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TREASURY DEPARTMENT
WASHINGTON

August 14, 1934.

COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
"COMPTROLLER OF THE CURRENCY"




Memorandum to Mr. Secies,
Assistant to the Secretary of the Treasury.

Sometime ago we were talking in regard to the
policy of chartering banks.

I told you a t that time

of the general policy of the Comptroller's office, and
which i s expressed i n the attached extract from the
Comptroller's annual report for 1927, which you w i l l
be interested i n reading.

F. Of AWAIT,
Deputy Comptroller.

•attracts from the Comptroller's Annual Beport.
*fhis "bureau is subject at a l l times to the demand for charters for
new national banking associations.

One of its most difficult problems

is to avoid a conflict between the interests of the applicants and the
needs of the comnunity for additional banking f a c i l i t i e s .

Siere is a

strong tend ney on the part of many of those interested in securing
charters for new banks to believe and to urge that because they or
their associates are willing to risk their personal funds in capitalising
an institution a charter should be granted.

Die chances of success

based on local banking and business conditions and the responsibility
of investing the money of potential depositors which would be attracted to them is given but scant consideration.

An analysis of the

applications which this office has received for the establishment of
new banks shows that there is too often a desire to organise banks in
localities where the cocffsonitles are amply served and wnic : would
not support new institutions with a likelihood of any fair faeasure of
succe s.1*
*l£xtreiae care should be exercised in granting charters, both for
National and State banks.
national bteak chart rs.

This has been w policy with respect to
Daring the current ye^r only 44 per cent

of the number of applications received for the establishm nt of new
national banks was approved, as compared with b2 per cent the previous like period and an average of 72,8 per cent over the eight
prior years* with a high of 82•? per cent just subsequent to the world
War. In other words, despite the fact that the number of applications




2.
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ifttracts from Comptroller's Annual report(continued).

received remains about the same, the Dumber approved by this office Is
constantly becaaing fewer and in the current year a less number of applications was approved than has been approved any year during the past 10year period. n
"A large wmbet of failures occurring in the years 192-'- to date have
been In some me. sure due to the too liberal policy of granting charters,
especially during the inflation period iramfeAUtely following the war.
As I have stated elsewhere in this report, an analysis of the applications which this office has received for the establishment of new
banks shows tli t there is too often a desire to organise "bank® in
localities where the community is anroly served by present banking f a c i l i ties and which would not support new institutions with a likelihood
of any fair measure of success.