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602 FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO T H E FEDERAL RESERVE BOARD J u l e S t . SUBJECT: 15_ 192 g 5 ^ 2 2 Branch and Chain Banking. Bear S i r : In s u b m i t t i n g your r e p o r t c o v e r i n g changes i n "branches of member and nonmember banks d u r i n g t h e 12 months ending June 30, 1928, a s r e q u e s t e d i n the Board'• l e t t e r S t . 5120 of October 10, 1926, m o d i f i e d by l e t t e r S t . 5^20 of December 23, 1927, i t w i l l be a p p r e c i a t e d i f you w i l l c a l l t o the B o a r d ' s a t t e n t i o n any e r r o r s t h a t may have been f o u n d i n t h e memorandum on b r a n c h e s of member and nonmember banks submitted t o you with t h e B o a r d ' s l e t t e r S t . 5&91 F e b r u a r y 21, 1928. The Board would a l s o l i k e to have you accompany your r e p o r t on changes in branch banking with such i n f o r m a t i o n a s you have or can r e a d i l y o b t a i n r e g a r d i n g c h a i n banking in your d i s t r i c t . While i t i s d i f f i c u l t t o f o r m u l a t e a d e f i n i t i o n of c h a i n banking, i t i s g e n e r a l l y u n d e r s t o o d to i n c l u d e t h o s e banks over which an i n d i v i d u a l , company, c o r p o r a t i o n , o r group of i n d i v i d u a l s e x e r c i s e s some m a t e r i a l c o n t r o l or i s i n a p o s i t i o n through s t o c k ownership o r o t h e r w i s e t o e x e r c i s e such c o n t r o l . While t h e Board woulS: l i k e t o have your r e p o r t on c h a i n banking a s com?p l e t e a s p r a c t i c a b l e , i t should n o t , of c o u r s e , i n c l u d e banks which may have one o r more common d i r e c t o r s b u t i n which t h e r e i s no c o n t r o l or no r e a s o n a b l e exp e c t a t i o n t h a t c o n t r o l c o u l d be e x e r c i s o d , nor banks w i t h s u b s t a n t i a l l y i d e n t i c a l ownership b u t o p e r a t i n g i n d i f f e r e n t f i e l d s i n the same community, such a s the a f f i l i a t i o n which may e x i s t between a l o c a l commercial bank and a l o c a l s a v i n g s bank. I t i s s u g g e s t e d t h a t your r e p o r t on c h a i n banking be s u b m i t t e d under the following heads: 1 . L o c a t i o n and name of c o n t r o l l i n g i n t e r e s t or group 2. L o c a t i o n and name of banks i n c h a i n 3. Degree of c o n t r o l , i . e . , a . M a j o r i t y of s t o c k b . S u b s t a n t i a l s t o c k i n t e r e s t l e s s than m a j o r i t y c. Inter-locking directorates d. Other ( s p e c i f y ) During r e c e n t y e a r s a number of investment t r u s t s and o t h e r f i n a n c i a l c o r p o r a t i o n s have been o r g a n i z e d f o r the purpose of s p e c i a l i z i n g i n bank s t o c k s , and the o p e r a t i o n s of t h e s e companies a r e l i k e l y t o r e s u l t i n c h a i n banking and no doubt i n some c a s e s have a l r e a d y done so. In view of t h e f a r - r e a c h i n g i n f l u e n c e on the b a n k i n g s i t u a t i o n t h a t t h e s e c o r p o r a t i o n s may h a v e , t h e Board would l i k e to have you f u r n i s h i t with such d a t a r e g a r d i n g t h e s e i n s t i t u t i o n s , i f t h e r e a r e any i n your d i s t r i c t , a s i t i s c o n v e n i e n t f o r you to o b t a i n . DigitizedTO for FRASER ALL FEDERAL RESERVE Very t r u l y y o u r s , Walter L. Eddy, Secretary. AGENTS*
@FedFRASER