' Association, and N, D. Prince,
vice-president of tho Hartford-Con?
necticut Trust Company. Thomas R
Preston, of the Hamiliton National
Bank, Chattanooga, urged that na?
tional banks in fairness should be
allowed the same freedom as the state
banks. F. 0. Watts, vice-president o?
the First National Bank of St. Louis,
' which by opening "offices" has become
j the center of tho controversy, then
made a plea for the increased service
rendered through branch banking.
Asks for Judicial Decision
Mr. Watts, who bitterly referred to
the opposition which his bank's project
has met, declared that the question
could not be settled on the floor, that It
had become a matter for judicial deci?
sion, and that he hoped a problem
which had drawn bankers from all over
the country would continue to be
fought out until it was settled right.
The amendment to the resolution
was then offered by John G. Lonsdale,
president of the national bank divi?
sion, and accepted by Mr. Jeffries. _ A
substitute resolution was thereupon in?
troduced by W. A. Bonyngc, president
of the Commercial National Bank of
Los Angeles, operating three branches,
who declared that, while he did not be?
lieve in branch banking, he did not
believe it a menace if properly re?
stricted. The substitute, in four divi?
sions, admitted the right of state leg?
islatures to regulate banking within
their states as they saw fit, asked equal
privileges for national banks where
branches were allowed state institu?
tions, opposed any law giving national
banks such rights where not enjoyed
by state banks, and also opposed per?
mission for banks to establish branches
outside of their hosne state.
Daniel F. Gui?an, treasurer of the
jj--?;;?--,'- p'
German Cash Pays Only
Half Occupation Cost
PARIS, Oct. 4 (By The Asso?
ciated Press).?Gold marks to the
amount of 7,000,000,000 In round
figures constituted the total pay?
ments made by Germany on rep?
arations up to April 30 of this
year, accorditiR to figures printed
by the Reparation Commission in
n pamphlet just issued. This
amount included cash and deliv?
eries In kind and the value of
railway rolling stock, automobiles
and other property turned over at
the time of the armistice.
The cash payments totaled
1,425,000,000 marks, less than
? half the cost of the military occu
I pation of the Rhincland, which,
! up to April 30 had reached 2,131,
I 000,000 marks for the Allies and
1,000,000,000 marks for the
United States.
I_ I
Merchants Bank and Trust Company,
Mahanoy, Pa., recalling the reasons for
Andrew Jackson's veto of the United
States Bank act, said that the oppo?
nents of tho resolution had begged the
question In that they had 330t answered
the objection to branch banking that.
In fostering monopoly, It was against
the public interest. He moved that the
substituto resolution be tabled, a mo?
tion that was defeated when it was
brought out that such action would
tablu tho whole subject.
Defend Branch Banking
Tho satisfactory experience in De?
troit, where branch banking ia highly
developed, was cited by J. A. Latta,
vice-president of tho Northwestern
National Bank of Minneapolis, who
pointed out that the inability of na?
tional banks to compete in "this city
had limited their number to two. He
thought that the increased opportunity
for service justified branch banking
within limitations.
Ex-Senator William Alden Smith, oi
Michigan, president of tho Grand Rap?
ids Savings Bank, declared that the
bringing of the banks to the people
particularly to the laboring classes
with consequent encouragement ol
thrift, was a3i unanswerable argument
for branch banking, and felt tnat the
convention would make a vital mistake
in opposing it.
The substituto having been easily de?
feated, tho amended resolution wat
adopted and the meeting broke up. Ar
echo of the discussion appeared at the
meeting of tho national bank divisior
in tho afternoon, at which a resolutior
concurring with the action of the gen
eral body, but qualified in that it em
phasized the dangers to the Federa
Reserve system of a situation favorinj
conversion of national banks into stat?
banks, was defeated after considerabl?
debate.
Following their victory at the con
vention tho anti-branching bankers las
night took steps to form a Nationa
Association of National and Stat?
Banks and Trust Companies Oppose?
to Branch Banking. Chairman Murra;
McLeod was directed to organize i
committee composed of three delegate
from each state bankers' association ii
all states to meet in Chicago at hi
call to prepare plans for carrying th?
tight to Congress. Subsequently sim
ilar efforts will be put forward ii
the various state legislatures.
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McKenna Bears With a Smile
Attack on System He Supports
Englishman's Institution Has 1,600 Branches, and
Bankers' Convention 'Walks All Over' the Idea ;
Reception of Former Chancellor Is Very Cordial
By Merryle Stanley Rukeyser
As Andrew J. Frama, chairman of the
Waukesha National Bank, was leading
the attack on branch banking Irf a de?
bate on the subject before the Ameri?
can Bankers' Association yesterday
morning, tho Rt. Hon. Reginald Mc
Kenna, chairman of the London Joint
City and Midland Bank, Ltd., sat besido
him on the speakers' platform. Mr.
Frame referred to branch banking as a
"frrab all, loso all" game, and charac?
terized it as monopolistic, arrogant and
oppressive. Mr. McKenna remained si?
lent and smiled during the speech. Mr,
McKenna's bank, with more than 1,600
branches, has more branches than any
other banking Institution in tho world,
? ? *
Mr. McKenna heard the convention
place itself on record after a heated
exchange of views as opposed to any
form of branch banking whatsoever.
The resolution was not Intended as a
criticism of the British banker or his
institution, but was aimed at the ef?
forts of national banks in tho United
States to obtain the same legal rights
which state banks occupy In about
thirty-two states.
? * ?
Mr. McKenna's reception was ex?
tremely cordial. He argued that Ger?
many could not pay more than $1,000,
000,000 in reparations in the next few
years, and emphasized the inability of
all the Allies except Great Britain to
pay their war debt to the United States
in full under present conditions. He
laid facts before the great unofficial
congress of city and country financiers
Intended to reveal the inadvisability
of attempting to force collection. His
remarks were received with unre?
strained enthusiasm.
? * ?
Tho dignity and somberness that one
associatos with a meeting of bankers
gave way to a free outburst of emo?
tion yesterday morning, when tho is?
sue of branch banking, which for a
time threatened to disrupt tho associ?
ation, was discussed. The main oppo?
sition came from state bankers, who
aro vastly in the majority. The advo- I
cates of a law pennltting national
banks to open branche? within thslr
own cities in states where stato bonks
have similar rights stated their rea?
sons cogently, but to no avail. The I
tide of feeling swamped the conven- j
tion floor, and the delegates were ?
satisfied with nothing less than a j
?weeping condemnation, which in a
way represents an attempt to turn
back the hands o? the clock.
F. O. Watts, of the First National
Batik of St. Louis, tho action of whose I
institution recently reopened the whole :
discussion of the establishment of
branch bonks by national banns, com?
mented on tho unprecedentedly large
attendance?more than 11,000 had reg?
istered yesterday?and suggested that
the issue of branch banking be kept
in future years on the A. B. A. pro?
gram, in order to sustain interest at
tho present high pitch. On the theory
that the present national banking act
does not forbid the opening of domestic
branches, the First National Bank of j
St. Louis recently opened a branch
and the State Attorney General pro- I
tested. The matter is now in the I
courts and will come up on November 1.
Notional banks do have branches, but
they acquire them by indirect methods.
Tho usual procedure is for a national
bank to absorb a state bank with
branches.
The peaks of interest at the conven?
tion have been the questions of branch
banking and inter-Allied debts. The
former Chancellor of the Exchequer
approached the subject from the in
vestsnent value of the United States
Treasury's holdings of the promises
to pay of tho Allies, indicating that
only Great Britain had the ability to
pay in full. Thomas W. Lamont, of J.
P. Morgan & Co., who effectively stated
the case for partial cancellation, had
a different approach, laying emphasis
on sentimental and political factors,
such as the consideration that the
United States should cancel the loans
advanced during the first year of its
participation in the war, on the theory
? that during that time it was not con?
tributing substantially in man power.
Frod I. Kent, vice-president of the
Bankers' Trust "Company, envisaged
Over 300,000,000 Pain
a Year
When in 1629 the Massachusetts Bay Company
sent its letter of instructions to Governor
Winthrop with reference to the coming on the
Mayflower of Thomas Beard, America's first
shoemaker, it stated that he was coming for
the purpose of making shoes for the Colonists,
that he brought with him divers hides, etc.,
that he was to be paid so much for his work,
was to receive a certain allowance from the
Company's stores and was to have the right
to gather herbs on the Common.
No doubt Mr. Beard was a very good shoemaker,
using the awl, lapstone and hammer with the
skill of his time; but suppose he could take
a look around to-day in any one of America's
great shoe manufacturing plants!
It was a long cry even from the sandal tied with
the leather thong to Beard's time, but think
of what has happened since then.
Scores of machinery inventions have revolutionized
this industry.
Where once Beard laboriously wielded his hammer
to drive a peg, to-day there are the click?
ing, lasting, welting, lock-stitching and other
machines?infinitely more efficient than human
hands, and a thousand times quicker.
From the South American Pampas, the African
Veldt, the Far Hills of India, the American
Plains and elsewhere, hides are gathered that
man and woman may be properly shod.
Great institutions devoted to dressing, curing and
tanning, fashion this crude material into
leather of strength, finish and durability.
The translation of the hide into the dainty slip?
pers of the modern Miss entails some 300 dif?
ferent operations, exclusive of clerical labor.
Just think for a moment of the number 159,000,000
?that figure represents the production of
pairs of shoes in the United States for the
past six months, or at the rate of three pairs
per capita per annum.
The development of the banking systems of the
world.since the day of the Venetian banker
has, like the development in the shoe industry,
kept pace with civilization.
Since 1838, or to be exact, for 84 years, The
American Exchange National Bank has regis?
tered continuous progress in its growth and
in its ability, as a result of broad experience,
to assist those who favor it with 'their
patronage.
Throughout this long period it has enjoyed inti?
mate relationship with almost every character
of industrial enterprise. It has seen little
businesses grow to be big businesses and not
infrequently it has had the pleasure of assist?
ing such successes.
Sure of its ability to render unusual service and
counsel of the highest character, it invites
you to discuss your business problems with it.
Our representative will call at your office
by appointment.
The ?American Exchange
Rational "Bank
Total Resources over $175,000,000
128 Broadway New York
Monthly Letter sent free ?n request
-:-_-|
'London Times' Praises
McKenna Debt Promise
LONDON, Oct. 4 (By The As
sociated Press).?-"The I/ondon
Times" editorially gives great
praise to Reginald McKenna's
speech before the American bank?
er?' convention, at New York,
saying that Mr, McKenna ren?
dered good service hy emphasiz?
ing the fact that "wo have the
capacity to pay our debts, and it
is our determination to honor our
bond in full," and proceeds:
"If, as we believe they will, the
British funding mission also make
this point crystal clear to our
friends on the other .side of the
Atlantic, the mischief the Balfour
note did may yet by undone."
1_-_?
the debt problem from the standpoint
of foreign trade, and argued that debt
collection would impose great hard?
ship on th? creditors, who would be
compelled to import unwonted quan?
tities of foreign goods. The principal
speakers on the subject were at vari?
ance with the position of the United
States Debt Commission, which, in view j
of the nature of the act which created
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T4-?5 FIFTH AVfsrsiTj
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?Matthew 7:24
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The most valuable of all foods is WHOLE
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