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New York City, who have more interest than anybody else along that line, wanted the status quo to maintain in the way it is, and the comptroller was beginning to permit national banks to organize with less than the statute really provided for. I think that was done in several instances in Chicago. We felt this way, that as to branch banks we would rather suffer the handicap possibly of the national banks in, one instance and of the State banks in another instance than to permit what we believe was something inimical to the best interests of our different communities. I think you will find that true as you go to the middle of the country and to the far West. I know you have had many arguments made to you, and I hope you do not think I am trying to make an argument of that kind.

Senator Glass. I want you to argue. I want somebody to justify to me the proposition that the national banks of 26 States of this Union should be denied a right which is granted the national banks in the other 22 States of the Union.

Mr. POWELL. Senator, I do not think any person would undertake, at least I would not, to say that this bill is fair and just in all particulars, I think in many instances it recognizes what the States try to maintain within their own boundaries, and that is the right to run certain financial matters. I do not believe that we should by national act go in there and create conditions which they have tried to eliminate locally. Take the State of Illinois, for example--and I want to speak especially for that State--we have recognized the principle here that evidently the States know what they want in each particular State, as they have adopted laws.

I heard you ask Mr. Rathje a question here, as to whether or not hereafter this law would have to be amended. In my opinion, if it comes around to denying to a national bank a right or privilege to which they were entitled in a State where the State laws had permitted branch banking, whereas they do not now, and later on did, then you would have to give to the national bank that same right. I do not think there is any doubt about that.

Senator Glass. But you do not give it to them. You expressly deny it to them.

Mr. POWELL. Here is what I want to say to you. I have been quite active in this matter, and this is an attempt to approach something that is regarded as workable. I do not believe there is any instance anywhere at the present time where it works a hardship. I do not think any man in fairness would say that it is absolutely just to all, but on the other hand that provision which you say is unfair was not suggested by the gentlemen who opoosed branch banking. That was suggested by the gentlemen who have these branch banks, and it is they who attempt to take upon themselves that handicap, if it can be thought that those gentlemen represent properly their States and their communities, and that is the only reason it is suggested. For instance, to be very frank with you, all my activities and those

, of the associations to which I belong, and which I was delegated with any authority to represent-my community was entirely against the branch banking, and I think to-day, with all due regard to the gentlemen who argue so eloquently for them, that they are inimical to our country and I do not think the country needs them. We have developed in an amazing degree without them, and we have

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developed satisfactorily. Of course, this is a big country. I do not believe you people in the East appreciate what it is to have a little $10,000-bank in a community like we do in the West, and like I have seen in the West.

Senator Glass. Do you mean, for example, up in the Minneapolis district where about 500 of them have failed in the last 18 months ?

Mr. POWELL. Yes; but, Senator, that was no condition of theirs, much. That was almost like a flood that caused that.' It is similar to the situation in the mining districts. If you are going to run & business, you have to take into consideration valuation to maintain it because it depends on valuation. There is one thing that I know from my own experience. We had one bank in Chicago that was taken over—I do not want to exaggerate—the Fort Dearborn National; it did not fail, it was taken over, but that one bank represented in its assets, I presume, more funds than all the independent banks that have failed there, so far as my knowledge goes. For instance, take the Merchants Bank of Canada with 462 branches, and take the other bank, I can not remember the name of it now.

Mr. RATHJE. The Australian.

Mr. Powell. Their banks are no stronger in my opinion than the small banks. Strength is a matter of relativity; it is a matter of ratio, and the small bank can be just as strong as the large bank.

Another thing about it, I do not believe that Minnesota, Michigan, Illinois, and Iowa would be where they are to-day if they were depending on branch banks. They are just simply filling stations; they absorb the money without distributing credit.

Senator Glass. I am not arguing for branch banks. I am arguing for equality of competition; in other words, I am for what this bill pretends to be for and is not for. I am for putting the national banks of the country under proper limitations, on a parity of competition with the State banks.

Mr. POWELL. I will tell yoù, Senator

Senator Glass. And I have had nobody to justify to me as yet the proposition that Congress should give the national banks of 22 States privileges which it denies to the national banks of 26 other States, or, to reverse the proposition, to deny to the national banks of 26 States the privileges which it accords the national banks in 22 States. If you can justify that proposition go ahead. You will take a great weight off of my mind.

Mr. POWELL. I think, though, Senator, most of the legislation at some stages must be a matter of compromise.

Senator GLASS. Yes; but a compromise ought not to involve as great an injustice as that.

Mr. POWELL. Let us take, for example, the national banks; all the National banks have automatically entered the Federal reserve.

Senator Glass. But as to the State banks, Congress has nothing to do with them.

Mr. POWELL. Take the national bank which I am connected with; it costs up as high as $15,000 or $16,000, or more than that, to be a member of the Federal reserve system.

Senator Glass. Do you want to go out of it?
Mr. POWELL. No. And the State bank that I am connected with.
Senator Glass. Do you want to go out of it?


Senator Glass. How many financial panics have you had since the Federal reserve act was passed ?

Mr. POWELL. I do not care what it costs, I would not do without it; but on the other hand, take for instance the bank right across the street from me. They can get along. They can save considerable during a year that I can not,

and they can get accommodations that I can not get for the discount of bills, etc. But I think that any bank of a certain capital and resources ought to be compelled to be a member of that system.

Senator Glass. But Congress can not compel a State bank to become a member of it.

Mr. POWELL. No, but I was going to say that really that was an approach, or the nearest thing that we could evolve. I really believe that you can get more States into the Federal reserve system by just giving that a little bit more attention. However, it is too deep for

Senator Glass. We appointed a joint congressional committee to ascertain why more State banks did not come in, and to provide ways and means to persuade them to come in, and here we have a bill that will drive those that are in out and keep any more from coming in.

Mr. Powell. I think this is really the cause; the causes for it are, with respect to some of them, a matter of cost.

Senator Glass. I do not want to impugn their motives or reasons, but my impression is that they do not want to endure the overhead cost, but they want you gentlemen to stand that and they reap the advantage of it. That is very patriotic, is it not?

Mr. POWELL. That is so, but on the other hand they have got to come to it. They may think they will not, but they will have to come to it just as sure as anything, in my opinion.

The principle of this bill, Senator, I believe is right. There is no reason we should nationally set up a standard that is antagonistic to what we can support locally, I mean through our local government; we have a large number of different governments in this country, and it keeps us busy paying taxes to the different kinds of government, looking forward to the day the collector is coming around. But what I want to say is this, I do not think there is anything inconsistent in this bill from the standpoint of being understood, provided those gentlemen who represent different interests in the association can be depended on to represent their associations as they should be; that there is not anything there that is repugnant to what is considered a fair attempt to accomplish something. I do not say that it is entirely the just thing, but one thing about it is that if we want to do what is absolutely just, in all probability we will never do anything. We can approximate

Senator Glass. What is the objection to having a provision in the bill prohibiting the establishment by any national bank in any State the laws of which prohibit the establishment of branch banks by State banks? Mr. POWELL. Nothing.

Senator Glass. Wait a moment. And according to any national bank within an incorporated town the privilege of establishing one or more branches under proper restriction wherever the State permits the establishment of such branch under the State law?

Mr. POWELL. I think it is right. The only reason that is not in here is because, Senator, as far as my knowledge goes, this matter, as far as the bankers are concerned, before it reached you gentlemen, was the matter of compromise. A compromise sometimes is the best thing you can do.

Senator Glass. I have not much opinion of the discernment and ácuteness of the gentlemen who agree to compromise on one side.

Mr. POWELL. You do not know how terribly some of those men çan fight. The control of the matter was with the association that did not want to permit branch banking, anyway. As far as I am concerned, I agree to this, representing the people who I do represent, as a matter of approachment to the branch-bank end of it.

Senator GLASS. In other words, you are an advocate of that familiar doctrine of doing wrong in order that good might follow? Mr. POWELL. Yes, sir. As you know, Wendell Phillips said once

. I forget just the words, but I recall that he referred to the everlasting system of compromise.

Senator Glass. Senator Pepper has sent word that the tax bill is coming up in the Senate within a few moments, and I shall not interrupt you any more. You may finish your statement without further interruption.

Mr. POWELL. Senator, I want to say that I think your criticisms are absolutely fair. As far as this $100,000 is concerned, there are practical reasons why that should be changed, in my opinion. You can not go into a city of 50,000 these days and get a building and a place to do business for less than $100,000, and it is impracticable to use up the entire capital of any institution in the getting of a building. That is one thing.

As far as section 4 is concerned, our suggestion was that that be amended so that in States that required a greater capitalization, that no national bank should be organized with a capitalization under what the State banks require. In that way there would be no conflict, and it would carry out the principle that seems to be predominant here.

That, Mr. Chairman, is about all I care to say, except that there is no reason why this section 5990 should be like it is, as far as I know, but that is what the gentlemen agree to.

It has been agreed to by every association that I know of from Minnesota to Texas and from California to the Atlantic Coast. I do not believe that a piece of legislation ever came up that is more generally understood and more generally approved by the people that I have come in contact with, in an effort to do something

that was fair to all concerned. Mr. RATHJE. I suggest, Mr. Powell, that you read your amendment to section 4.

Mr. POWELL. The suggested amendment is: Provided, however, That said capital for banks required hereunder shall not be less than the capital required by State laws for State banks in States where national banks may be organized after the passage of this act.

I think you had a little bit better wording, Mr. Rathje.

Mr. Chairman, I thank the committee very much for the opportunity to be heard.



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Mr. WELLS. Mr. Chairman, I would like, if I may, to confine my remarks to the last clause of section 4 (section 5138 of the Revised Statutes of the United States). The last sentence reads:

No associations shall be organized in a city the population of which exceeds fifty thousand persons with a capital of less than $200,000, except that in the outlying district of such a city banks now organized or hereafter organized may, with the approval of the Comptroller of the Currency, have a capital of not less than $100,000.

Mr. Rathje and Mr. Powell have both covered the point as to why that might work an injustice, and I would suggest that there be added, immediately after the words “a capital of not less than $100,000" this language:

But this exception shall not apply in any city where the laws of the State wherein such national banking association is proposed to be organized, require a capital greater than $100,000.

It would seem to me that that would be perfectly fair. Of course I can not say that all the things we are trying to accomplish can be accomplished without possibly working a leverage on State legislatures to pull the requirements down as to the State banks, and I think the privilege would be availed of largely in the larger cities rather than in the smaller cities, and it would seem that if there were any criticism of the capital requirements of the national banks it would be that no discrimination is made in a city of a population of more than 50,000. It would seem that in the larger city the capital requirement ought to be larger, and all we would like is that exception to the provision found here. Mr. Chairman, that is all I care to say. What I have said repre

, sents the view of the associated banks in Milwaukee comprising the outlying banks of that city for whom we were commissioned to appear here.

The CHAIRMAN. The committee thanks you very much for your statement.



Mr. FISHER. Mr. Chairman and gentlemen, we passed legislation in Wisconsin in 1921 raising the capitalization of the State banks to be organized in the city of Milwaukee from $50,000 to $200,000. Since that time not one State bank has been organized in the city of Milwaukee, but three national banks have been organized in the city of Milwaukee with a capital of $200,000, which would indicate that there is no partiality as against the national banks at all in our city. Our citizens feel perfectly at ease with regard to the McFadden bill and as well do the bankers of the entire State. There are certain other provisions that we are not concerned with.

Senator Glass. How well satisfied with it would you think the national banks would be if Wisconsin should change its mind and permit State banks to have branches?

Mr. FISHER. I feel that if Wisconsin should change its mind and establish a law for the creation of branches of the State banks, the

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