ARGUMENTS IN THE NEGATIVE 
- Tr ee ee———————————— AL LV | . 
“It is desirable that Congress should consider the revision of some portions of Presidents Message 
the banking law. 
“The development of ‘group’ and ‘chain’ banking presents many new probiems 
The question naturally arises as to whether if allowed to expand without restraint 
these methods would dangerously concentrate control of credit, and whether they would 
not in any event seriously threaten one of the fundamentals of the American credit 
system—which is that credit which is based upon banking deposits should be con- 
trolled by persons within those areas which furnish these deposits and ‘thus be subject to 
the restrains of local interest and public opinion in those areas. To some degree, how- 
ever, this movement of chain or group banking is a groping for stronger support to the 
banks and a more secure basis for these institutions. 
“The growth in size and stability of the metropolitan banks is in marked con. 
trast to the trend in the country districts, with its many failures and the losses these 
failures have imposed upon the agricultural community. 
“The relinquishment of charters of national banks in great commercial centers 
in favor of state charters indicates that some condition surround the national banks 
which render them unable to compete with state banks; and their withdrawal results 
in weakening our national banking system. 
“It has been proposed that permission should be granted to national banks to 
engage in branch banking of a nature that would preserve within limited regions the 
local responsibility and the control of such credit institutions. 
“All these subjects, however, require careful investigation, and it might be founc 
advantageous to create a joint commission embracing Members of the Congress anc 
other appropriate Federal officials for subsequent report.” 
During the post-war history of the federal reserve system there have been bank 
failures in such numbers, particularly of banks in smaller communities and agricultural 
districts, as to raise questions about the efficacy of the system in its relations to the 
smaller member banks. Reporting to Congress on December 21, 1929, the Comptrolle 
of the Currency,—who is the federal official charged with the duty of supervision of 
national banks,—pointed out that in the nine years between July 1, 1920, and June 30, 
1929, about 5,000 banks have failed, and their failure had tied up deposits of 
$1,500,000,000. In the first ten months of 1929 there have been 521 bank failures, 
involving deposits of $200,000,000. An analysis of the statistics discloses that in seven 
states over forty percent of the banks in existence in 1920 have since failed, and in 
twenty-six states the failures have amounted to more than ten percent. It may be true 
that the greater number of the banks that have failed in recent years existed under state 
charters and many of them were not members of the reserve system, consequently not 
being in a position to derive direct benefits, but it is equally true that member banks, 
national as well as state, were found within the number of failing banks. In the years 
of 1921-1928 inclusive, eight hundred fifty-three member banks. failed, and they had 
aggregate deposit liabilities of $436,000,000. In the year following the end of the 
period for which these figures were compiled there have been seventy-nine failures of 
national banks including two national banks which had assets of more than $12.- 
Uontinued on dace 
18) 
Bank Failures