366 CONSOLIDATION OF NATIONAL BANKING ASSOCIATIONS
Mr. Ratnie. Because we are afraid that if the national banks
should have the privilege of establishing branches, that the attempt
would be made to pass legislation in the State for branch banking.
Senator Grass. But it 1s not proposed to give the national banks
the right to have branches in the States which do not permit branch
banking.
Mr. Rarnse. No——
Senator Grass. Why not control that matter in the State? If it
is the desire of Illinois to prohibit branch banking, Illinois now has
the right to exercise it. i it is the desire of the State of Ohio to
have branch banking, why should it not have the privilege of
doing it?
Mr. Ratnse. 1 will admit that that phrase in there is in there
purposely so as to get the assistance of the national banks to prevent
way State legislation in favor of branch banking.
Senator Grass. In plain English, to coerce the States against
granting the privileges of branch banking?
Mr. Rarmur. I would not say it is coercion.
Senator Grass. Why is it not coercion when a penalty attaches?
Mr. Rarmse. I do not regard it as a penalty, because if a national
bank can not benefit by the enactment of a State law, they would
not be for it.
Senator Grass. But the penalty is against the State banks. You
preclude them from membership in the Federal reserve system.
In other words, if Illinois should pass a law hereafter granting its
State banks the right to establish branches, under progr restriction,
they would be precluded from membership in the federal reserve
system.
Yair Rarnge. If they established branches; yes.
Senator Grass. Well, is not that coercion by a Federal statute?
Mr. Ratuse. I would not regard it so.
Senator Grass. Well, I would not know how to define it if it is not.
You may proceed with your statement, if you have anything further
to say, without interruption.
Mr. Rare. That is all I care to say, Mr. Chairman.
STATEMENT OF ISAAC N. POWELL, WASHINGTON PARK
NATIONAL BANK AND SOUTH SIDE NATIONAL BANK AND
GREATER SOUTH SIDE CHAMBER OF COMMERCE, CHICAGO,
ILL.
Mr. PowerL. Mr. Chairman and gentlemen, I think this bill is a
matter of compromise. It represents, I think, the composite agree-
ment of men who have been active in the matter of trying to bring
about some kind of adjustment or arrangement as to branch banks.
I do not believe it is pis to do that with absolute justice to
both sides of banking. I really think the gentlemen who have been
very active from communities all over the United States have at-
tempted to put into this bill what they believe is a workable arrange-
ment. For instance, I think the provision which you possibly
complain of most is this: I pane to be in a State bank, and I
happen to be in a national bank. I am the only connection. The
Am are not of similar ownership. In fact, they are very dissimilar,
but I think that the larger banks of the country, especially possibly