CONSOLIDATION OF NATIONAL BANKING ASSOCIATIONS 227
The Crairman. Do not misunderstand me, Senator. 1 took an
extreme illustration merely to make my thought clear. T realize
that what we are talking about is commercial security.
Senator Grass. Yes. Then he continued.
It might be argued that no well-managed bank would take such a step, but the
restrictions in the law are for the protection of the depositors in poorly managed
banks, which have been found to be quite numerous. If banks would always
conduct their business along sound and conservative lines the limitations of see-
tion 5200 would be entirely unnecessary, but experience has proven them to be
very lmporians and necessary, and the bars should not be let down too much, if
all.
Which is a statement of the case that I fully agree with.
The CuarMaN. Well, I think—Mr. Collins will correct me if I am
wrong—I think that what the gentleman who wrote that was focus-
ing his attention on was subsection 8, containing provisions for gradu-
ally increasing a loan as the security increased, where the basis of the
loan was nonperishable staples, because everything else in the section
as drafted in this bill is already a feature of the existing law, is it not,
Mr. Collins?
Mr. Corrins. I think so.
The Cuarrmax. That subsection 8, as you will remember, Senator
Glass, was the subsection that Senator Robinson of Arkansas and
some of the men who were particularly interested in loans on cotton
in storage were interested in.
Senator Grass. It is upon the theoyy that we have not done enough
for agriculture.
The CratrMAN. Now, is Mr. Whipple here? Had you finisied,
Senator?
Senator Grass. Yes.
The CuarrMaN. Thank you, very much, Mr. Harrison, for your
very able statement. We will now hear Mr. Whipple.
STATEMENT OF HOWARD WHIPPLE, PRESIDENT OF THE
FIRST NATIONAL BANK OF TURLOCK, CALIF.
Mr. WarepLe. Mr. Chairman and gentlemen, my remarks are
practically entirely on the question of branch banking. In any dis-
cussion of the McFadden pil interest focuses on its branch banking
features. They are its most controversial sections and therefore are
more spectacular than the sections which modernize and clarify the
law controlling national banks alone, important though they may be.
That law, since its enactment in 1863 and amendment in 1865, has
endured with but little change. The Federal reserve act of 1913
was imposed upon the national bank structure but did not modify
its basic prineiple to any material degree. Its effect was evolution-
ary rather than revolutionary. It maintained the unit character of
national banks by evolving their cooperation and avoided revolu-
tionizing their fundamental structure by periting that structure
to be destroyed, as would be the case were nationa banks consoli-
dated under branch banking. Branch banking, on the other hand,
after a thorough investigation of all the principal banking systems
of the world by the monetary commission, was deemed unfitted to
American conditions. i
_ Since 1865 and in spite of its immobile character, national bank-
ing, both in law and supervision, has been the backbone of American
