The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
•
-
4
FILES SECTION
DO NOT REMOVE ANY
PAPERS FROM THIS FILE
TURN TO
11
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
O
END
SHEET
KIND OF MATERIAL OR NUMBER
41.J1
NAME OR SUBJECT
Committee on Branch Group & Chain Banking
DATES (Inclusive)
Apr - Nov 1931
PART NUMBER
7
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-Form ..1(3. 131
•
• e Correspondence
Memorandum for files
From
FEDERAL RESERVE
BOARD
•
//.
Date_ November 30, 1931_
Subject:
Mr. Carpenter
•I0
2—8495
•
At the meeting of the Board on November 21, 1932, the Governor
presented the attached extract from the proposed annual report of the
Secretary of the Treasury for the fiscal year 1932, stating that Mr.
Mills had inquired whether the Federal Reserve Board would have any
objection to the Secretary's annual report referring to the summary report of the System Committee on Branch, Group and Chain Banking in
the manner indicated.
A general discussion of the matter ensued during- Which it appeared to be the consensus that since the report of the committee is
subject to revision and has not been released for publication, it would
be preferable for the Secretary to refrain from referring to it in the
manner indicated.
1
At the meeting on November 22, 1932, the Goveraor stated that
following the meeting of the Board on November 21, he learned from the
Secretary of the Treasury that the text of his annual report had gone
to the printer for final proof.
Governor Meyer stated that he had in-
formed the Secretary that the Board considered the summary report of the
Committee on Branch, Group and Chain Banking as being in preliminary form,
subject to revision, and that the Board is not ready at this time to decide whether it should be released for publication.
Governor Meyer
added that he understood that the Secretary had subsequently revised his
report to eliminate all reference to the summary report.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
Pr
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Banking
eform.
The developments of the lat decade have uncovered unmistakable
defects in the imerican 1.ankin7 structure. They constitute Riposting
source of weakness in our economic life,
factor
and
have been an important
tbe present depression. meenhey call for fundamental re-
; outstanding facts are as followes
forms.('The
1.
Durnz., the twenty years ended
in 1920 there Nino an enorlous
increase in the number of banks. In 1900 there were about 1440001
in 1920, over 30,000. -)
CIn 1900 there
WRS
one ban
for every 6,467 of the inbabitants of
the 1nited ltatesi in 1920, one for every 3,601.
2.
This excessive rrowth in the number of banks ens Oue in 'art
to our dual system of State and National hanks, and to a laxity resulting from its competitive feature •
There is no doubt that both
State and National authorities have in the past -.ranted bank charters
too freely.
3.
Durinr all of this period unit, banking received every
,ouragement, -Atile branch banking vee6iseouraged and for the most
part prohilted.
4.
The banking system o
the United States as thus developed did
not successfully meet the test of adverse Axcumstances.
In twelve
years there have been over 10,000 bank failures, or over one failure
for Ivory three active TAnka in the country in 1020.
These failures
have involved deposits aggre7ating nearly 45,000,000,000.
They have
brought untold ardship to countless individuals, and !':ave4MAx
quombiecobalkintensified the econolic depression. The Comptroller of the Currency has in recent years re-oeatedly pointed out the weaknesses in our existing iOlik last Annual)tcport of the Secretary of the Treasury it
was recommended that trude area branch banking be adol.tod for National
banks as a
Agiiiida
present ban. in
that weul0
111411141e0-411010,
2141
help overcome some of our
difficulties.
I ANNWIegikeket recommendClon looking to the extension of
branch barking.
Since that report was made to the Congress a oommittee appointed
by the Federal aeserve •.1:ylitem to make a study of the bankinr situation
in the Jnited States has mi0e a remarkable and comprehensive report.
I quote a Pew of the significant passages of the oomnittee's
summary report:
"The country's bankin7 difficulties as renected in a heavy
mortality rate have been a major factor in tYes more seriow stares
of the 1930-19S2 depression, and in a measure are respnnsible for the
extreme depths to which security prices and public confidence declinod.
The growing feeling of insecurity, the withdrawals of deposits, and the
frequent susnensione led to an airiest continuous sale of securities at
depressed levels, thereby endangering other banks and setting up a
vicinus circle whicb has been difficult
o break.
"The suspension of over 10,000 banks during the past twelve years,
involving deposits nf nearly five billion dollars and affecting many
lions of depositors, has had far-reaching social and econnmic -consequenc
Disturbanoes to
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
be orwlit and business structure of the noantry that have
followed in the ele of these suspensions have shown the urgent need for
greater stability of banki-g, ins itutions and greater protection to depositors.
"Economic .onlitions with which the ..anks
ftve had to cope dur2-1-
this period have been extremely difficult. In agrioultural regions a etri,
gle with adverse price trends has been nearly conti'uous since 1920, while
in the pet three years the entire economic ail financial machinery of the
country has been subjected to extraordinary pressure on account of a worldwide depression of unusual dimension and ,luration.
hownver, which results in
A banking structure,
he failure of banks on the scale witnessed durinr
the past twelve years, even though they be years of unusual difficulty, is
one that challenges careful analysis with a view to determinIng the causes
of its weakness.
In order to command the confidence of the people and to
safeguard their interests, a banking structure -lust be eapable of withAanding economic storms as well as flourinhing in Terieds of sunshine."
The 4onmittee sees one of the important oauses of bank failures in
the extremely rapid vomth of
to 1920.
number of lank* in
he years
rom 1900
To quote from the report'
"The number of State and national banks in the country increased
at ar average rate of nearly a thousand per year during the periou
to 1920, largely am a result oP favorable economics oonditions, including
rising prices an
real estate values, as well as in consequence of co'-
petition between the State and the national banking systems.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
In 1920 there
as 4••••
mere in the Inited States about 28,700 State and national banks, the
great majority of which were small institutions, located for the most
part in country towns and in a*fiultural re lone.
"Number of thks and the iopulation per fank in the
United Sta es, by tive-year ,Wriods, 1877-1930.
s
Year
:
s
1877 s
..--
1885
1890
1896
1900
1905
1'10
1915
1920
1928
1930
Number of IlarEs
All
banks(1) : banka(1)
:
2,709
6,141
t
2,726
3,704
:
7,180
6,734
: 10,039
8,084
s
12,005
8,738
1
13,925
14,682
19,973
t
21,486
25,159
2
25,345
s
28,084
28,659
: 30,395
27,639
: 23,554
23,642
23,045
s
TraorporAa 1
1
:
s
1
s
:
:
:
:
:
: Population Rer timik (k)
: Incorporated : Ail
:
banks
: banks
o
t
17,266
: 9,098
:
18,438
t 9,486
15,297
2
7,913
:
t
10,907
: 6,281
5,794
8,607
S
s
8,712
t
: 5,467
5,736
t 4,217
:
: 3,667
4,294
3
3,920
t
t 3,537
1 3,501
t
3,718
4,156
: 4,023
:
5,346
:
: 5,211
71-Inoorporated banks inelUde itate and national banks.
All banks includo State, fittienal, and private banks,
but exclude mntual savingn banks. The precise number
of primate banks in any year is unknown, and these
fiuree are therefore only aproximatoly aosurate.
(2) icpulation figures used mere mid-year estimates as publisled in the statistical abstract."
The pcmlittee also finds that many of the fsClurea have been due to
again
the prevalence of banks of unwsonomio sills. To quote ommoomme from
refort:
"In 1920 there were ovnr 6,000 banks, or 20 per cent of the total
in the .A)untry, with loans and investments of less than A.50,000 and
over 18,000 lanks, or 60 per cent of the total, with loans and invest wits
or less than 5clos000.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
"The record indicates that
he mortality rate increp.sed in inverse ratio
di
to the size of the bank.
During the eleven years 1921 to 1931
suspensions of banks having loans and investments under
150,000
each amounted to more than one-half of the active banks in that size
group in 1920. Combining all size groups below 41,000,000, suspensions
in the same period amounted to 35 per vent, or mere than one in tlree,
of such banks„,operaticx in 1920.
fanong banks having loans and invest-
ments of :1,000,000 and over, on the other hand, suspensions were ot
the rate of about one in seven.
"The typical small Aink 'n recent years has reported unsatiAlvAory
I
For example, an average of 35 per cent of all na'Aonal banks
haain
loans and investments under 0.50,000 had no net profits whatever
bile
%.L.1'bears from 1926 to 1930, and an additional 19 per cent
earned less than 3 per aent on. their invented eapital.
The earnini7s
record improved substartially, however, with the increase in the size of the
L
-s and in the largest size group only a small fraction reported unsatis•
factory earnings.
"A majority of small banks
' found it impossible to earn imams
adequato to permit thus to build up sufent reserves in prosperous times
to tike care of losses incurred during depression.
Furthermore, triall
banks have not been able to obtain a whffieient diversification to
tribute risks properly, or in gewral to seralre a management cepa 10
TII
of pding
safe and profitable operation.
"The snall bank has rompared onfa7orably with the large bank because
i - unit costs
doing
es have been relatively high.
lasiness and its losii
The gro s char7e upon the oolualni4 per 4100 ofaxocomeodation in much
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-6..
hip;her among small banks than among large banks, and the former do
not -oturn as mch to customers in interest on leposits as the latter.
Consaquently, it appears that the serlAces o!. small banks are more
ostly to the community than those of large 1,anks.
"The size group ,180,00004280,000 of loans and investments may
be taken as an example of small banks, amd$500,000410,000,000 as an
•ixample of large banks.
Among the small bank group the typloal gross
retu-n during the period was 0.06 per
inst $6.37 for 4110 large banks.
100 of loans and investm,-
The umall banks, however, paid out
C,8.23 of this alount in oxpenses, wrote off
1.33 in losses, and showed a
marr.in of profit of only 0.80. The expenses
and their losses
oe
the large 1-finks were $4.81
leavin - a margin of profit of 41.14.
The relatively
settsnarrow mar!rin of profit of the :mall Nulk results in a still less
actory rats of profit on invested ca ital oompared with that of the large
bank, owin
to the fact that the large hank has a gre ter volume of 'Melo.
nese per unit of capital.
7 ban -s with loans and investments of under U50,000 there
'Amo,
AT)re 58 sus2ensions per hundred s.tive banks.
This rate declines
regularly as the banks with larger resources come into view and is less
than 5 per hundred for banks with loans and investments of $80,000,000
and over.
Among all banks with loans and investments; of lees thnn
per
i800,000 the swipensions during t'Al eleven years amount. to 38
hundred motive banks in 1920.
c
"As a consequence of the excessive nu.-.ber of banks of anecononi
size an
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
of the relaxation in banking regulati -n, resultinr from s.:,..idec
-ontrol, unsound practices have develr120' at the banks.
Banks have
.made loans without af,equate scrutiny of credit risks, have concentrated
too large a proportion of their loans in the same locality or in the
Uame industry or rroup of interests, ha,Je loaned too mixch of their funds
to the management, and have allowed too larps a proportion of their
assets to become tie.' up directly or Indirooly in oapital coamitmente."
These facts speak for themeel,les.
It has been conclusivoly de•
monstrated that the banking structure of the Tinited States needs modi•
filation.
The material or whioll tobase a banking reform is now available
in the report of the Federal Reserve ;:ystemls :o-ittee on Branch, Group,
and Chaln
anking, as •ell as in the reports and hearin:-1 of'
Banking
and Currency 'tittees of both FOAMS.
I recomend that a joint commiAee of the two Ilouses be created to
work out, in coop ration with the Federal Aeserve i'oard, a complete plan
for bankine; reform
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
that deali with the fundamentals of the situation.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL RESERVE BOARD
OFFICE OF THE GOVERNOR
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
reca A
^-ct
,
•14.
6"1, 011-71-1,04.
e/k_
NoverLer 2S, 1931.
PROGRESS REPORT OF THE COMMITTEE ON BRANCH, GROUP AND CHAIN BANKING
TO THE CONFERENCE OF GOVERNORS AND CHAIRMEN
NOVEMBER 30, 1931
Senator Glass requested the Governor of the Federal Reserve
Board on October 15th to submit to the Subcommittee of the Senate Committee on Banking and Currency any available material collected by the
Federal Reserve Committee on Branch, Group and Chain Banking.
In answer
to this request a preliminary statistical report on certain phases of
the investigation was prepared by the staff of the Committee and submitted to the Senator by the Governor on November 10th.
This prelimi-
nary report consists very largely of statistical tables and charts and
contains very little interpretative text.
The material covers: (1)
Bank Changes; (2) Bank Suspensions; (3) Banking Costs and Profits;
Branch Banking; and (5) Chain and Group Banking.
(4)
A limited number of
copies of this report has been mimeographed and twelve copies are available for the members of the conference.
Immediately after appointment by the Federal Reserve Board
on February 26, 1930, the Committee on Branch, Group and Chain Banking
began to outline the scope of its work and to prepare a program for
its investigation.
The task assigned by the Board was very broad in its
terms, but it soon becane apparent to the Committee that in view of the
importance of the time element sone very definite limitations to its
field of study should of necessity be made.
After surveying the field
in a preliminary way, it was decided to concentrate the Committee's
efforts on certain major projects which bear directly on the question
of the banking structure rather than to extend the investigation too
broadly.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
- 2-
•
•
The phases of the subject to which it was decided to give most
attention are the following:
(1) Bank Suspensions in the United States
(2) Earnings and Expenses of National Banks
(3) The Dual Banking System in the United States
()4)
Banking Concentration in the United States
Branch Banking in the United States
Group and Chain Banking in the United States
Branch Banking in Canada
Branch Banking in England
These projects will be supplemented by a few brief chapters on
such subjects as: economic background for bank changes, competition from
non-banking institutions, certain phases of bank supervision, and perhaps
the banking systems of one or two other foreign countries if time permits.
Among the subjects which the ComEittee feels that it cannot adequately
cover under its present program are: banking supervision in the United
States, functional changes in our banking system, and the banking systems
of other leading foreign countries.
In view of the importance of bank
supervision in this country and its apparent shortcomings it is believed
that any adequate investigation of that subject would have to be made by
a special cornittee endowed with special powers.
After a survey of the material which was then available on the
various projects listed above, the Committee felt that merely assembling
and analyzing this material would make little contribution to existing
information and would not adequately meet the needs of the situation.
Because of the need for a more comprehensive body of data on which a constructive banking program might be based it was decided to collectfrrough
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
-3-
..
various channels whatever additional factual material would be necessary
to give a more comprehensive picture of the causes for banking difficulties and of the forces tending towards changes in the banking structure.
Various schedules, questionnaires, forms and tables were, therefore,
prepared designed to secure the desired information regarding: (1) Each
of the banks suspending since the beginning of 1921; (2) Earnings and expenses and operating ratios of each national bank for each of five years
1926-1930; (3) The organization, management, operating policies, etc., of
the leading group and branch banking systems of the country; (4) The details
of consolidations and other bank changes during the ten-year period; (5)
The affiliations of brinks; (6) the classification of all active banks in the
country by size of loans and investments, size of town and size of capital
stock; (7) Examination reports of suspended banks; (S) Farm loans and other
data showing the nature of agricultural commitments; (9) quality indices of
the investment holdings of banks, and certain other supplementary bits of
information.
Much of this information has been compiled by the Federal reserve
banks but parts of it have been furnished by the state banking departments
and other agencies at the request of the Federal reserve banks.
Much of the
material was not received until this past spring and summer, but, with
minor exceptions, it is now in the hands of the Committee, and the process
of analyzing it is well on the way towards completion.
Reports on these major projects have been submitted and are now
being revised, after which they will be worked over for final submission.
The following is a brief statement of the scope of the work undertaken under the various projects.
Suspensions.
The study on suspensions has been divided into four
sections and material has been collected on each of these phases of the
subject.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
-4-
•
•
(1) A statistical analysis which in addition to giving the ::umber
and location of suspensions makes comparisons on the bais of
the size of banks, size of towns, and geographical divisions.
This study also shows the ultimate losses to depositors of
banks completely liquidated.
These detailed statistical data
cover only the period 1921-1931, while for prior years back
to 1892 more general statistical information has been compiled.
(2) Causes of suspensions as revealed in the study of examination
reports of a limited number of suspended banks.
This touches
upon such subjects as management, supervision, loan policies,
etc.
(3)
Agricultural conditions and bank suspensions.
This is a
study of agricultural changes since 1900, including commodity
prices and land values and their effects upon banking institutions.
It also includes a study of bank commitments to
agriculture and the general credit conditions in agricultural
districts.
(4) Florida--a case study of the effects of real estate speculation on banking institutions.
Earnings and Expenses.
A detailed study of earnings and expenses
of all national banks over a five-year period, 1926-1930, classified accomding to size of bank, size of community and by geographical divisions.
This is supplemented by a presentation of the general movements and fac-
tors in bank earnings and expenses over several decades.
The Dual Banking System.
An examination of Federal and state bank-
ing laws, recommendations, practices, etc., with a view to determining
the extent of the competition Which has existed between the two systems
and the general effects of this competition.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
It also includes certain
•
•
-5-
conparisons and salient facts regarding bank supervision.
Bankin
Concentration.
This is largely a statistical study of the
changes in the number, nature and size of baning institutions including
consolidations, affiliations, etc.
Branch Banking in the United States.
The study on "branch banking
will be covered in two sections.
(1) A general statistical and historical study of branch
banking experience in the United States including a
discussion of the sources and causes of opposition
and the factors involved in the branch banking controversy.
(2) Branch banking in California.
This is a special
study on the growth and present position of branch
banking in California including motivating forces,
effects of the development, etc.
Group and Chain Banking in the United States. An outline of
the development and present position of group and.chain banking,
including organization, management, policies, methods of operation,
etc. It also includes a discussion of the problems involved in group
banking and the effects of this development.
Much of the material for
this report cotes from the questionnaires answered by the principal
groups in the country.
Branch Banking in Canada. This report has been written and after
a limited amount of editing will be ready for ma:Omission.
It includes
a discussion of the following phases of Ganadian branch banking:
structure and supervision, safety, adequacy of service, cost of service,
test of the post-war deflation, and concentration.
In addition to
making use of the documentary and other published material available
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
•
•
• I.
-6in this country, a member of the research staff spent about four weeks
in Canada studying the various phases of branch banking.
Branch Bankini? in Erv7;land. The section on branch banking in
England, which covers rouchly the sane ground as the Canadian study,
has been prepared and with a limited amount of editing will be ready
for submission.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL RESERVE BANK OF SAN FRANCISCO
NoveTber 25, 1951
J. H. Riddle,
Secretary, Committee on Branch, Group and Chain Banking,
c/o Federal Reserve Board,
Washington, D. C.
Dear Mr. Riddle:
There was forwarded to you last night by air—
mail a copy of the material prepared on Branch Banking
in California.
Mr. Dryden has arranged an index which may
be of assistance to you.
Yours very truly,
Deputy Governor.
Letter sent to all F. R. Banks except Boston
November 23, 1931
.4r. L. R. Rounds
Deputy Governor
Federal Reserve Bank
New York, New York
Dear Mr. 2ounds:
In the early pirt of this year the Committee initiated a study
into the causes of bank failures which consisted in compiling the case
historasof 120 banks for several years prior to suspension. These 120
banks were selected from suspensions during 1921-1930 and the material
Is now being analyzed.
In View of the large number of suspensions during 1931, however, as well as the differences in location and factors involved, it
is felt that no study of suspensions would be adaaIate unless it covered
this year. Therefore, 100 banks suspending in 1931 have been selected
in a manner witch should make them representative of this year's fatalities. Those selected from your district are given on the attached list,
and s should appreointe it if you would give us the recent histories of
these banks in accordance with the instructions. The information desired consists of four parts.
First, the comments of the national or Ltate bank examiners,
as the case may be, from the beginning of 1920 till suspension. The
form in which these comments should be drawn up is explEined in the enclosed mimeographed instructions to which is attached uxhibit I, an
illustration. As an aid to interpretation these comments are interspersed with certain figures sho-ving in a reneral ay the condition
of the bank at the time of each examination. Certain other data are
also oulled for. such !is population figures fild earnings. These are
covered in the mimeographed instructions.
Second, the comments of Federal reserve examiners regarding
these banks during the same period, together with any corresponaence,
meaoranda or other material in the files of the Federal reserve bank
which will aid in understamiing the concition and operation of these
banks prior to failure. No special form has been drawn up for compiling this material, but in so far as feasible it should be listed
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Kr. L. R. Hounds, #2
November 23, 1931
chronologically as in the case of the comments of the national and State
bank examiners.
Third, a photostat copy of each bank's bond and other security
holdinge on three different dates; (1) at or just prior to suspension;
(2) approximstely one year prior to suspension; and (3) appro. imately
two years prior to suspension.
Fourth. detailed st'itistical data taken from the examiners'
reports and recorded on "Form F" from 1920 to the date of suspension.
A copy of this form and coments regaraing its preparation are enclosed,
and a supply of the forms is being forwarded to you umer separate cover.
In case the history of any bank in the list is not available
for any reason a substitation should be made of some other typical suspended bank in your district.
In view of the urgent neoeLeity of oompleting this report at
an early date we hope you will have this material oompiled and forwarded
to us as soon as possible. Perhaps you can let us have it by the 15th
of December.
Very truly yours,
E. A. Goluenweiser
Chairman, Committee on Branch,
Group and Chain Banking.
Enc.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
el.40
a(t)4-to
f
.
1
9
(7
•,
t,,f
„
1. go.4.,14 fl
,
)
)
,
6
e-ne-tiv
*".ifm,P4,109 I
i
hv
a9
a,
,1
A4
-61.1
.2 . 471P
it -4-9
j TT
'
'I'
t
ti
://:,:,,
1
e
,
91
,
-1A
4X
4
erv-t
•
i
r. 4-^bvi
j
iki &
4l
/nedt 111
,1i
A1 ‘114
)4, 4,M
4
1
6'. ''
'I
i
,
ti
fr
,.4
,t
1p
7,
,
792Z.
)
rr
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Suspended Banks Selected for Case Studies
?hiladelphia District
1. Citizens National Bank
2. First National Bank
3. First National 3unk
4. First National Bank & Trust CO.
5. Westmont Nf.tional Bank
6. Overbrook Nntional Bnnk
Jenkintown, ?R.
Orbisonia, Pa.
Portage, Pa.
Merohantville, :J. J.
Westmont, N. Z.
Philadelphia, Pa.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
/
1,4,4/ 44,1' 0A,
41
ittifo.
i.c.A....e.
,c, Lt.( /7)• -Ds
a
ret. -a-P-A3
'
•••
. i
/° Xi,
‘44)
s-
3,,
0ini.c.4441,i'a .4.//qx
p,4 tA,
e4
kle/9ay
/
r•
,r
a•
I
fl
,Susoended Banks Selected for Case Studies
Richmond District
First National Bank
First National Sank
National Bank of nortan
Kingwood National Bank
First National Bank
First National Bank
First National Bank
First National Bank
Seoona National Bank
10. First National Brink
1.
2.
3.,
-Ai.
5,
- 6,
,7.
-g.
p
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Kinston,
Clinton,
Norton, Va.
lo.
Kingwood,
New Windsor, gd.
City, va.
Case
h
Anawalt,
Va.
Cowen,
in.
..lorgantown,
la.
la.
Mchiood,
(.)-0
I/
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Suspended Banks Selected for Case Jtudies
Chicago District
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
First National Bank
First National Bank
First National Bank
Oconto National Bank
First National Bank
National City Bank
Irving ?ark National Bank
First National Bank
First National Bank
First National Bank
First National Bank
First National Bank
First National Bank
Citizens National Bank
First National Bank
Washington Park Nat'l 3k.
First National Bank
National 3ank of
North estern Trust & Vg8. Bk.
Fowler, Ind.
Doon, Iowa
Yeedersburg, Ind.
Oconto, Wisconsin
Downers Grove, Ill.
Ottawa, Illinois
Chicago,
Newton, Iowa
Coin, Iowa
Merrill, Iowa
Randolph, Iowa
Reed City, Mich.
Erie, Illinois
Kokomo, Indiana
Logansport, Ind.
Chicago, Illinois
Boyne City, ioh.
idneY, Iowa
jilioago, Illinois
:laspended
an
oelected for _Gass Studios
St. Louis District
"
First Nation%1 Bank
First National Bank
first rational Bank
°onto Natipnal
4746/L
6. kirbc .atioLal bank
7. First rational Bank
S. duLlhines First National Sank
9. First rational Bank
10. City Nation-1. Bank
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1.
2,
3.
4.
adora, Ark.
Holly r;rove, ;zrk.
Brookfield, MO.
6
7 A . • 9nd
4
"
eitAl.t
lft4
“uverty, ill.
Blytheville, Ark.
Silorva „prins, Ark. (1
Carterville, Ill.
?adqcah, ry.
'41
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Suspended Banke Selected for Case Stuaies
Minneapolis District
1.
2,
3.
4.
5.
6.
7.
d.
9.
Anoka National Sank
First or Farmbrs UA.ional Junk if,
First Wationnl Bank
Jank
30ttinehu
Bank
onal
First Nati
Fum1er.3 Lationil
First National Bank
Firat htionaL bank
First National Sank
tnokn, ;ann.
Luvorm,
Tracy, Ann.
•
D.
Van Hook,
D.
1)rid6cwatur,
Sisseton, S. D.
te;'urtvi1le, .inn.
Fairchild, ;dem.
roe
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Juspendad 114Xas Stlecte4 fOr
atilt Jtudils
Kansas City District
1. Limon National sank
2. first National Sank
3. First N:Itional Bank
4. First rational Bank
?irst Lational Bank
6. First National sank
7. First National Bank
8. First Rational Bank
Limon,
Colony, Mans.
BeggL,
71!,ta,
YuAla, )lo.
0115.nen, T7ebr.
Auburn, Nebr.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
6u6Per1600 bilaka Lieleoted for Case zAudies
Dallas District
Pla!nview, Texas
1. Plainview National Bank
2. Coleman National Bank
_ge.D.Soleman, Texas
3. First Nationbl Benk itr-Fteirtlim'llitiA44.41., Texas
1 exas
Turkey, 2
4. First National Bank
PPso, Term;
• ?irst r‘lti,1710. parl
UZI El 43-4rfrre4---_.
-67 *04441-1P“Mttrat-llealr-&
,
6,
•
Tilis is a State bank and if its history is not sufficiently complete for our purposes, please sestitute a tilLontli
bank. We suggest the First National Bank of Clint, Texas.
tAolovilt_ '""
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4 1
:
i•
174 'V
.7, 34,4,44 414ill.
.404;-.1
/__4/
atioav
iotaii,e-e-ptire24,4-14-41:_l
-r.A.L.111,4,:azt,1144
f.,41-7-g'116}
A,e4424 914L1JJ1
/-
4111
Federal Reserve Committee on
Branch, Group and Chain Banking
November 20, 1931
CASE HISTORIES OF SUSPENDED BANKS
Instructions to Federal reserve banks for analyzing typical cases
of member banks which suspended operations in 1931
PURPOSE:
The purpose of the analysis, is to show in concise form the history of factors developing in the bank which ultimately led to its suspension. This history
is to be taken principally from comments contained in the reports of Examiners
over a period of years. The history should commence at the beginning of 1920
and be followed through to the time of suspension.
It is intended that a person reading the report should be able to obtain
an understanding of the problems which confronted the bank and to form therefrom
an intelligent opinion of how its affairs had been conducted for a few years
immediately preceding its suspension.
METHOD:
For each of the suspended banks on the attached list prepare an analysis in
accordance with the attached example, Exhibit 1. In the interest of uniformity
these examples should be closely followed. In order that this small sample may
be as nearly typical as possible of the suspended banks in your district the
names have been picked at random without any regard to location or cause of
failure.
Do not write the names of the banks on the analysis forms, but number them
according to the numbers on the attached list.
In furnishing the population of the city or town in which the bank was
situated, give the census figures for 1910, 1920 and 1930.
So that those studying these reports may have some idea of the economic life
of the community served by the bank which suspended, a brief reference to the
principal crops grown or industries followed should be given.
ECAMINERS
COTS:
Attention should be devoted to brief comments by the Examiners indicating
their impressions of the general affairs of the bank. Examiners in each instance should be designated by letters of the alphabet, merely to inform the
reader whether or not the reports had been prepared by the same man. Whenever
reference is made to a certain Examiner, obviously the same letter should be
used throughout.
The statistical information regarding the condition of the bank, given
at the beginning of a report and immediately following the comments of the
Examiner, are to be taken from the examination reports.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
- 2EARNINGS:
This information shotld be compiled for five complete calendar years
It is to be derived from the
immediately preceding the bank's suspension.
Earnings Reports submitted by banks to the Comptroller of the Currency, copies
of which are in the possession of the Federal Reserve Agent.
The item "Net Income" comprises the difference between the total
debits and credits to Profit and Loss Account exclusive of debits for "Losses
Charged Off" and credits representing "Recoveries" on assets previoubly charged
off.
The item "Recoveries" represents the collection of items previously
charged off the bank's books as losses.
The item "Losses Charged Off" represents the write-off of worthless
assets and depreciation on securities, banking house, furniture and fixtures,etc.
ASSESSMENTS BEFORE SUSPENSION:
The history should include voluntary assessments as well as those paid
under statutory levy in order to remove an impairment of capital.
BAD ASSETS PURCHASED BY STOCKHOLDERS:
Inasmuch as this information is not given in Reports of Earnings, but
invariably is touched upon in the re-7orts of Examiners, it will be necessary to
search the latter records to ascertain to what extent, if at all, stockholders
have marchased assets directly from the bank or through a Holding Colripany, or
have otherwise nade voluntary contributions to avoid an assessmc.at or the reduction of Capital, Surplus or Undivided Profits Accounts.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
EXHIBIT I
Bank Organized:
Bank Suspended:
1890
1928
Population of Town:
Principal Crops or Industia Served b
9599
14027
10349
(1910 census)
(1920 census)
(1930 census)
Bank:
Lumber, fishing, shipping.
Important Exceribts from Reports of Examination: (Amounts in thousands of dollars)
Date
Can.
11-16-20 Examiner A:
400
Surplus &
Profits Loans Deposits Borrowin-„s
9g
1965
2591
50
Classified Assets
Slow Doubtful Loss
82
4
9-12-21 Examiner A: "Present management is considered good. Large agregate of
undesirable assets were mostly inherited from former management. There is no
question but what present capital is too large. At time of consolidation it was
left at this figure in anticipation of material increase of business but owing to
depression of business generally bank shows a loss in deposits instead of expected
increase."
1542 2015
195
9-12-21 Examiner A: 400
63
00
4
93
2-23-22 Examiner 3: "Bank's present condition is probably due to some extent to
general slunp in prices and business generally, but is mainly duo to unwise policy
of previous management. Present management is in no way to blame for ?resent
condition."
52
1367
1614
507
2-28-22 Examiner 3: 200
00
0
53
10-17-22 Examiner C: "President is not a factor in management but other officers
are capable. They with the more aggressive members of the board will probably be
able to solve the problems of bank's present rather undesirable situation. Management has been too eager for business with result that many loans are frozen and
heavy losses are likely to be sustained. Bank is somewhat extended and has experienced some difficulty in financing seasonal operations of its cusotmors. Directors
advised that they believed worst of difficulties was over and their future position
should be easier."
10-17-22 Examiner C: 200
1456 1914
00
73
33
15
57
4-10-23 Examiner D: "This has always been a one man bank. Years ago President
was dominating figure, succeeded. by Cashier__ who recently resigned, and now being succeeded by Vice-President. President is hardly a factor in bankls management. Past and ?resent management are anxious for business many loans made as a
matter of policy."
4-10-23 Examiner D: 200
11421 2073
00
97
20
57
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I
•
EXHIBIT I (Contld)
Date
Cap.
Classified Assets
Surplus 2:
Profits Loans Daoosits Borrowins Slow Doubtful Loss
10-22-23 Examiner D: "Former President deceased. President
is following
closely in footsteps of predecessors and conducting largely a one man bank so far
as he can handle matters. He appears very easy in extending credit or making too
many loans as a matter of policy and also very reluctant and timid in enforcing
collection on criticised lines apparently being afraid he might lose a customer
directly or indirectly. This report shows some inprovement but as a rule imiprovement has been made in reduction or elimination of slow or undesirable assets that
were least subject to criticism, while loans most severely criticised have changed
but little. Directors were advised that unless materialimprovem:ent was shown at
next examination, pnrticularly as applied to loans to directors and concerns in
which directors were interested as well as large amount of statutory bad debts,
overdue paper, slow, doubtful, and otherwise undesirable paper, special* (*frequent) examinations would be recommended."
16.9
1537
1971
S9
12
00
10-22-23 Examiner D: 200
59
4-26-24 Examiner E: 'President, who dominates policy to large extent, is a good
'business getter', but rather weak in making collections, and is endeavoring to
handle too much of bank's affairs alone. He should have a conservative bank man
to assist in management and this matter was thoroughly discussed with him. Some
general improvement has been made, although there still remains much to be done
before bank is clean. Slow assets show considerable reduction and a deal has been
made for sale of Other :Zcal Estate."
54
1438
1727
271
4-28-24 Examiner E: 200
6
00
52
11-25-24
Examiner E: "Directors and officers state that large amount of slow and
doubtful assets were inherited at time of consolidation with another bank several
years ago. However, it appears that a number of large lines and slow assets have
accumulated since then as a result of 'business getting' oolicy and too free extension of credit. President is capable but too liberal and too lenient in making
collections. Besides, he has recently spent too much time on -personal natters and
enterprises. This was also severely criticised by examiner and he now promises to
devote all his time to bank's affairs with a view to getting bank in good condition
again. Principal matter subject to criticism is large amount of Overdue Paper which
including statutory bad debts aggregates about 28% of bank's total loans. This
matter was severely criticised by examiner during directors' meeting. Examiner informed directors and President in particular that unless decided improvement in
matter of attention to slow and doubtful assets and overdue paper was shown at an
early date by correspondence consideration night be given by office of Chief Examiner to matter of placing bank on Special List* (*meaning for frequent examination)."
2011
103
69
1435
11-25-24 Examiner E: 200
00
58
9
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
6
11101HIBIT I (Contld)
Date
CaP.
•
Classified Assets
Surplus &
Profits Loans Duaosits Borrowings Slow Dafytful Loss
6-22-25 Examiner E: "A material improvement in note oouch is noted in regard to
amount of overdue paper. Classification of loans, however, shows no iDm-ovement.
Slow loans show a decrease of $40,000 but doubtful items show an increase of
$52,000. Losses charged off at this time amounted to $17,690 as compared with
$9,452 at last examination. Large amount of increase in paper classed doubtful
is almost entirely due to change in classification during examination. No new loans
of slow and doubtful character are being made and most of loans criticised at this
time have been in bank a number of years and are workout problems. Some losses may
develoD in items classed doubtful but it is believed bank's earning capacity will
enable it to charge off losses as they develop. :o dividends are to be paid until
bad debts and doubtful items are eliminated."
5-22-25 Examiner E:
18
12g3
306
150
56
00
200
12-2g-23 Examiner D: "Directors as a whole compare favorably with average country
bank. They are successful men in their individual lines of business and would do
well if they had an agressive leader. Management is very weak, lacking force, if
not incompetent, as indicated from numerous criticisms listed. President is well
mening but easy going, entirely too free in granting of credit and while a large
number of frozen and questionable assets are an inheritance from former management
it is evident that President does not have ability or inclination to collect or
clean ire these old matters. President is believed to have had little banking experience outside of this bank. Cashier is as easy roing as President with even
less initiative. It is, however, perhaps true that President would not permit asaumption of any authority by any other employee as he appears anxious to manage
entire bank even including opening of all mail personally. When suestions were
made or criticisms directed at several heads of different departments they commented
to examiner in effect that President was equally to blame as he would not permit
any leeway when they were disposed to bring about correction of some of criticised
matters. Writer examined bank in 1923 and a comparison with his previous re2ort
discloses numerous assets criticised at time unchanged and apparently no attempt
made since then to liquidate various statutory bad debts and other questionable
and frozen assets. Exa:ninclr recommends that bank be placed on list for frequent
examinations until condition is satisfactory and that next examination be made 90
days from date."
12-28-25 Examiner D: 200
316
96
2621
52
00
51
1g55
4-10-26 Examiner D: "Writer examined bank in 1923 at which time President was
then Vice-President and at which time he succeeded to Presidency. Bank has for
many years been a one-man bank, and condition generally unsatisfactory greater
part of time. At examination in 1923 examiner urged management and directors to
take -prompt and aggressive steps to collect or secure large amount of statutory
bad debts and other overdue paper, slow and questionable assets, and directors were
advised that unless such assets were given immediate attention bank was certain to
sustain large losses. Examination of 12-28-25 when compared with 1923 shows
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4
4110KEIBIT I (Cont td)
Date
Cap.
•
Classified Assets
Surplus 67;
Profits Loans Deposits Borrowings Slow Doubtful Loss
majority of larger and more undesirable asscts still in bank with many large loans
unchanged except that they were two years more 7oast due and it was evident that
management have made little, if any, attempt to scctre status of such paner subsequent to 1923 or previous. This state of affairs was rather forcefully brought to
attention of directors during 12-2g-25 examination and a substantial amount of
uncollectible assets of 1923 and previous were listed as estimated losses.
So
many promises and so much assurance was Given examiner at previous exarination
that immodiate stops would be taken to improve condition that the few changes and
lack of improvement are most disappointinc and discouraging. Special examinations
at short intervals will probably prove useless and a waste of time as but little
imprI vement can be expected in three to four months, time. Frequent examinations
will undoubtedly create unfavorable comment and Gossip to detriment of bank.
Examiner has lost what little confidencehe had in 1923 in President and Cashier
and it is not believed theso two will work the bank out of its most unsatisfactory
condition. Without frequent examinations and the -present management in charce it
is believed bank will be permitted to drift and it ap-2cars to bo a choice of two
evils, each reacting unfavorably for bank and its shareholders. Directors were
adviseP that examiner had no authority to demand or request resignation of any
emoloyee but that it was duty of examiner to make reco=ndations to directors for
good of bank and it was suGgested that if present .1,anagement did not show a desire
or inclination to work with directors that directors should employ someone who
would take charge of bankts loans and who would be res,
?onsible only. to board and
not subject to interference by President or Cashier and it was further su-,,gested
that directors coEpel officers to comply with resolutions passed that no new loans
in excess of ,t00 be made without first being authorized by finance committee and
that directors compel officers to furnish at Board mcotins information they desire concerning status of loans and
IS
assets and that if present officers arc
not competent in opinion of directors and bankts welfare be improved by a change
of management that they give serious consideration to same."
4-10-26 Examiner D: 200
262g
1941
26S
19
00
llg
43
g-13-2S Examiner P: "General condition shows vcr: little nance. Condition is
most nnsatisfactory and unless some chances are made I do not expect to see any
material change for some time to comc. President as well as directors aro of
opinion that they should not be asked to put up money to eliminate any losses and
doubtful paper, contending that bank can earn its way aut in time. Examiner does
not agree and informed them that they would be civen until next examination to
provide for losses estimated. Examiner informed directors that they would be
given until next examination to make some provision to provide for losses and
other items totaling $144,g19.39. Your examiner hardly expects to. cot enough. ,
money to eliminate all this paper but thoucht that by placing this program before
them thay would exert themselves to collect this paper. Estimated losses were not
chargeI off for IS
reason. Examiner thought that if situation was to be brought
to a head it should be done at ono time. Ey idea was to place them on notice that
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
411/
EXHIBIT I (Contld)
Date
Cap.
•
Surplus &
Classified Assets
Profits Loans Deposits Borrowings Slow DaThtful Loss
something would have to be done by time of next examination and perhaps some concerted action could be obtained for the better. It is respectfully recommqnded
that bank be not placed on special list at this time. I do not think special
examinations would be of any value now.
8-13-26 Examiner F:
200
47
1915
172
2672
00
go
59
1-25-27 Examiner F: "General condition shows some slight improvement and officers
and directors promised to continue efforts towards collecting criticised opper.
At this season business is very poor and collections slow. Real estate is extremely difficult to sell and a large amount of bank's loans depend on sale of city
property, farmland, and timber. With this condition it is entremely difficult for
management to collect any paper predicated on above assets. President is interested in entirely too many civic affairs and other things and cannot devote all his
time to bank. During examination I took particular notice and he spent majority of
time out of bank. This was forcefully called to his attention and his excuse is
that no one else will do it. Your examiner had a frank talk with President and
endeavored to show him that he was doing wrong. On other hand he spends his
personal money for benefit of bank in way of transportation, etc., and there is no
question that he is doing his bast to place bank in a more satisfactory condition.
He is one of most pleasing men I had had the pleasure to come in contact with but
is inclined to let people impose on him and some of his financing is su:1),ject to
criticism. He trios to help people and concerns who do not even do business with
the bank.nnd anyone can take up his tire whenever they desire. At present bank
has good earning capacity, approximately from r,;325,000 to $40,000 per annum after
expenses and with a reduction in interest paid savings depositors it would mean
some $18,000 a year additional profits. In past few years all earnins have been
used to charge off; losses. In oast six years bank has charged off over $172,000
in losses and recoveries have amounted to over $26,000. This is believed to have
been in addition to assets eliminated by a reduction in capital of $200,000. Practically all these assets were inherited by present management and that holds dood
with assets criticised in this report. This report shows estimated losses agcreating $132,000 and on February 14th I wired your office status situation.
After several conferences were held directors reached conclusion that an assessment would not be proper procedure. It was finally agreulthat they would personally purchase these items and it was definitely understood that they were to be
purchased for cash and under no circumstances were any notes to be taken by bank.
This they aueed to do, but wanted 30 days in which to complete their arrangements
and accordingly your office was notified. Your wire of February 15th was received
in which you stated that impairment notice would be withheld for 30 days and I
accordingly notified management that they would be given until March 15th in which
to complete their plans.
179
00
19
200
41
1803
2701
132
1-28-27 Examiner F:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
LTJ
IliErtiIBIT I (Contld)
Date
Classified Assets
Surplus &
Cap. Profits Loans Deposits BorrowinF,s Slow Daubtful Loss
8- 2-27 Examiner F: "Condition remains most unsatisfactory and uanac;oment apPears
to be making very little progress in collecting criticised assets. President con•
tinues to dominate and
apparently directors cannot control him. Bank is overloaned and President continues to make loans that will prove very slow and also
continues •to try and finance everyone in the community. Regardless of advice he
receives from examiners and experienced bankers he does not change his policies.
I am afraid that if he does not change his ways he will find bank in a serious
condition one of these days. I had a talk -vith his principal correspondent banker
on August 16th and he told me he had talked to President a short time a4o and if
he did not change they would be inclined to refuse his bank further loans. The
Federal Reserve Ban:: is very reluctant to discoUnt his eli.gible paper and are constantly watching him. I am not all satisfied with condition or policies and feel
that something must be done to correct situation. In view of this situation it
is respectfully recommended that bank be placed on special list and be again
examined in about 90 days."
514
oo
1950
2512
4o
8- 2-27 Examiner F: 200
52
1-20-28 Examinerexamination was made on basis of &„oing bank, it has b een
ir
difficult to write repo rt, and examiner has attempted to classify assets as they
are classed under the receivership. It is to be noted that 'slow assets' has
II
been eliminated. Examination was commenced on afternoon of 1-20-28 and was completed 2-11-28. Precarious condition was thoroughly discussed with directors
latter part of February at which Chief Examiner was present and ways and means to
eliminate estimated losses and frozen assets was topic of conversation. It was
concensus of oon that efforts should be made to organize a new bank to assume
•
amount of assets. With this thought in
deposit liabilities and take over a like
II
11
as to progress made in
with
tauch
mind examiner left bank but kept in
the
latter
resif,:nation
part of January and
this direction. President tendered his
manner
that
it left a great deal
this was published in a local newspaper in such a
of inference with regalt that a run was started which rea,ched such proportions
•
After a thorough
that examiner was requested to return and advise with directors.
analysis it was deemed advisable to close the bank as run had reached such proportions that it was useless to keep open.
00
333
810
2473
1745
1-20-2S Examiner52
Earnings: (In thousands of dollars)
1925
Net Income (Gross EarninEs
less Expenses)
Recoveries
Losses Charged Off
Assessments before Suspension
Bad Assets Purchased by Stockholders
Dividends
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1924
1929,
34
0
25
0
0
8
1
19
0
0
0
10
35
0
0
0
1925.
10,27
Total
)0
30
145
5
1
44
33
0
0
0
0
18
156
0
6g
6g
0
8
Federal Reserve Committee on
Branch, Group and Chain Banking
November 23, 1931
Comments Regarding the Preparation of Form F
Form F should be prepared for each of the suspended banks on the
attached list from the beginning of 1920 till the time of suspension. For
the years 1920 to 192S the first examination report each year should be
selected and a separate copy of Form F prepared for each report. For 1929
and 1930 two examination reports each year, the first and the last, should
be analyzed. For 1931 the form should be prepared for each examination
made, including those made at the time of saspension or after suspension. A
blank form of the examination report is attached with marked references to
the items to be taken off on Form F. These are references to the current
edition of the examination form, of course, and certain adjustments will have
to be made in taking off the data for earlier years.
1. In connection with slow loans, doubtful paper, etc., the earlier
examination reports had a column "Other undesirable paper" for which no provision is made on the analysis form. This should be classed as "slow" with
a footnote indicating the amount.
2. Some of the items, as for example, "Contracts for deed" (item 23) require considerable scrutiny to see whether anything along this line is shown
anywhere in the examination report.
3. Items 20-22, pertaining to real estate loans, require much care in
compiling because the figures are not available in the desired form in the
reports, and certain combinations are necessary.
4.
In the earlier years care must be exercised to see that rediscounts
are included in loans and discounts. Furthermore, in obtaining total borrowings,care must be taken to see that rediscounts are added to bills payable,
for rediscounts are shown on the resource side as a deduction from gross
loans.
5. After transcribing the figures from a given examination report, it
should be compared with the previous report to see that it is on a comparable
basis.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Federal Reserve Committee on
Branch, Group and Chain Bankin4110
Form F
ANALYSIS OF NATIONAL BANK EXAMINATION REPORT
Date of Report
Place
Name of bank
Item
(L.
(R.
Where found (page)
Liabilities on Page 1
Resources on Page 1)
Amount
(In thousands
and tenths)
1. Capital
2. Surplus
3. Undivided profits
4. Reserve for depreciation and losses
1
1
1
1
-
L.1
L.2
L.3
L.4
5. Bankers' deposits
6. Time deposits
7. U. S. depcsits
1
1
1
1
-
L.S
L.13
L.14
L.8-14
1
1
1
1
-
L.17-20
L.16
R.1
R.1 & 5-11
9a
9b
10.
11.
- R.12
- R.14-20
1-Part of R.24
12,
13,
1)4.
8. Total deposits
9a
9b
10.
11.
Borrowed money
Borrowed bonds
Total loans (including rediscounts)
Total loans and investments (incl. rediscounts)
5.
6.
7.
s.
fixtures
12. Banking house, furniture
items,
and due from banks
cash
13. Reserve, cash,
14. Excess (if any) of expenses over earnings ...
1
1
15. Loans to officers & directors (direct)
16. Loans endorsed or guaranteed by off. a di
17. Loans to interests of off. & dir. (direct)
2
2
2
15. Par value of stock owned by directors
2
is.
19. Past due loans A & B
14.
19,
5
5
5
23
'
21,
22.
5
23.
20. First mortage (Loans without prior liens,
except where called "contract")
21. Junior mortgages (All loans with prior liens)
22. Prior liens (to junior mortgages)
23. Contracts for deed (more often in recap. of
...
investments on Page 7)
Liquid Investments
24. U.S. bonds other than those securing circulation 1
Other investments not in default Lparket value)
25. Foreign
7
Railroad
26.
7
7
27. Public utility
25. Industrial
7
"7
29. lainicipal bonus
30. Ij.scellaneous bonds, tax certificates, warrants,
and other liquid investments, excluding; foreclosures claims,judgments and defaulted bonds 7
Other Real Estate
31. Book value
32. Prior liens
33. Estimated value
34.
35.
Slow loans
Slow bonds, securities, etc.
36. Slow "Other" real estate ..
- R.6.7
24,
25,
26.
27.
25.
29.
30.
8
31.
32.
8
33.
11
11
11
34.
5.
36.
11
Doubtful assets and losses - Loans .
35. Doubtful assets and losses - Bonds & secur.
39. Doubtful assets and losses - All other
11
11
37.
38.
39.
40.
11
10.
37.
Value of assets not shown on books
41. Large state, county a municipal deposits
subject to check
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Yellow Page A
41.
7
••
••
FEDERAL RESERVE BANK OF SAN FRANCISCO
November 25, 1931
Dr. E. A. Goldenweiser,
Chairman, Committee on Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Dr. Goldenweiser:
In preparing material for the use of your Committee, concerning
the development of Branch Banking in California, the intention was to record the facts and to avoid the expression of personal views. You may be
interested, however, in receiving the personal opinion of one who has been
very close to the movement from the time Branch Banking was brought into
prominence.
It is my conclusion that the major development of Branch Banking
in California, say from 1921 to 1927, was conducted in a hasty and reckless manner, without regard to any economic demand for a change in the
banking structure of the State. Why the transition failed to throw the
greatly-bewildered populace into a panic, can only be explained by the
fact that the public at that time was impervious to good reasoning and accepted every innovation as a matter of natural development.
Whatever may be done in the future to give legal sanction to the
expansion of Branch Banking, by effecting consolidations with unit b-mks
or otherwise, safeguards should be provided so as to give the public time
to consider the effects of such a development and the means to prevent consolidations which are inimical to public welfare. Existing unit banks
also should be afforded an opportunity to resist being stampeded into
Branch organizations through threats or inducements which they cannot withstand. Stockholders should have a dependable means of ascertaining the
actunl asset values of shares in which they are investing or exchanging
their own bank stock.
The feverish expansion having subsided, it might now be said
that Branch banks in California are earnestly engaged in coordinating their
all-too-rapidly-thrown-together organizations, to the end that a useful service may be rendered commerce, and the interest of depositors and stockholders better safeguarded and served.
Ultimately, I believe it will be found that good Branch organizations in healthy competition with strong metropolitan unit banks and sound
rural unit banks will be beneficial for commerce, agriculture and industry
in California.
Yours very truly,
cc. to Mr. &read, etal.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
norvilfw areunrylivr.
FEDERAL RESERVE BANK OF SAN FRANCISCO
t
C
,01
November 23, 1931.
,
,
1,<))
tPAcP V
<.
0
5#p
7
4'(4
Dr. E. A. Goldenweiser,
Chairman, Committee on Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Dr. Goldenweiser:
You have probably seen the questionnaire sent by Senator A. H. Vanderburgh of Michigan to State Bank Commissioners, relative to proposed amendments to the Federal Reserve Act.
It has not come to my hands, but I have
read some letters which would indicate that four proposals have been made,
namely:
(1)
(2)
Extension of the maturity of member bank notes from 15 to 90 days;
Admitting for rediscount debentures of Federal Intermediate Credit
banks having maturities of not more than six months, and also
obligations of municipalities which are now eligible for purchase under Section 14;
(3) Making eligiIle for discount paper secured by stocks and bonds (Lombard's);
(4) Granting Reserve Banks permission to make emergency advances
against sound paper not now eligible for discount.
In the correspondence and newspaper comments which I have seen in
connection with these proposed amendments, the recommendations are invariably
based upon the idea that these provisions, particularly the one permitting
the Federal Reserve Bank to make advances against obligations not now
gible, would prevent suspension of sound banks.
I am writing to inquire if it would not be well for our Committee to
obtain some information from the Governors of the respective Federal Reserve
Banks as to whether they have any knowledge of the suspension of a solvent
member bank having non-liquid but unouestionaqz_sound assets.
Speaking for the Twelfth District, I do not know of any instance in
which a suspension could or should have been averted by the extension of
credit.
Most failures are due to a loss or heavy impairment of capital. The
cure for such cases rests with stockholders and not with credit-granting agencies.
Yours very truly,
WV
cc. to Mr. Smead, et al.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
de
Deputy Governor.
••
Form 148
••
TELEGRAM
FEDERAL RESERVE BOARD
LEASED WIRE SERVICE
WASH I NGTON
2-904
ero
November 23, 1931
Clerk
'6an Francisco
Can you lat us &Ire another copy of your maruscript
on Broroh eauking in lalifornia?
BID=
4ri
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
OELEGRAM
•
•
FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)
RECEIVED AT WASHINGTON,
D. C.
151gb
Sanfrancisdo 1025am Nov 23
Riddle
Care Board Washn
Yours twenty third copy branch banking manuscript in preparation
will reach you about twenty seventh or twenty eighth.
Clerk
146p
• le 00••30.111.1T
rya urrno•
mina
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2-11901
corm No. 131
9
•
Office Correspondence
To
Dr. Ooldenweiser
From
Mr. Riddle
FEDERAL RESERVE
BOARD
Date 'Iovember 19, 1931
Subject:
Ore
Yetit-Trare-that-!tr. 117111-ffewir-re4-eed Lme question
/rout the
percentage of payments to claims of suspended national banks as shown
in Table 15, page 78, of the Committes's preliminary statistical report.
The figures in that table represent general or unsecured claims
as contrasted with secured claims.
They are lpsed on 267 national
banks which suspended during 1921-1930 and which had been completely
li'uidated at the time the schedules of information were prepared for
the Committee.
The table indicates that payments on the general or
unsecured claims of those 267 national banks equalled 49.7 per cent
of the total general claims.
This figure corresponds rather closely to deta published in
recent reports of the Comptroller of the Currency.
page 25, this sentence occurs:
In the 1929 report,
"The average percentage of dividends
paiu on cLims proved against the 103 receiverships that were finally
cicsed in the year ending October 31, 1929, not including the 2 banks
restored to solvency which paid creditors 100 per cent, was 49.2 per
cent."
In the 193) report, page 31, WM be found the following:
"Proa the above it will be noted that the average percentage of dividends
paid on unsecured liabilities at date of suspension of the 83 receiverships that were finally closed during the year ended October 31, 1930,
not including the 4 banks restored to soliency which paid creditors
100 per cent, was 52.89 per cent."
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2—S496
••
I
-2-
The figures on the table which you handed ae and which presumably was prepared in the Comptroller's office
cnsare cumu-
lative and include all failed national banks since 1865 which have been
completely liquidated.
dated darin
They do not represent the banks failed or liqui-
the years given, but the cumulative total on October 31st
of each of those years.
Apparently the banks suspended and liquidated
prior to 1921 paid a much higher nercentage to depositors on the average
than banks which failed during the ten years 1921-1930.
You will note,
for examole, that the banks which had failed up to October 31, 1921,
had paid 77.2:; per cent on claims, but by October 31, 1930, all liquidated banks had paid only 68.33 per cent on claims.
It is evident that
those banks which were finally liquidated during 1921-1930 on the average
paid a much smaller percentage on claims than banks liquidated prior to
that time.
77 to 68,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
This resulted in reducing the cumulative nercentage from
PERCENTAGES C7 DIVIDENDS AND OTHER PAYMENTS TO CREDITORS 07 INSOLVENT NATIONAL
BANKS FINALLY CLOSED FOR PERIODS ENDED OCTOBER 31, YEARS 1921 to 1930, INCLUSIVE
_
•
For years
ended
Oct. 31--
Totel of all trusts
finally closed, excludinE those restored to solvency--
Total assets of all
receiverships finally
closed, excluding
those restored to solvency--
Average percentage of
all dividends paid on
claims proved against
trusts finally closed
Averaae percentage of
all payments to all
creditors if offsets
allowed, disbursements
for protection of
assets, payments to se.
cured and preferred
creditors are included
with dividends paid--
1921
527
$361,4.1:6,770.03
77.25%
83.70%
1922
529
365,862,851.00
77.21
83.72
1923
537
377,440,261.00
77.66
84.03
1924
555
386,831,314.00
74.38
81.72
1925
56s
396,055,015.00
77.84
84.24
1926
597
)112,172,350.0O
76.91
83.55
1927
638
439,130,998.00
714.714
50.95
1928
712
469,551,622.00
72.36
80.57
1929
815
514,476,412.00
70.19
79.13
1930
898
559,147,916.00
68.33
77.99
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
tip
PERIOD 1921-1930
•
APPROXIMATE PERCENTAGE OF LOSS SUSTAINED BY UNSECURED DEPOSITORS
IN STATE BANKS WITIOIT TUVE BEEN COITLETELY LITIDATED*
(Preliminary tabulation)
State
Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
New York
New Jersey
Pennsylvania
Delaware
Ohio
Virginia
Maryland
West Virginia
North Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Louisiana
Tennessee
Indiana
Michigan
Wisconsin
Illinois
Iowa
Missouri
Kentucky
Arkansas
"innesota
Forth Dakota
South Dakota
Montata
Wyoming
Nebraska
Colorado
Kansas
Oklahoma
Texas
New Mexico
Arizona
Utah
Idaho
Nevada
Washington
Oregon
California
*The data on 115 banks %ere
Percentage
No. of banks
of loss
0
0
0
0
0
0
n
0
0
0
1
n
0
0
0
0
2
12
0
0
0
0
45
3
2
0
0
0
1
0
12
36
110
62
6o
5
46
9
2
0
16
9
11
17
6
12
2
41
20
36
2
37
176
119
102
51
1
30
14
6g
49
55
72
35
,17
,
39
22
65
4g
9
15
0
62
34
7"
122
.0c
46
56
24
16
4
33
g
3
0
0
28
52
0
0
32
33
13
36
4
14
too fragmentary to be included in t,lis tabulation.
Federal Reserve Board, August 27, 1931.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
0
Novsmber 19, 1931
Mr. Ira Clerk
Deputy Governor
Moral Reserve Bank
- an rrancisco, Calif.
S
Dear Mr. Clerk!
Thanks for the manuscript on brRnch banking
in California, which we shall all to over with
intar,,qt..
I realise what R task this hRs been
for you, particularly in view of all the other
urgent &made upon your time.
Very truly yours,
11. A. Goldenweiser.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
••
•
FEDERAL RESERVE BANK OF SAN FRANCISCO
November 17, 1961.
Dr. E. A. Goldenweiser,
Chairman, Committee on Branch, Group and Chain Banking,
c/o Federal Reserve Board,
Washington, D. C.
Dear Dr. Goldenweiser:
It would seem to me that the work of our
Committee would not be complete without a brief resume
of the banking system in Hawaii.
As you may know, banking in the Islands is
almost exclusively comprised of branch systems.
Mr. Rid—
dle may be interested in reviewing "The History of Bank—
ing in Hawaii," by Cecil G. Tilton, published by the
University of Hawaii in 1927.
Yours very truly,
rtzot7
Deput3 7/overnor.
cc. to Mr.
Mr.
Mr.
Mr.
Smead
Rounds
Fleming
Riddle.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
THE SECRETARY OF THE TRE
S l RY
WA S H I NG TO N
November 16, 19)1.
Dear W. Morrill:
I have received yout letter of the
11th instant, and thank you for sending me
the confidential copyof materisl_on branch,
group and chain banking which the Federal
Reserve Board has transmitted to Honorable
Garter Glass, Chairman of the Sub-committee/
of the Committee on Banking and Currency
of the United States Senate.
Very truly yours,
Mt. Chester Morrill,
Secretary, Federal Reserve Board,
ington, D.C.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL RESERVE BANK OF SAN FRANCISCO
November 14, 1951
Dr. E. A. Goldenweiser,
Chairman, Committee on Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Dr. Goldenweiser:
Pursuant to your telegram of November 3, 1951,
I am enclosing incomplete material compiled on Branch
Banking in California.
A considerable number of changes have been
made since our recent discussion, but I doubt whether
Mr. Dryden and I
such changes have been beneficial.
are not satisfied with the work--probably we have looked
at it too long. However, we both agree that the topical
treatment of this subject has caused so much repetition
as to make the article unattractive from a reader's
standpoint.
Yours very truly,
Deputy Governor.
cc. to Mr.
Mr.
Mr.
Mr.
Smead
Rounds
Fleming
Riddle
•OraLEGRAM
•
FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)
RECEIVED AT WASHINGTON, D. C.
211gb
o4Z
4/0
44wsttlitit
ty
Sanft&ncisco Nov 13 126p
Goldenweiser
Washn
Draft branch material will be in your hands tuesday at latest
appreciate your patience.
Clerk
337p
• 00V CV.INT
storms arms, 1911
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2-11901
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
•
•
FEDETtAL R:t-3E-FtATE BANK
OF CLE-NrELOIND
/7
Novem
1951.
H. Riddle, Secretary,
Committee on Branch, Group and
Chain Banking,
Federal Reserve Board,
Washington,
Dear Mr. Riddle:
I thank you for your letter of the 10thin
which you enclose a copy of the statistical report that you
have prepelred for the Glass Committee.
I do not know when I will have the opportunity to look this over but the first chance I hnve I will
be glad to do so.
In the meantime I have turned it over
to Mr. Carter, who was active in the accumulation of data for
the report and if he has anything to suggest I will incorporate it in my reply.
Yours very truly,
Dep4
F.m
Governor.
Form No. 181
• Aft
pondelke
FEDERAL RESERVE
BOARD
▪ McClellanC,
T° \
*TVMr. Gol-'enw-is411 A 4,
•
EhaeltveTiber 11. 1931
Subject:
•••
r
I am sendinR. you eight additional copies of the material on
Branch, Graup, and Chain Banking.
Mr. Pole has one.
The Governor 1-17,,s one copy and
There are, therefore, enough copies for the
other !!embers of the Board and two in addition.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2—8495
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
••
••
FEDERAL RESERVE BANK
OF NEWYORK
November 11, 1951.
Mr. J. H. Riddle, Secretary
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
This will acknowledge your letter of yesterday
enclosing two copies of the statistical material which you
have prepared for the use of the Glass Committee. I shall
be glad to look this over carefully and will write you later
any comments that occur to me.
iath thanks for these copies, I am
Very truly yours,
LAL
L. R. Rounds!
Deputy Governor
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
November 10, 1931.
donorable Carter Class,
Lynchburg, 7irginia
Dear Senator Glass:
In accordance with my letter of October twenty-second,
I take pleasure in sending you two copies of certain material
prepared by the Federal Reserve System's Committee on Trench,
Group, and Chain T3anking.
This material covers: (1) Bank
Changes; (2) Suspensions; (3) Banking Costs anl
Branch Banking, and (5) Chain and Croup Banking.
rofits; (4)
The material
in these reports consists of tables and charts, together with
a brief explanatory text.
As the data are in preliminary form,
subject to revision, they are not yet ready for publication, and
for that reason have been narked "confidential".
I hope thet these reports may be of service to your Subcommittee.
A limited number of copies has been mimeographed,
and the committee will be glad to supply you with
tional copies, if you so desire.
With best wishes, I am
Sincerely yours,
B
D MEET1NU
Governoz.
few addi-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
November 4, 1931
Mr. L. R. Rounds
Deputy Governor
Federal Reserve Bank
New York, New York
Dear Mr. Rounds:
I an sending you herewlth IWO copies of the stareport
tistical
Which we have prepared for the Glass committee. I hope you will have an opportunity to look this
Over an[i give us the benefit of any suggestions which you
may hnve.
Perhnps the Governor or Mr. Case or Dr. Burgess
would be interested in seeing this preliminary report because it indicates in a way the nature arid scope of the
work we are doing.
Very truly yours,
J. H. Riadle
Secretary, Committee on Branch,
Group and Chain Banking.
•
•
•
Form No. 131
Office Correspondence
From
FEDERAL RESERVt
BOARD
Subject:
Mr. Riddle,_Secretary,
Caunittee branch, Group & Chain Banking.
_Afro_ Wyatt..General Counsel.-
•
•
Date November 4, 1931.
Digest of conslidatten,and merger provisions of Federal
and State-law.
•PO
This office has now completed work on the final revision
of the digest of the laws of the United States and of the several States,
as of July 1, 1931, relating to the consolidation. merger, etc., of banks
and trust companies, which it prepared at the request of the Committee
of which you are Secretary.
I am, therefore, handing you herewith ten
copies of the digest as finally revised.
I am also furnishing Messrs.
Smend and Goldenweiser with a copy. but it is assumed that you will
furnish each of the other members of the Committee with a copy if that
is deemed necessary.
Very truly yours,
Walter W tt.
General Counsel.
Digest herewith.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2--8495
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
November 3, 1931
CLERK
SAN FRANCISCO
RETERHINI TELEPHONE CONVERSATION TESTERDAT COMD YOU
SEND THE MATERIAL HER2 IN ITS :RESENT FORM AND HAVE IS
EXAMIN7 IT WTORE DECIDING ON NEXT MOVE?
GOLDKNWEISER
•
firLEG RAM
FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)
ti
1111II
"
lr ••••
cf)
%
cP
• c. •
✓ .4%
4
t;t1 (7.4,)
Vol
RECEIVED AT WASHINGTON, D. C.
015
'LD
rd asu -i ckly
itii1
- tkinj. a
-T1 -
s pobsi
••.v
n
Clerk
2Cep
o. L ger
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
mammon, twotroc• ern. Iv,,
2-11901
n i),•
but
OELEGRAM
••
FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)
181gb
RECEIVED AT WASHINGTON, D. C.
Sanfrancisco 111
Goldenweiser
Washn
Let me know most convenient hour I can telephone you today relative
branch banking report
Clerk
11.1.1,1310 &MOM: 1916
0.•41011•1104VIDIT 11,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2-11801
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
•`ri
;
.
FEDERAL RESERVE BANK
OF NEWYORK
>
4t/541.
11
'
SP4
,0 (;,?/
AlliteS,
,141.5
k
October 26, 1931.
Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Goldenweiser:
Your letter of October 25 is received enclosing
copy of a letter from Governor Meyer to Senator Glass, also copy
of the progress report.
I am in entire agreement with the thought that we
should push this report through to completion at the earliest possible date. If it can be expedited by adding to the staff, that
should certainly be done.
Very truly yours,
LAL
L. R. Rounds
Deputy Governor
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 23, 1931
Mr. L. R. Rounds
Deputy Governor
Federal Aeserve Bank
New York, rew York
Dear Ur. Rounds:
I am enclosing for your inform%tion a co2y of a
letter dated October 22nd from Governor ;Illeyer to .-Anator
Glass stating that our Committee could make available to
the Oenator during the ewrly part of November certain statisticrl mnterial -shi,7:11 has been aollented. 'ye are now
putting this material into shape as rapidly as possible
and will send you a copy as soon as it is lonpleted.
You will note in the last paragraph of the
Governor's letter that he asked us to expedite the work
of this Committee as mtufa as possible. Orally he expressed the wish that we should push the '.7ork to completion faster than is indicated in the proposed progress report which we lalive prepared for submission to the
forthcoming Conference of ;overnors Ind Chs.Irmen,
copy of thi3 progress report is attached for your information. In carrying out the go7ernor's wish we may
find it necessary to employ one or two high grade men
provided they can be found. 7;P shall certainly maks
every effort to conclude the work as soon as possible.
Very truly yours,
E. A. Goldenweiser
Cmirman, oolanittee on Branch,
Group and Chain banking.
Sno.
October 22, 1931.
Honorable Carter Glass,
Lynchburg, Virginia.
Dear Senator Glass:
I have been out of the city for a few days and this is the first
opportunity I have had to reply to your letter of October 15.
I have discussed with Dr. Goldenweiser, Chairman of the Committee
on Branch, Group and Chain Banking appointed by the Federal Reserve Board,
the status of the work of the Committee.
He tells me that some of the
material that has been gathered by the Committee probably can be made
available to you during the first part of November.
This material,
which will include statistical data, together with some charts and
explanatory text, with respect to (A) Bank Suspensions; (3) Earnings
and Expenses of National Banks; (C) Banking Concentration; (D) Branch
Banking, and (E) Group and Chain Banking, will be forwarded to you as
soon as it can be put in shape.
While considerable progress has been made in connection with the
other features of the Committee's study, much remains to be done in the
way of digesting and interpreting the material, and Dr. Goldenweiser
thinks that same little time may be required to put it into such shape
that it would be useful to the Committee.
We have asked him to expedite
the work as much as possible, and he assured me that he will do so.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
With best wishes, I am
Sincerely yours,
(Signed) Eugene Leyer
Governor.
October
11, 1931
Mr. Clerk's elements on ',tudy
Mr. 711,Ale
of Canadian Branch Banking.
Ur. Greer
kr. .Aerk's letter of_.,eptelaber 28th4,1!., been turned oTer to
me, end his suegestions have been incorpornted in the Canadian study.
I
have found them extremely pertinert end very euoh to the point, and I
reeret that Mr. Clerk hns not hnd time to make P lerger number of observations.
The following are a few explenetory notes or revisions made in
response to certain of his comnents:
In the first reference to the le;-1 limit of issee of Dominion
notes, at the top of enge 5, I hive deleted the nhree "there being no
legal limit to their expansion."
cited the terms of the Finance
On
we 5. line 20, however. I have
,It or 19:A to show thet there is no
legal limit to the amount of Dominion notes which the -'rensury may
issue and lend to the bens eesinst apnroved securities and commercial paper.
The statement as it stood originelly at the ton of page
5 was submitted to three seenrete Csnadian bankers, to the Inspector
General of Banks at Ott-re, end to the
cretry of the ..;anadian Bank-
ers Associetion, erd no exemptions were taker to it.
-!-.10.7ever, since the
bald assertion is at first glance a litle startling, and we have, of
Course, no Wish even by implication to criticize the Cenadien currency
1878, I hwie
only left the sielnle statement of fact in the explanetion
Of Trraslry advances, substantinted bye. suitable referene to the
Finance :et.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
"
ligrarell
-2-
Mr. Clerk's
nt on page 56, line 20, I have
almost verb:Itim as u pnrneraph on the position of the loci .x,nager.
Also I h%ve deleted the formally mmibered tentative conclusions
on pages 56-57, replacing them by a brief paragraph.
I am
-riting
an additional brief chapter of the report, aith the title "Conclusions," where I shall summarize important implications of the factual
material.
With respect to Mr. Clerk's sugestion to incluae
-
cussion of th, restrictions on C.:,nadian banks in the sale of stock,
have added on pae 9 a fuller statement of the provision:, of the
law.
In the - Conclusions" chanter I shsll emphasize this feature
again, althoiTh not too strongly.
damnginp! reply -Prom some
Too much stress _ight draw a
rewho hss seen (aE I have) circulars of
-)ank shares--as in-
New York brokers urging the purchase
vestments, it iu true, rath-r than for speculatiJe purposes, but very
energetically advertising them just the .ame.
I understand that they
are in fact freely bought and sold "over the counter" in wontrepl anu
Toronto, although p,rhaps not on
5
very large scale.
It would not b,
wise either, I think, to insist too much on the freedom of Canada in
the post :ram skullduggery in the mattsr of raising money to start
banks.
There is, for exam)le, tle well authenticated case in 1.S.1.0
of the organizers of the Farmers 'Bank, taking personal nites fcr its
shares and then pledging the notes
s col:ateral for loans from a
trust cowpony in order to raise the cash necessary to commence
nese.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
busi-
I
If poLaibly Mr. Clerk may have had an opportunity to think
over other parts of the C nadian study, 1 shoqld be v,ry grateful for
his further oomments.
1,5 you icnow and at your suggestion, 1 am .;laking
some rearrangement of the material in .2hapter i/, on costs of operation,
as 7e11
RS
substituting average figures (which the Canadian banks have
promised to furnish) for earnings and expenses during the five years
1925-1929, in the comparisons with member banks of the Fedeml '7=Atserve
4rstem.
Perhaps 2r. Clerk might hf,ve same suggestion
ment of the subject matter of thib chapter.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nE
to the treat-
October 16, 1931
Governor Meyer
Mr. Goldenweiser
Mr. Tiarrison told me this morning that the Board has received
a letter from Senator glass requesting that his sub-committee be
furnished, in so far as possible, with the data collected by the
committee on branch, group, and chain banking.
I am sending you herewith a copy of a
report of progress
which Mr. Biddle, tae canmittee's secretary, has prepared for
submission to the autumn conference of governors and chairmen.
This report of progress indicates the subjects that the committee
is working up and the status of the different investigations.
As
I told you the other day, I do not feel that we can give Senator
Glass anything in the nature of a report from the committee at this
time, because the material has not been thoroughly digested and interpreted, and such reports as have been prepared by the members of
the staff have not been gone over or approved by the committee.
I
think, however, that if the Eoerd thinks it desirable the committee
can famish Mr. Glass witvii0Arstatistical data, together with some
charts and explanatory text, on the five principal statistical inquiries; namely. (1) Bank Suspensions; (2) Mornings and Ixpenses of
National Banks; (3) Banking Concentration; (4) Branch Banking, and
(5) Group and Chain Banking.
I believe the committee can make tide
material available to the Senator in the early part of November.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Governor Meyer,
Oetotr.l f-7, 1931
I inauld like to suggest that you talk this matter over with
Senator Glass in order to make it clear to him that the system
wishes to do whatever it can to be of assistance to him, and that
we are not at this time submitting the entire report because it
does not exist, rnther than because we are holding anythine back.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Letter sent to F. R. Banks of New York
Chicago
St. Louis
Minneapolis
Kansas City
Richmond
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 14, 1.931
Mr. L. R. Rounds
Deputy 1Jovernor
Federal Reserve Bank
New York, :lel' York
DeLlr
r.
ounds:
, to get for the Committee's
Wo4d it be possiA.:
use the approximate numbe.,-
f correspondents which the Now
York banks havo in each state in the Union?
;te are not in-
terested in names of banks or depoJits but morely the naLibr
of correspondent accounts in each state.
Very truly yours,
(o1donweiaor
. 1— 1.
Chairman, Committee on Branch,
Group and Chain 311nAng.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October /4, 1931
Mr. Ira Clerk
Deputy Governor
Federal Reserve Bank
San Francisco, rIalifornia
Dear Mr. Clerk:
Enclosed is a copy of a progress report whioh we
propose to submit to the forthcoming Conference of Governors
and Chairmen. I understand that no date has been set yet
for the Conference and there will doubtless be time to make
any revisions which may occur to you as necessary. The
other members of our Committee will presumably be in ;:ashington the early part of next week and will give us their
views of this report at that time.
Very truly yours,
J. H. Riddle
Seoretary, Committee on Branch,
Group and Chain Banking.
ilk
Mr. L. R. Rounds
Deputy Governor
Federal ieservo Bank
New York, New York
Dear Mr. Rounas:
We have been pushing the work of the Oommittee as fast as
sible with the staff at hand, and vol7 sql;ot&lital
pootp.e.
,
,siu lAwri
since you were last here. Umbers of the staff have prepar
ed preliminar.
draft reports on all but two of the major projec
t:, which have beau under.
taken. In tap cases, that is, Branch Banking in Canada
and aranch Banking in En4and, a second or third revision has alread
y been mgde, and
these reports with some editina will he in Food shape,
In the Cq94 of
three other studies, Rank Snene , sions, Ilarnine:s and .7xpons
1
es, and Banking loncentration, the preUminary reports, nfter
careful and detailed
criticism fraa various souin'es, are no,
: undergoing their first revision.
Mile same of the reports have been in fairly -ood sillape
when
submitted, others have been below expeotetions and have raised
doubts
as to Ihether the particular individuals would be nble to prepar
e satisfactory reports even with the usual amoumt of criticism and
supervision.
This, I presume, is normally to be expected in any research
organization
as large as the present staff of our Committee,
but it seems to hit us
particularly hard becouse of the alaiert need for completing
the work at
as early a date as possible. :.1oreover, two of these report
s which I
have in mind are on very important phases of the investigetio
n where
a poor presentl3tion wolld be very noticeable
and would seriously detract froai the .7loarsittee's whole work.
In fact it is essential that
these bIrticular reports be unusua
lly good.
I have talked this matter over fully with Dr. Geldenweiser
and Mr. Llmead and raised the tlestion lith then
s to what stept might
be taken to remedy the situation and push the
cork forward to '3 conclusion at the end of thr, year if possible withou
t anking essential
sacrifices in the quality of the reports. At are all
agreed that it
Is very important to finish the work as soon fit)
possible. After
spending as much time and effort as we have in
oollectin 77 the material, however, we cannot afford to do a second
rate job in analyzing
this mat rial and writing the reports. As
you know, each one Of these
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
October 13, 1931
Mr. L. R. Rounds, #2
finishreports is a major piece of research in itself and the problem of
ed.
anticipat
y
originfill
-Is
than
ing them up is proving to be a bigger task
for
In view of the circumstances it seems desirable to secure
proven
of
economist
two or three months the assistanoe or some trained
he
ability in writing on banking and iinahcial subjects. There would
cost
possibly
might
no object in getting any but A-1 ability, but thiE
thousand dollars a month for two or three months. There
the Committee
is no tsturcnce. cf Course, thnt we can find such a man on short notice,
ser and
but it would probably be worth the effort to try. Dr. Goldenwei
begin
to
might
Mr. Awed have suggested tlul if you approve the idea we
aopointlook around to see if we can locate such a person but that tie
ment should ML be made until after the full meeting of our olmmittee,
which presumably will be eoetime next week.
As you mow, we kv.ve alreody made some reductions in 'yir staff
and others wil. be released shortly. 7herefore it seems that the peak
of expenditures for the Committee has been rlssed and will continue to
decrease from now on ::ith the eloeotion of tois suggested additional
member c:" the staff.
de should like to have your views on tem suggestion. 1 can
give yo vt over the telephone any further information which you may want.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Very truly yours,
j. h. Riddle
ecretary, Committee on Branch,
Group and Chain Banking.
FEDERAL RESERVE BANK OF SAN FRANCISCO
September 28, 1931
Yr. J. S. Riddle,
Secretary, Committee on Branch, Group and Chain Banking,
Federal Reserve Eoard,
Washington, D. C.
Dear rfr. Riddle:
Your letter of September 15th) enclosing Yr. Greerta article
on "Branch Banking in CanEda," reached me just as I was clearing my desk
in preparation for an absence of several weeks with the Committee on Re—
serves; concec_uently, I have not been ablc to study the report but I have
read itthrough and made the hastily prepared conments which follow:
Page
3,
line 14:
The theoretical principles of the Canadian Banking System are
hot an adaptation of the Scottish Banking System but of that of the United
St. tes. The late Sir Edmund Walker, when President of the Canadian Bank of
Commerce, stated:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
"There are very few people who know that we
system of banking very largely — the beginninjilt'
all events — not from Scotland and England, as we might
suppose, but from the United States. That great genius,
Alexander I:I
rilton beganII as early as ln0 to fight for
a system of banking which would have branches and would
both gather in and distribute capital in an easy way and
cause
to be an arm of the Ltate, helpful to the
II
State as
a whole, as opposed to the system of banking by
little institutions scattered all over the country,
which may be very powerful in their own small areas but
are not powerful in aorkinr; for the country ao a whole.
Thct struggle har lasted in the United States from 1790 to
the preaent time, and when we established our first banks
in Canada we took some of their features from the charter
of the bank establiohed by Alexander Hamilton, so that we
began with the ideac of bankine; which had already been
teated to sone extent on the American continent, and it
has been successful thus far."
•
2
Page 51 line 1:
I believe there is a legal limit to the amount of Dominion notes
which the Canedien Treasury may issue. 1:3r recollection is that the limitdlons
existing at the time of the Uorld War proved very embarrassing and had to
be enlarged, but they were not left unfixed. Time does not permit running
this down, but it is suggested thet Mr. Greer conrm
fi
his stament.
te
Page 51 line 4:
I do not understand why the Treasury would issue Dominion notes
in large denominatims "to make advances to banks for their own note issues."
It seems to me that bills in large denominations would be issued to banks
so that they could mointain the statutory ratio of Dominion notes11
to total
cash reserves.
Page 5, line 16:
It might appear to a casual reader that the amount contributed
by the note-issuing banks to the circulation fund CS% of thcir note issues)
may not be sufficient to retire all outstanding notes of a suspended bank.
I think you will find, however, that as seen as the fund is depleted by
charges for notes of a suspended bank, it must be restored by the banks continuinc: in operation, so t
the notes of a suspended bilifank cre in effect
'I
immediately retired to become
a first charge egainst the assets of the
suspehded bank. A casual observerLI may not realize the justice of a note
creditor standing ahead of a deposit creditor. The distinction between
the two is, of course, that one may select his own bonk of deposit, thus
becoming a voluntary creditor, whereas it is not convenient or desirable
to have the public discriminate in the matter of notes which must pass
freely between involuntary creditors.
Page 5, line 20:
It might be well to say that the note-issuing privilege represents one of their chief sources of income, instead of representing one of
their chief earning assets.
Page 91 line 14:
Jhile it is true that Chartered Banks are prohibited from lending
money upon the security of their own shares as well as the shares of other
Chartered Banks, they are not prohibited from making loans against the pledge
of stocks of foreign banks for instance, although in practice it is probably
not done.
It might be well at-thit-point, also, to discuss the fact that
the stock of the Charter-6d Banks of Canada is non-negotiable and, therefore,
This, I feel, is a very strong feature and could
not desirable-1or roans.
be adopted in the United States to very great advantage. If it had not been
possible for nen of limited capacity and financial resources to make a place
for themselves in the bankinj world by organizing banks with funds provided
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
by the pledge of their bank stock, a very large proportion of the
banks
that have failed (and are likely to fail in the future) mould never have
been organized.
Page 9, line 20:
Might it not be well to develop at this point the thought that
the Chartered Banks can not only augment their loanable funds by the issue
of additional notes (within prescribed limitations) but they may also
borrow money directly from the Dominion Treasury against the pledge of
assets.
This is a rediscounting facility which, while not elaborate,
fills to a lesser degree the functions of the Federal Reserve Bank in
the United States.
Page 10, line 21:
Would it not be better to say "so that prospective creditors
may have the protection of being able to learn of prior commitments,"
rather than "so that later creditors may have the protection," etc.?
Page 15:
The establishment of district supervision has the purpose, of
course, of relieving manarrers of the necessity of doing business with a head
office far removed from the scenc of action. To all intents and purposes,
the district supervisor is the local manager's immediate superior, and in
all matters pertaining to loans, for instance, the manager never feels the
presence of the head office. Mule it is true that the district supervisor
may
iF himself under limitation by the head office in the amount to which
exercise his own discretion in a_proving loans beyond the limitations granted
the managers, the manager is unaware of what might transpire between the
district supervisor and the head office in regard to large loans subritted
by branch manaFers to the district supervisor. To state the case briefly:
The district supervisor is the branch manaLTrio head office.
if
Page 16, line 14:
It does not seem consistent to say that a financial statement
i&des-Ignedprimarily to disclose the current assets and - iabilities and the
borrower's ability to pay the loan when due, and to imply that only secondary
assets. The British strategy in ap
Iproaching
consideration is given to fixed
I!
II
a financial statument is to examine first the borrorer's net worth, then his
liabilities. Their bankens believe that the applicant for credit should
III II
show that he has more at the risk of the enterprise than the prospective
borrower's creditors would have. In examining liabilities, the case of
Ii of tl-eburden which must seek re—
incumbrances upon fixed assets is a
•i
lief from the borrower's current transactions. If the net worth of the
borrower and his relationship of debts thereto is appropriate, then con—
sideration iF given to whether the pro:,ortion of current assets is suffi—
cient in the normal turnover of business to liquidate current indebtedness.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Nr. J. S. Riddle - -
A
I do not think the credit-granting practices of the Canadians is ruch different
from those of any large and well-managed bank in the United States, except
1
that the Canadians are more insistent about borrowers liquidatin thcir bank
I'
indebtedness annually than we are on this aide of the line.
Page 45, lines 7 to 12:
There is opportunity for misunderstanding that the subject is the
size of the loan to individual borrowers rather than the volume of loans which
may be made by a branch office compared with a unit bank. While it is true
that a lirge volume of loans might be made at a srall office by reason, for
instance, of some large industry having its principal place of business in
the town in which a small branch is situated, it usually follows that where
there is a large volume of loans, there is a respectable volure of deposits.
I
II
The thought Yr. Greer had in mind was, possibly, that the branch office was
not restricted in the relationship of loans to its deposits, whereas a unit
bank is because the latter must obligate itself for borrowed money to the
extent that its capital and deposits are inadequate to provide means to
meet the loan demands of the community.
• I think also that it is a mistake to imply that member& of the
Federal Reserve System can extend themselves farther than non-members. On
the whole, I think that member banks are pretty well checked by the Federal
Reserve Bank wherever there is an indication of over-expansion. Non-member
I
are even more inclined to have disproportionbanks, particularly small
II
ate borrowings because their credit relationchips with correspondent are
based more on the safety of the transaction to the correspondent bank than
on hia• soundness of the operation from the standpoint of the borrowing
bank's stockholdera and depositors.
Page 56, line 20:
I think it is generally overlooked that branch managers are
under the whip of capablc superviEors who expect the manager to obtain at
If the inclination
least the bank's share of business in the community.
-conservatism,
he
will ultimately
over
that
of
manager
is
of the branch
demand
for
progressiveness.
little
is
there
where
find himself in a branch
unwisely,
the rein
credits
to
extend
inclined
On the other hand, if he is
of the supervisor is tightened.
Page 62, line 13:
The operating expenses of a group of Canadian banks should be
compared with those of the members of the Federal Reserve System. The words
"members of the" have been omitted.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Page 77, line 12:
.The substance of this paragraph would be clearer by making two
separate statements:
(1) That there are no usury laws;
(2) That the rate of interest which can be collected by
legal procedure, where none is stipulated, is 7%.
The remainder of the statement in the paragraph, intending to
give the range of interest rates charged customers, does not do so. The
implication is that the absence of usury laws results in borrowers paying
exorbitant rates of interest. I think the facts woulJ not justify this
assumption.
It might be informing to say that the established practice of
Canadian banks is to collect interest to maturity at the time of making. a
loan, which tends to make the actual cost of credit a fraction higher than the rate
or interest specified. This as you know is identical with the practice in the
United States in regard to paper sold through bill dealers (commercial paper).
Th3 1- .--;ason the cost is slightly higher than the specified rate is that the
borroaer has the use of a les er sum than if interest were payable and col—
lected at maturity.
As I recall, the rate of interest collected before maturity is
not specified in the note. The bank merely deducts six, seven or eight percent,
as agreed upon at the time the loan is made, and unless the borrower is to pay
more than 7'/; (the legal rate) after maturity, no rate is specified in the note
for that contingency. I am not conversant with the Canadian laws relative to
usury, nnd assume that 7r. Greer has checked this carefully.
I wonder if Mr. Greer would care to consider including some dis—
ea—ion as to restrictions which are placed upon Canadian banks in the sale of
stock. Inasmuch as ae have had a considerable amount of manipulation of bank
stocks in the United States with some disastrous results, it might be said
that Canadian bank stocks do not favorably lend themselves to the practice of
speculation, first, because they are non—negotiable, and, second, because a
Chartered bank is prohibited from selling any original or increased stock of
a bank for more than the percentage which the surplus of the bank bears at the
time of issue to paid—up capital.
Yours very truly,
Deputy Governor.
cc. to Dr. Goldenweiser
Smead
7.r. Rounds
7.7x. Fleming
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
IiIP III
i
0)0A.
vs"
/(9:7 '40
FEDERAL RESERVE BANK
OF NEWYORK
.
September 26, 1931.
Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Goldenweiser:
As requested in your letter of September 15;
I have taken up with Mr. George F. Rand, President of the Marine
Trust Company of Buffalo and the Marine Midland Corporation, the
matter of the use in the report of the Committee and its possible
subsequent publication, of the material furnished by the Marine
Midland Corporation in response to the questionnaire of the Committee.
This morning I am in receipt of the following
reply from Mr. Rand:
"Replying to your letter of September 22nd
regarding our answer to the qUestionnaire prepared
by the Federal Reserve Committee on Branch, Group
and Chain Banking, we will be glad to have the Committee use our reply together with the other material which we sent, as they so desire."
from which you will note he giveshis approval to the use of this
meterial in such manner as the Committee may desire.
Very truly yours,
LAL
L. R. Rounds
Deputy Governor
SENT TO ALL F. R. BANKS EXCEPT CLEVELAND
2eptember 22, 1961
Mr. Fridnils L Curtiss
Federal Reserie Agent
Federal Reserve Bank
Boston, Massachusetts
Dear Mr. Curtiss:
As you doubtless know, the Federal Reserve Committee on Branch,
Group ant stn Banking expects to include in its report a chapter on the
competition encountered by banks on the part of non-banking institutions,
notably building and loan associations, savings and loan associations,
and similar societies conducted on the mutual or cooperative principle.
Several of the Federal reserve banks have been good enough to =vile and
transmit to us much valuable information, whieh in the main will be sufficient for our pur,cses. We are anxious, however, to make sure that the
report shall not fail to take account of any new—developments of Laportex.
which may have occurred in :event months, particularly with respect to the
manner in which building and loan associations have met the conditions
arising out of banking crises in various localities.
Simms es hope to eemplete this part of the report in a few weeks,
manifestly there will not be time for an extended inquiry; but we than be
glad to have any infermation you can furnish, without too mush trouble, as
to conditions in your district. We should like to knotty, for example, to
what extent the meets of building and loan associations are "frozen,.
whether more or less seriously than the real estate loans of the banks;
whether in general the associations have been obliged to invoke the full
extent of their privilege* under the laxin the matter of requiring notice
for payment at the withdrawal value of their shares, or of their deposits,
as the case say be, and whether there has been in the paA telve months
any considerable increase in building and loan failures, as compared with
the years 1928 and 1929.
We shall grently appr ciate a reply along the lines indiented
at your earliest convenience.
Very truly yours,
Ooldenweisar
Chairman, Comnittee on Branch,
Group and Chad:, Banking
14 A.
0.c. to Dr, Goldenweiser
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
11)
•
FOTIO NO. 131
NIIV
Office Correspondence
To
Mr. Riddle
From
Mr,_Tio rb t t
FEDERAL RESERVE
BOARD
•
Date
Subject:
September i ,1931
Examination Reports
OPO
2-EMM
In accordance with the request of Mr. Mistr we have obtained from the
Comptroller's Office and are handing you herewith the examination reports
of the Brotherhood of Locomotive Engineers Cooperative National Bank,
Cleveland, Ohio, and of its successor,. the Engineers National Bank, for
the following dates:
Feb. 10, 1921
July 29, 1921
June 30, 1926
Dec. yi, 1926
Jan. 3, 1922
July 31, 1922
9, 1927
May
Oct. 28, 1927
Feb. 21, 1923
Dec. 28, 1923
Var. 31, 1928
Dec. 14, 1928
June 26, 1924
Dec. 9, 1924
June 3, 1929
Oct. 10, 1929
June 30, 1925
Dec. 29, 1925
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
6(
smber 15, 1931i
1.
-.:stimate
91 PeDos: ta
are
Tied a la tate Banks Whieh,
:-rooess of Linuidation
Deposits at date of suspension for banks suspended 1921-1930
inclusive and which were in process of liquidation at the
the the schedules were prepared for Committee on Branch,
41,200,000,000
Group ana Chain Banking
-40 Deposits of banks suspenc.ing in 1)31 up to beptember 11th
(less eopenings)
Total
ft
Fati..ated deposits of receivershipswhich have terminated
since schethaes were prepared
aalance (e..,timated deposits of banks now in process of
liquidation)
Offsets to deposits estimated at 10 per cent
Balance after offsets
491,900,000
.1,691,000,000
75.000,000
1,616,0)0,000
162,010,000
454,000,000
lAvictftal 2aYments on the pbove deposits are estimated as follows:
Payments up to time schedules were prepared
;250,010,000
i]stimcted payments since schedules were prepared
1930
1929
1928
1927
1926
at
at
at
at
at
25%
10,10%
10;:
5%
on 1502,000,000* = 4125,000,000
12,000,000
on 119,000,010 =
6,800,000
68,0)0,000 =
on
8,600,000
on
86,003,000
vs.
on
93,000,000
157,000,000
stimated 5;.,; payments on A91,000,010 deposits of
suspensions in 1931
Total estimated payments
Less payments on reoeiverships closed out after
schedlles were prepared
Balance (estimpted payments on eposits
of banks now in process of liquidation
•
25,Q00,000
,432,030,
45,000,000
387,000,000
After allowanle of :;30,000,000 on Bank of United btates and then 10%
deduction for offsets.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
-2..
Deducting these payments from the deposits (after offsets)
as shown above leaves a balance of deposits still tied
up of
A,067,000,000
On the basis of past experience, however, it is estiarted that
not more than 60 per cent of the original deposits, less offsets, will be
returned to the depositors in dividends,
60% of
1.,454,000,000
Payments to date
The balance is the additionn1 amount which depositors
are likely to receive
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
8?2,000,000
367.000,000
4,85,000,000
Vi
September 15, 1931
Mr. L. R. Rounds
Deputy Governor
FElieral Reserve Bank
Nerv York, rev! York
')ear . . Rounds:
Some months ago the Marine Midland Corporation of Buffalo
vtls goot:L (!lough at ycur reouestto fill out for the
Committee on
Branch, Or,7—o and Chain Banking a schedule of information which
oonsisted in answering some sixty odd questions prepared by the
Committee. 2his information was supplied on the understanding
that it would be kept confidential and used only by the clommittee
In drafting its general report on group bunking.
The Committee, of course, is living up to this understanding. The information is so well orgaaised, however, and so
instructive that it seems destrable to print this schedule, among
others, as in appendix to the report on group banking provided we can
secure permission from the group itself. We sbould appreciate it,
therefore, if you will ri!Ase the 7uestion with them. It will be
entirely optional with them, of course, and if they should objct
for any or no reason, that will be the end. of the matter. So far
as we can see there is nothing in this report which would react
agT.inst the group. On the contrary it supplies a body of useful
data which will help to give a better understanding of groups
generally and their activities.
The Committee's report, including the appendices, will
be submitted to the Federal Reserve Board and to the Conference
of Avernors and Agents and it will bo for them to decide what
disposition to make of it, Presumably it will be made public
in some form.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Very truly yours,
E. A. Goldeaweiser
Chairman, Corimittee on Branch,
Group and Chain Banking.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
September 15, 1931
M. 3obert C. Effinger
Vice-President
Irving Trust Company
1 ,4111 street
New York City
Dear :v1r. Effinger;
Thank:you for your letter of September 14th
in which you agree to postpone the date rhen Mr. Garlock
will joLn your staff from October let to November 1st.
We appreolate your consideration in granting us t'lis
request.
lery truly yours,
B. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Banking.
September 15, 1931
Mr. Ira Clerk
Deputy Governor
Federal Reserve Bank
San Francisco, California
Dear Mr. Clerk:
I am sending you herewith for perusal and comment a copy
of Mr. Greer's article on branch banking in Canada. We are not
distributing this as yet to all the members of the Committee because Mr. Greer has just finished it and we have not done anything in the way of editing it. In view of your familiarity and
interest in Canadian banking, however, we decid,d it would be Nell
to have you see this part of the report as soon as possible and
perhaps get the oenefit of your suggestions before we edit it.
I hope this does not impose too much of a burden upon
you just at the time when you are busy with the report on branch
banking i% California us well as the Reserve Committee and your
regular zork.
Very truly yours,
J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.
Eno.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
r-
6eptember 14, 1931
Mr. Blattner
Comments on ..,:anuscript on Bank
Mr. Riddle
Earnings
Many of my comments appear on the margins of the pages, but
here are some additional observations.
The :lanuscript is fall of good solid material with no useless
phraseology.
In fact it appears entirely too oompresse6 aod too heavy.
It is largely a running &moment on the series of charts and tables presented without muoh broad interpretation of the cita as a whole or the
problems and factors involved.
There is little introductory material
relating the study to th, general banking problem, and no summary or
concluding observations.
If the dooiment were outlined topically, the
brevity of the trretment of the various phases of the subject would be
more obvious.
One kr s the impression that the mass of material avail-
presentaable has not been fully utilized, and that the same time the
it
tion has not peen sufficiently lucid to make the impression which
should,
As it is, the reader is b9und to have a number of questions in
mind which a fuller interpretation and the use of supplementary material
might answer,
Presumably in writing the report you had in nind the thought
that only that material would be of value which bore directly on the
structural problem, that is the differences between annll and large banks.
Doe,n't that ignore muoh of the background for banking difficulties, howover, =Ind leave the report open to the charge that othrr and important
lases of the trouble have been neglected?
The banking system as a whole
has been severely tested daring the past deoade.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The reader wants first
Prmr. siattner
..eptember 14, LVI1
Riddle
a general picture of the problem and an analysis of the factors involved,
71bat was back of the long term trends prior to 1921 and why the cAange in
trends?
This date was undoubtedly a turning point of fundamental importance.
Aeat happens to banks during a period of prosperity, rising prices, rising
interest rates, etc., and [,so what happens in a period of falling prices,
eto., or in a depression?
You have a basis for this in Chart I but the
treatment seems inadequate.
For example there is little if anything in-
terpreting the trend of gross earnings, the narrowing spread betee"
•
ings and expenses, or the apparent small losses written off f.n thP
decade in spite of known heavy losses and numerous failures.
Parthermore the problem has been something of a googrflphichl
one,
Can the material in Chart I be shown for Awgraphical districts?
This undoubtedly would entail some discussion of the effects of changes
in land values and agricultural oommodity prices on bank profits.
After outlining the factors affectire; bank profits generally,
the question naturally arises as to Ant type of banks are meeting the
test and what type are not meeting the test suocessfnlly.
This raises
both the structural problem and the geographical differences.
Thus the
study would still point up in the structural voblem but would have a
better background.
Somewhere tn the report it would seem desirable to give the
data in Chart I for country banks as contrasted with reserve city or
central reserve city bmks or, if possible, the country banks in oere
Lain states or districts.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The purpose would be to see whether anall
Fr.
-8-
Ur. Blattner
Amber 14, 1
Mr. Riddle
and large banks were affected differently 4 the factors bearing on profits.
This is merely an effort to find smoothing to supplement the material bearing
on the structural problem which is now limited to 192.6-1930.
notice in Powlison's thesis a classification of expense and earnings items for national banks back as far as 1918 which presumably came from
the Comptroller's reports.
Should we not make use of that material, especialy
in showing differences between geographical districts ana betm)rn country
banks as contrasted with city banks?
I doubt the wisdom of using the phrase "structural weakness" in
the subject heading because it indicates the narrower approach to the questior.
I suggest first a rather complete topical outline.
Then some general
introductory paragraphs indicating that the earnings study was undertaken to
see if it would help t:) diagnose the weaknesses or difficulties 1
the bankibg
wet= which are reflected in the excessive number of suspensions.
In the discussion of trends of earnings and expenses sh(;Adn't L'hoE
factors be considered:
growing functions of banks, growth of free Lc,rvices
which the A; B. A. estimates at a cost of 4300,0)0,00") per year, the removal
of collection charges, changing interest rats, and comp,
:titive forces,
including excessive number of banks?
What is the relation of the changes
in "gross income" and "expenses" to the process of deviation from coma rcial
banking?
That emphasis should be placed on competitive factors, both banking
and non-banking, affecting profits?
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Looking to the future what is tae significance of the tendency in
mr. Blattner
-4-
5eptamber 14, 1931
Mr. Riddle
•the
past for a declining capital-assets ratio to offset the narrowing margin
•beteeen
gross income and expenses?
Has the oapital-assets ratio
lTEJ'(r1
less since 1900 for small
banks than for large banks?
If so would this aocount for the greater
ficulties of the small banks?
Why not begin Chart I at 1890 or earlier instead of 1900?
Would it not be well to put some of the material you have in
tables into charts and run the fi4ures in the a. pendix?
I have in mind
Table IV and perhaps 1, II and III.
?. 10.
Isn't the more favorable showing of eastern banks due
largely to the fact that prior to 1929 and 1930 they didn't meet the same
severe test as agricultural banks?
They are having their troubles now.
Why not show the experiences of these districts, as len as the
whole ()wintry, by years, to see what effects changing econamic conditions
have from year to year?
'IIA
sgys that from 1900 to 1920 earnings in the western
states were larger than in the eastern states.
Is there any evidence to
show that the ups and downs in earntngs in the west are greater than in
the east?
2he discussion regarding interest paid on deposits doesn't seam
quite convincing.
Can this material be supplemented by figures from the
Comptroller's reports baok to 1916 or 1918 so that oomparisons can be made
by geographical divisions as well as by size of banks?
Hateinterest pay-
ments by country banks incre sed at a more rapid rate than by oity banks?
Isn't there a good explanation as to why large banks can pay more
interest than small banks would
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
e justified in paying, 1.41. bank deposits,
-5-
Mr. Blattner
September 14, 1931
air. Riddle
larger average individual deposits, etc.?
on time deposits than larger banks?
Do analler banks pay higher rates
Do they have a larger proportion of time
deposits than large banks?
P. 17.
Are interest pay:sents by small banks larger than for large
banks in all geographical districts?
How about chorges over a period of years
in the two types of 'Janke—large and small?
. 19.
This hardly oonvinces one that there can be no reduction in
interest rates on deposits, especially in certain sections.
There may be some
good explanation ts to why interest rates may be no higher than in Canada and
England and still be too high here.
Are they, too high in those countries?
In showinF the difference in earnings and expenses between small
and large banks would it not be well in the int-7.rest of clarity to give in
the text the actual figures for the typical small bank and typical large
bank?
This would enable the non-statistical reader to visualize the situa-
tion.
Table I
showing invested capithl in relrAion to loans and invest-
ments for different size banks doesn't seen to check with the same compar\sons
between country banks and reserve city banks as shown in call report figures.
Is there an explanation?
I suggest a few summAry paragraphs in order to fix the salient
points,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(C 0 P Y)
Irving Trust Company
New York
September 14, 1931
Mr. E. A. Goldenweiser
Federal Reserve Board
Washington, D. C.
Dear Mr. Goldenweiser:
I have your letter of September 12th. We have
been counting on Mr. Garlock's joining our staff October
1st, and have planned our work accordingly. It will inconvenience us not to have him come at that time.
On the other hand, we appreciate his value to
you at the present stage of the studies upon which he is
engaged, ana would like to be of any possible assistance
in your work.
Accoraingly, we are pleased to postpone the date
when Mr. Garlock will join our staff from October 1st to
November 1st.
Very truly yours,
(Signed)
C. c. Mr. Garlock
HS
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
R. C. Effinger
Vice-Pre siaent
September 14, 1931
Dr. Goldoweiser
Mr. Riddle
Here is Mr. Greer's manuscript on branch banking in
Canada.
This is his secord revision on the basis of criticisms
made by other members of the staff,
Since Mr. Clerk is especial-
ly familiar with Canadian banking, I as wondering if it would not
be wise at this stage of the ammo to send him a copy of this report and get his criticisms before attempting to edit it.
We do
not have sufficient copies to send to all of the wembers of the
Omalittee, and of course we have been working on the principle
that -le shoula get these lanuscripts in as near final form as
possible before submitting them.
In this case, however, I think
it might bo very helpful and save much time to et Ur. Clerk's
reactions at tlis point,
The same can be said of the chapter on group banking.
In that case we have, of course, only the first draft and it is
not in as finished form as the manuscript on canadian banking.
Rut in view of Mr. Clerk's familiarity vith group banking, especially on the ?acific coast, perhaps it would be well to get
his critioisms on th4lt chapter also. Mr, Upham is away at present
on his vac-)tion and will not return until the early part of October at which time be will undertake a revision on the basis of
criticises received.
If you approve, I shall send both of these manuscripts
to Mr. Clerk for comment.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
September 12, 1931
MI'. Robert C. Effinger, Vice ?resident
Irving Trust Coppagy
1 Wall Street
New York City
Dear UT. Effinger:
Mr. Richard H. Garlook, who 11._s been employed with the Committee on
Branch, Group and Chain Banking for some months, informs me that he has accepted a position with your staff and that be is planning to begin work with
you on October 1st. He originally planned to begin with you on oeptember 1st,
I believe, but at his request you were good enough to change thJ date to October
1st in order that he might have more time to complete the work .fhich he is doing
for the Committee.
I do not know how urgent it is that Mr. Oarlock should begin his
duties with you at the date agreed upon and do not want to mole any suggestions which would interfere with the efficient functioning of your organization. However, if you could spare Mr. Garlock until the first of November without dislocating your plans, it will be an accommodation to us.
The Committee has undertaken certain investigations vhioh are requiring considerably more time than had been antioipated. Mr. Garlock has
been handling one r.ther important piece of work which it appears now will
not be completed before the middle or perhaps the latter part of October.
You can readily see haw useful he is to us at this stage of the work and
how difficult it would be to replace him. However, I should like to emphasize a previous statement that we are requesting this extension of time
only in case it does not seriously interfere with your work. We are fully
aware, of course, that you need Mr. Garlock, and if the situation is ouch
that you do not feel that you can grant this extension of time, we shall
make some other provision here.
Mr. Garlock has done a good piece of work for us and I am sure he
will male a useful member of your staff. Consequently we do not wish to do
anything that will affect his relations with you and the work there. In
fact I am writing you this without consulting him and as the matter stands
now he is definitely planning to begin work with you on October 1st.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Iiincterely yours,
E. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Banking.
Form No. 131
Office Correspotdete
To
Dr. Goldenweiser
From
Mr. Riddle
FEDERAL RESERVE
BOARD
• • ///,
Date
UpteMber 12, 1931
Subject:
• o
I should like to hold 1.1r. Garlock for a few weeks
longer, if possible, in order that he may finish writing up
the report on suspensions. At the same time I do not want
to do anything that will jeopardize his new position. perhaps you know r. Effinger personally. If so, you will have
a better idea than I as to how he might take this request for
an extension of time.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'2-849.5
41
Form No. 131
Office Correspondence
To
Jr. Goldenweiser
j1111
FEDERAL RESERVE
BOARD
Date__Jentember 12. 1931
Subject:
From Mr. Riddle
ere
2-8495
What do you think of the idea of printing some of
these schedules as appendices to the report on group banking,
provided we can secure the permission of the groups who submitted the schedules?
I have in mind eight of these schedules
as follows:
°Northwest Bancorporation, Minneapolis
..First Bank Stock Corp., Minneapolis'
First Security Corp., Ogden, Utah—
,Pxo--4/tw. „evb
Guardian DetroitDetroit Union Group,
Detroit, Mich'.
Wisconsin Bancshares Corp., MilwaukeeMarine Bancorooration, Seattle
-0...4•4 7 k-A--01-01
,
c
Anglo-National Corporation, Jan
Francisco, Calif.
Marine Midland Corp., Buffalo, r. Y.
af.,;,--10.00
4
I am attaching two of these for you to see.
If you approve of the attached letter, I shall then
prepare the others.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL RESERVE BANK
OF NEWYORK
August 22, 1931.
Dr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and Chain Thinking
Federal Reserve Board
Washington, D. C.
Dear Dr. Goldenweiser:
I have received a copy of Mr. Clerk's letter of
August 13 addressed to you in which he discusses at some length the
matter of bond depreciation.
As you know, this is a subject to which
we have been giving much attention lately here in the bank and in connection with the Comptroller's Office.
Mr. Clerk has said.
I think there is much in what
It is at least a fact that many banks are having
to revise their conception of the value of a bond account and its
function as a part of the assets of a bank.
My only purpose in writing you at this time is to
say that in whatever manner this subject may be dealt with by the
Committee on Branch, Group and Chain Banking, I think they should be
particularly careful at this time in not rocking the boat.
It may
be by the time the report is ready to be completed we shall feel like
making some definite statements on this subject, but that can best be
determined at that time.
In the meantime we should be cautious in
our approach to this subject.
Very truly yours,
L. R. Rounds
L.6,L
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
August 17, 1931
Ur. Frederic H. Curtiss
Fodoral Reserve Agent
Federal Reserve Bank
3oston, Massachusetts
Deur
We are returning under separate cover the lists of
securities held by each of fifty selected rational bunks in
your district -Ohich you prepared in accordance with our letter_of June 25th. The Committee reuests that you indicate
the rating assigned by you to each security for which you
could find no published rating and that you identify each
security classified 66 "not rated" or "not listed." if
ada ,uate information concerning a partioular security is
lacking and you have assigned an arbitrary rating, the rating
Should be noted as being arbitrary.
Very truly yours,
E. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Banking.
••
••
(C 0 P Y)
Irving Trust COmpfiny
New York
August 14, 1931
Mr. Aichard H. Garlock
Federal Reserve Board
7ashington, D. C.
Dear Mr. Garlock:
I have your letter of August 13 and will count
on your joining our staff on or before October 1, 1931
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely yours,
( igned)
R. C. Effinger
Vice President
lugust 13, 1931
Mr. Robert C. Effinger. 751P "Irrntd(Int
Irving Trust Company
New York City
Dear lir. Effinger:
Thank you very much for permission to remain here a fe
weeks longer. lar. Riddle is out of town at present, but I an sure
he also will be grateful
I am sorry to ask this favor as it is my desire to begir
work with you at the earliest date possible. At the mums time I
dislike to leave this ,4,01) unfinished when a few weeks more will
complete it.
My feeling on this point is inflaenced by the fact tha
far
more
I am
familiar with the materials on bank suspensions than
any other staff member of the Committee. And unless some pecw
ities of the data are taken into careful account the results arEJ
likely to be inaccurate.
If yoa urgently desire for me to report September 1st,
however, I shall do so regardless of these other considerations.
At all events I can promise to report October 1st without fail,
and will try to be ve•th you at an earlier date.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely yours,
m••••••1,....•
FEDERAL RESERVE BANK OF SAN FRANCISCO
August 15, 1951
Dr. E. A. Goldenweiser,
Chairman, Committee on Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Dr. Goldenweiser:
In your letter of the 25d of July, written in reply to my
wire of the 21st inquiring as to which phase of our investigation the study
of bank bond accounts is intended to supplement, you asked my views regarding
methods of compiling an index and its value in measuring the quality of banks'
security holdings.
As to compiling an index for determining the quality of bonds,
the first thing to decide is what is meant by quality. Does it pertain to
the soundness of a given bond from the standpoint of its ultimate payment,
or does it relate to its present convertibility at the price carried on the
bank's books regardless of prevailing conditions in the investment market?
It has periodically disturbed me a great deal during the past two
years to encounterlamong those banks the capital of which is impaired according
to the latest report of examination, institutions which rarely have been borrowers and which always have been regarded in satisfactory condition. In forwarding a brief analysis of examination reports to our Branch Managers, I have felt
obliged to say in specific instances that too much weight must not be given to
the technical impairment of a bank's capital lest the bank on that account be
deprived of credit it might justly deserve.
It is a mistake to assume that every instrument which goes by the
name "bond" was acquired with the idea that it was a readily-marketable investment. Very often bonds of local enterprises are taken just as a loan would be
made and not with any false notion of the bond's marketability. Often municipal
issues are taken as a matter of public policy (duty, if you please), where it
is known their best service to the bank is in procuring and securing public
funds arisinE Gut of tax payments. Bonds of political subdivisions, even though
they be small and obscure, are generally sound investments because, they have
the taxing power behind them. Such obligations are at least as sound /s the
best private loans the community can produce. It is useless to discuss the
marketability of such bonds because they create no demand beyond the locality
of their origin, and very often a limited one there because of the absence of
unabsorbed capital seekinE investment.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
411/
Dr. E. A. Goloenweiser
ip
•••
A market quotation of a bond is not a conclusive indication of its
value but an indication of the condition of the public's purse and its receptivity at the moment for a particular class of investment.
I have often shuddered when looking over the bond accounts of banks
which have had their investments exposed to the scrutiny of bank examiners whose
experience with appraising bonds is limited to their ability to find in some
obseure publication a quotation at which some isolated transaction was concurmated. One cannot fail to be impressed with the fact that at this moment
many banks are more likely to succumb to examiners with those handy little
books in their brief cases than to the many adversities facing their borrowers'
enterprises.
It is my prediction that most of the bond appreciation and depreciation (don't overlook the former) now in evidence will disappear when the public
mind has had time to adjust itself to the fact that our social and economic structures are undergoing revision and, when over, that a sounder condition will exist
than ever before.
Some one (possibly it was an underwriter or a bond salesman) once
fabricated the idea that bonds were bank reserves and that their going values
conclusively determined their actual values regardless of the extent to which
their values might be manipulated by traders. As a consequence of this falacy,
it has become a common practice for many to look upon the bond account as ready
cash and as such it must be measured. Examiners appraise loans, first, from
the standpoint of the solvency of the borrower, and, second, from the point of
If a bank has a bond account
liquidity. Why not apply the same test to bonds?
which is first class from the standpoint of solvency, and has other assets adequately liquid to meet any ordinary or even extraordinary demand for funds, why
is it necessary to fire a broadside at the bond account? I venture to say that
if a present-day valuation were placed upon all bank buildings and on all
property, liquid or otherwise, standing in defense of loans in bank portfolios,
there hardly would be a bank in the country the capital of which would not be
wiped out by the depreciation in value. In saying this, I am not arguing that
revised valuations are not to be placed upon fixed and rrveable properties of every
kind, but any revision which takes place must afford our banking institutions an
opportunity equal to that given their obligors to determine the difference between
actual and imaginary losses.
I think there is a lot to be learned about means for measuring the value
of bonds for examination purposes, and I hope our Committee will not undertake to
lay down any predetermined facts in regard to what it might have found at this very
hapless moment in the bond accounts of our banks, until it will have given many
months of specific study to that subject with the aid of expert advice.
Yours very truly,
(-de
1-egl
ueputy Governor.
(cc. to each member of Committee)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(C 0 P Y)
Irving Trust Canoany
New York
August 10, 1931
Mr. Richard H. Garlock
Federal Reserve Board,
7;ashington.
Dear Mr. Garlock:
I have your letter of August 8.
We have released personnel on the assumption that
you would join our staff on Septenber 1.
We will need you on that date, but if we can assist
your committee by waiving our "claim" on your services for a
few weeks we would be glad to do so. Could we count on your
beginning vork with us by October 1?
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely yours,
(Signed)
R. C. Effinger
Vdce President
August 8, 1931
Mr. Robert C. Effinger, Vice president
Irving Trust Company
1 Wall Street
Wow York City
Dear Mr. Effinger:
At the suggestion of Lir. J. H. Riddle, Secretary of
Committee on Branoh, Group and Chain Banking, I am writing to
quire whether it would be agreeable with you for me to remain
Washington several weeks beyond September 1st, the date which
had agreed I sholld begin work at the Irving Trust Company.
the
inin
we
As you perhaps know, I have been in charge of the Coalmitteets statistical analysis of bank suspensions. The mass of
material Which has been in process of compilation during the
past year is just rounding into form so that a report can be
drafted. This in itself is a considerable undertaking and
since I am more familiar with the material than anyone else
Mr. Riddle is uite anxious to retain me, if possible.
I snould be glad to have the opportunity of writing
this section of the Committee's report, provided it is perfectly
agreeable with you for me to assume my duties at the Irving
Trust Company somewhat later than we had originally planned.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Respectfully yours,
•
Form No. 131
Office CorresporTteece
To
From
Sr. Zane
Sr. Borbett
FEDERAL RESERVE
BOARD
I
ltellid." 7. 1931
,L.,Selected
Jvae 30 Condition figures
braketlymel /tanks belonging te Groups
mmd Coins.
•1
, 10
2--8495
In accordance with our telephone conversation of this morning, we Mall
appreciate if if you will have figures of (1) loans and investments, (2) paidin-capital. (3) surpIns and undivided profits, including reserves for dividends,
contingencies, etc. shown in thousands of dollars. from the June 30. 1931
condition reports, on the cards transmitted herewith. These cards represent
the National banks which. according to our records, are members of groups and
chains. The information furnished as usual will not be used for individual
banks but only to obtain state totals.
Thanks very much.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
6, 1931
lir. earls*
Inepended hanks that belong to
Mr. loshatt
bask dodos end gams, 1921-1930.
I an handing you herewith a ring hinder esoteining lists showing:
1* The nuns eed location of every bank chain or group, a member
of Ukiah suspended according to our records at any time
during the period 1921.1930.
2. The total namber of teaks reported as members of such group
or chain on varies* dotes from December 1922 to December 19301
3. 'he
nese mod losatioo Of sash bank (amber of the chain or
peep) that oaqpooded at say time during the period 1921-1930,
together with the date of suspension.
*there the nonher of hefts is met Shown for one or more of
the given dates, the main was not reported to the Board
as being in esisteme at that time -- it may, however,
actually have Deem in existence. Where the number of beaks
in the chain is not shown at all, the list is marked
"Oomittee," nenelog that there is nothing Whatever in
ma records aim* the *min, and that the first indication
we have had of en& a chain is the information reported on
the "Bank ftspension" schedules.
After baring had all of the above materiel eseeihled it appeared to
epos onmeLostion, that there were missy twice ood Maim that night better
be excluded from your statistics on enspeoded data mot gprqp balks. Accordingly, I had the lists arronged into a noiher of groups sod
h-groups, as
indioeted on the Sheet next attashed. POr your purposes I Mak you Should
oonsider as "suepeededthain and grow hakes certainly no more than those
embraced in the eimsees and sdhippoepe that are listed in ths first column
below, and parbmpe saly those eihmesed is the classes that are listed in the
soond column:
golamal
01hss,
BOkszasa
2.43
2-0
3-0
(2)
(2) Ca and b)
(2) Ca and b)
(a and b)
Oolmma2
glut
2-8
3-C
9ab,gromp
(2) Cs and 1)
(a and b)
Theme is too mush dells. about the data affiliations of the remain.
mg basks Cat the time tbmy sompsodmWO to mamma definitely elassitpieg then
as chain bees, in my opinion. Of esiree, mop selection pump' mike dimmad
be olearl/mostied as prOhOhly ineomplete, even though it Is more somplete
than &milking else available.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
cms (AID GIMPS) THAI AVE
SAWN RECORDS.
1.
INCLUDED
. OD.
AIN
Chains eabraeing only 2 banks -A, With only
B. With both
(a) On
(b) On
2.
SOU TINS BI
1 of the UWE* suspended
banks suspended,
widely separated dates
the same date or close together
Chains .bracing 3 or more banks -A.
tath only 1 of the banks suspended
(1) Before the date of the chain list
(2) after the date of the chain list
B.
With 2 banks suspended,
(1) One or both suspensions being before the
date of the chain list,
(a) The dates of suspension being widely separated
(b) The dates of suspension being close together
(2) Both suspensions beisgafter the date of the
in list
(a) The dates of suspension being widely separated
(1) The dates of sunpension being close together
With 3 or more hefts euepesded,
(1) Most of the suspensions being before the date of
the chain list,
(a) The dates of suspension being widely separated
(b) The dates of suspension being close together
(2) Most of the suspensions being after the date of
the Chain list,
(a) The dates of suspension being widely separated
(b) The dates of suspension being close together
C.
CHAINS (AND GROUPS) THAT HANN INTER BEAN IMO= II OUR CHAIN BANKING RECORDS?
THE HUT INDICATION OP THEIR =ISM= BEING TH1 ENPOEMATION MUNISHED THE
COMMITTNIA ON TH1 SUSPINSION SCUM:UM.
3.
Numpeaded banks which, according to the suspension schedule, were
members of chains --
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
A, Where the nueber of suspended banks in a single chain was only 1
B.
Where the neither of Impended banks in a siagle chain was 2
(a) The dates of suspension being widely separated
(b) The dates of suspension being close together
C.
Where the nueber of suspended banks in a single Chain
was 3 or more,
(a) The dates of suspension being widely separated
(b) The dates of suspension being close together
28, 1931
Mr. Sawed
Mr. Riddle
Here is Hammond's story on branch banking.
have read it, I should like to talk it over with you.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
After you
•
Office Correspondence
Form No.
pi
IV
Dr. Goldenweiser
From
Mr. Riddle
FEDERAL RESERVE
BOARD
Ehae
July 22, 1931
Subject:
•PO
1-8496
The following are the subjects covered in the investigation of the
Committee on Branch, Group and Chain Bankingi
1. Economic Background of Bank Changes
This includes changes in rural trading centers, communications,
methods of distribution, industrial organization, population changes,
and a brief reference to agricultural c nditions which will be treated
more fully elsewhere.
Some material has been collected on this subject but the chapter
has not been written.
2.
Bank Suspensions
(a) Statistical analysis
This includes a detailed analysis of suspensions during
the ten-year period 1921-1930, and more general statistical
data for previous years back to 1890.
This material hns all been collected and the tabulations
will soon be completed.
The writing of the chapter has begun.
(b) Causes of suspensions as revealed in the study of examination re-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ports.
Covers management, supervision, loan policies, investment
policies, etc.
This material has been collected and is now being organized.
Dr. Goldenweiser
••
411
Wily 22, 1931
Mr. Riddle
(c) Agricultural conditions and bank suspensions
This is a study of agricultural changes since 1900, including commodity prices and land values and their effects upon banking institutions.
Also includes study of banks' commitments to
agriculture and the .Teneral credit conditions in agricultural
districts.
This material is now in process of collection, but it will
be several weeks before it is completed.
(d) 21orida--a case study of the effects of land speculation on banking
institutions.
Material is now being collected
3. Dual Banking System
(a) Competition between state and national systems and its effects
(b) Bank supervision--state and national
The writing of this report is about half finished
'4.
Bank Earnings
A detailed study of earnings of all national banks over a fiveyear period, 1926-1930, classified according to size of bank, size of
community and by geographical divisions.
This is supplemented by a
presentation of the general movements and factors in bank earnings
and expenses over several decades.
This material has been compiled and considerable progress has
been made in the preparation of the report.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
--Dr. Goldenweiser
4111
-3-
40/Ju14112, 1931
Jr. Riddle
5.
Competition from Ton-banking Institutions
A study of competition chiefly from building and loan associations.
Some materirll has been collected but the chapter has not been
written.
6.
.3anking Concentration
A statistical study of changes in the number, nature and size of
banking institutions, inclading primary organizations, consolidations,
affiliations, etc.
Much of tnis material, but not all, has already been collected
and is now being organized.
7.
!iranch Banking in the United States
(a) General statistical and historical study of branch banking in the
United States, including a discussion of the sources and causes
of opposition and the factors involved in the branch banking controversy.
Also a survey of the relative m,rits of branch and
unit banking.
The first draft of this phase of the report has been
written.
(b) Branch banking in California
The data on this part of the report has been compiled
by the Federal aeserve Bank of
an Francisco and Mr. Clerk
of the Committee is writirp; on tnis topic.
8.
Branch Banking in Canada
The first draft of this report has been written and is now being
revised.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
. Goldenweiser
110
110
110 22, 1931
Mr. Riddle
9.
Branch Banking in England
The first draft of this report has been written and is now being
revised,
10.
Branch Banking in Germany
Some data on this subject has been collected but the chapter has
not been written.
11.
Group and Chain Banking
An outline of the development and present position of group and
chain banking, includinr organization of groups and methods of operation.
Also the problems involved and the effects of the develop-
ment.
The writing of this report is about half finished.
12.
Summary of findings including Committee's opinions and conclusions
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Form No. 131
Office Corresponctite
To
Mr. Kane
FEDERAL RESERVE
BOARD
tit
Dt'e
File
of Bank Operations
gr_ 20.1931
' Subject:
From Atir,liorbett
•ro
2-8495
As I told you over the telephone, in addition to the reports requested
in liar letter of today, of which a copy is attached, we want the November 15.
1930 call reports of the twelve banks listed in the right half of the letter.
The original of this letter has gene to Mr. Pole.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1.
A
Confidential
•
••
LIST OF BANKS SUSPENDED IN 1921-1930 WHICH WERE REPORTED AS MEMBERS OF CHAINS
OR GROUPS IN DECMER 1922, IN JUNE 1926, IN JUNE 1928, OR BETWEEN
JUNE 1929 AND DECEMBER 1930
•
(Revised list -- prepared on the basis of information available in July 1931.
In the absence of contrary information, it has been assumed that a bank that
was reported as belonging to a chain or group on any of the above dates was
still a member thereof at the time of its Taspension.)
Nam of chain or group
Location
Number of constituent banks:
Names of susended banks
Dist. No.
December
June
June
June
1922*
6
1P1:
192S
1929
1
December 1929
June
1930
December 1930
Location
Dato
suspended
•
•
0
*The chain banking reports for 1922 wore in many instances incomplete. Where
they did not show the name of the chain but only the names of the chain banks,
they could not be used for the present purpose.
B-117
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
July 18, 1931
Dr. Golden fe ise r
Mr. Riddle
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Lauck is coming in at eleven o'clock on
Monday to make an oral progTess report on his mork.
I have also taken the liberty of asking mr.
Upham to come in at eleven o'clock on Tuesday in order
to makr a general report.
you, me can change it.
If that hour does not suit
I told Upham that you were
interested to know what his general line of attack is,
•
how =oh progress he has mide, and roughly when he expects to have it finished.
July 16, 1931
Mr. William W. Hoxton
Federal Reserve .agent
Federal :leserve Bank
Richmond, Virginia
Dear 2r. Hextons
are sending you a description of an index mhioh has been
devised for the vurnose of measuring the ..aality of the security holdings of banks. The construction is simple and is fully explained in
the attached memorandum. The Committee desires to hive this index
oomputed for a representative list of banks acatterea throughout the
country in order to determine something of their investment policies.
On June 25th we sent you the names of 50 banks in your
the request that you send us a list f the securities
with
district
held by each at the time of the last examination in order that we
might make an analysis of these securities. For each of these 50
lists of securities we should like to have you prepare an index in
accordance with the onclAsed example and the accompanying instructions. If you feel that the 50 banks will not be sufficiently
representative of your distriot, you ,light enlarge the list.
We are sending you under separate cover a supply of forms
for use in camputing the index.
Very truly yours,
E. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Banking.
!no.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
Federal Reserve Committee on
Branch, Group and Chain Banking
July 15, 1931
INDEX OF SECURITY HOLDINGS
(Instructions for Preparing Form S)
An index has been devised for the purose of measuring the quality of
the security holdings of banks.
This index is based upon the ratings given to
securities by the various statistical services such as Moody and Standard
Statistics.
The method of preparing the index is illustrated on the attached
cum. of Form S, and the securities used for illustrating the method are shown
on the attached list as the holdings of the llankville National Bank of Blankville, Maryland.
The first step in comouting the index is to give each security a
rating.
On the attached list these ratings have been placed
in the column at
the right and, as will be noted, the rating symbols used nre Ia, Ib, Ic, etc.
These symbols correglond with Moody's and Standard's symbols as follows:
1 a corresponds to Moody's
lb
lc
11 a
11 b
11 c
III a
III b
III c
IV a
IV b
IV c
AAA
AA
A
2AA
3A
3
CAA
CA
C
DLL
DA
D
and to Standard's
A 1+
Al
A
31+
31
3
C 1+
Cl
r,
L,
31+
D 1
D
The ratings of the various services usually agree with each other and
any service may be used in assigning ratings.
in one service may be found in another.
Occasionally a security not rated
Now and then a security may be found
which is not rated in any of the manuals.
In such cases, the analyst must make
a study of the financial condition and earning records of the oblit;ors and of
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
- 2the marketability and mortgage coverages of the issues concerned in order to
assign the ratings, if desirable.
On the analysis table is a space for issues
that cannot be rated because of very poor quality, and another for local, not
listed issues that have no market.
These two spaces ixst not be overloaded
with issues that should be rated, or the index of vality will have no meaning.
After assigning the ratings, then Form S is prepared.
In column I
Give the aggregate book value of all securities under each rating, and in
column II the percentage of the securities in each rating to the total securities
held.
The attached form, for example, shows that the securities of the Blank
National Bank which were given a rating of Ia had a book value of $65,400 and
that they constituted 13 per cent of the book value of total security holdings
as shown at the bottom of column I.
Columns III and IV giving the market value and appreciation or depreciation of securities in these rating groups are not essential in the preparation of the index but are included in order to indicate whether the extent of
the price change corresponds with the quality index.
In colunn V appears a series of desirability weights which have been
given to the various ratings.
The first and second ratings have been given
weights of 100 each, the third rating 90, the fourth SO, the fifth 50, and the
sixth 10.
Other ratings have been given a weight of 0 on the ground that they
do not represent the type of securities which should be found among a bank's
holdings.
In order to derive column VI multiply the percentages in column II by
the weights in column V.
The total of the resultant figures in colunn VI will
be the index of quality, which in the exanple attached is
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ET.
•
•
BLANK NATIONAL BANK OF BLANZVF17R, MD.
Par
Amount
Name of Obligator
Rate
Maturity
Book
Value
Market
Value
Rating
U. S. Bonds Pledged to Secure Circulation
Consol.
$25,000
1930
2
$25,000.00 $25,000.00
Unpledged U. S. Governments
15,000
10,000
4 1/4 1932-47
4 1/4 1952
U. S. First L. L.
U. S. Treasury
..I II 15,514.50
lo,000.00 11,325.0o
Ia
Ia
Railroads
5,000
10,000
10,000
5,000
5,000
10,000
5,000
10,000
5,000
10,000
10,000
10,000
5,000
Baltimore and Ohio
Canadian Pacific Ry.
Erie R. R., Gent]. Lien
Intll Great Northern
Missouri Pacific
N. Y. Central "A"
Chi. and St. Louis
Penn. R. R.
St. Louis and San Francisco
Southern Indiana
Southern Pacific
Wabash Ry. Ser. D.
Wheeling and Lake Erie
4 1/2 196o
196o
4
1996
6
1952
5
1977
2013
197s
197o
4 1/2 197s
4
1951
19s1
5
19so
6
1935
5,153.25
9,912.5o
7,75o.00
4,s15.25
4,9s 7.5o
9,975.00
4,600.00
9,9oo.00
4,s37.5o
.1S II
9,65o.00
9,600.00
5,os2.5o
4,5oo.00
9,937.50
II •I
4,225.00
4,25o.00
9,s75.00
3,75o.00
9,550.00
2,85o.00
6,5oo.00
9,187.50
6,2oo.00
5,325.00
ii-t.
Ib
Ib
III1
lc
Ib
Ib
lc
lc
lc
Ib
IIa
Ia
124,s63.50 $g3,750.00
Public Utilities
10,000
10,000
10,000
-Ir
5,000
5,000
10,000
5,000
10,000
10,000
10,000
10,000
10,000
5,000
10,000
5,000
10,000
5,000
10,000
5,000
Amer. Gas and Elec.
5
Amer. Tel. and Tel.
5
Assoc. Gas and Elec.
5
Cent. Power and Light Co.
5
Cent. Public Service
5
Cities Service
5
Cities Service Power and Ligt5
4
Cons. Gas of N. Y.
Detroit City Gas
6
Florida Power and Light
5
6
Houston Gulf Gas
Inttl Tel. and Tel.
Iowa Ry. and Light
Lacledes Gas Lt.
5
Middle West Utility
Minnesota Power and Light
5
National Elec. Pr.
Fower
Toledo Light and
5
United Light and Power
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2028
10,075.00
1/2 1943
1950
9,s25.00
9,o75.00
1/2
1/2
1/2
9,950.00
11,000.00
7,55o.00
Ic
Ib
IIb
Ha
IIb
IIb
IIb
Ic
Ib
Ic
IIc
1956
S.
1958
1952
1951
1947
1954
1943
4,787.50
4,650.00
3,600.00
4,812.50
5,800.00
9,775.00
3,631.25
4,887.00
10,075.00 10,200.00
10,486.50 10,675.00
9,437.50
8,625.00
9,591.25
7,900.00
1952
1945
196o
1934
197s
197s
1932
S.
9,Soo.00 7,711.11 lc
4,95o.00 5,o75.00 lc
10,2o2.5o lo,loo.00 II-1
4,905.25
II IS
9,7oo.00 9,637.5o lc
4,712.50 3,35o.00 IIb
9,937.5o lo,000.00 IIb
4,977.50
5,075.00
$151,812.50
39,268.75
IIa
•
Par
Amount
•
2
Name of obli,7ator
Rate
Book
Eaturity Value
Market
Value
Rating
Industrials
$5,000
5,000
10,000
10,000
10,000
5,000
5,000
10,000
10,000
10,000
10,000
5,000
5,000
5,000
10,000
10,000
10,000
Abraham and Strauss
Alloghany Corp.
Amer. Metal Co. Ltd.
Childs Company
Crucible Steel
Dodge Brothers
Federal Land Bank
Gulf States Steel
Hudson Coal
McKesson and Robbins
Nat'l Dairy Products
Pacific Coast Joint Stock
Land Bank of San Francisco
5 1/2
5
5 1/2
5
5
6
4 1/4
5 1/2
5
5 1/2
5 1/4
1944
1934
1943
1940
1940
1553
1942
1962
1950
2028
5
1933-53 4,275.00
Realty Assoc. Sec. lo.
Remington Rand
Shell Union Oil .
Sinclair Crude Oil
Tenn. Copper and Chem.
6
51/2
5
5 1/2
6
1939
1547
1949
1933
1544
1943
$5,822.50 $5,025.00
5,060.00 3,425.00
9,925.00 7,900.00
9,575.00 7,525.00
9,950.00 9,40000
4,800.00 4,300.00
5,025.00 4,700.00
9,850.00 5,525.00
9,825.00 5,650.00
8,875.00 7,100.00
9,904.50 10,175.00
4,975.00
4,587.50
9,975.00
9,825.00
10,000.00
Ic
1c
ha
ha
lb
1c
lb
IIc
ha
ha
Ic
3,300,00 IIb(9ur
Rating)
3,850.00 iic
3,700.00 ha
7,24400,00 ha
10,200.00 1c
9.000.00 1c
$133,245.50$107,75.00
Foreign
5,000
5,000
10,000
5,000
10,000
10,000
5,000
5,000
10,000
Australia
Bavaria (Free State of)
Belgium
Columbia (Mtge. Bank)
Denmark
Deutsche Bank
Newfoundland
Prov. of Buenos Aires
State of San Paulo
5
6 1/2
6 1/2
7
4 1/2
6
5 1/2
6
6
1955
1945
1949
1947
1562
1932
1539
1961
1968
4,955.00 3,200.00
5,003.75 3,650.00
9,810.00 10,525.00
4,883.75 2,750.00
5,500.00 5,350.00
9,925.00 9,700.00
4,987.5o 5,050.00
4,312.50 2,550.00
7,1425.00 3,450.00
ha
IIb
lb
IIb
Ia
ha
Ia
Ha
IIIb
$61,302.50 $51,525.00
Munici9als
5,000
10,000
5,000
5,000
5,000
5,000
Atlantic Co., N. J.
5
N. Y. State Highway
4 1/4
Town of Oakfield, Union Free
School, District #1
4 1/2
1531
1965
1931
4,956.25
Port of N. Y. Authority
City Seattle, Wash.
Washington Co., Va.
1953
1938
1933
4,925.00
5,013.50
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4 1/4
5
5
5,000.00 5,000.00
10,935.75 11,400.00
5,037.50
Pb
In.
Ic(Oar
Rating
5,037.50 lb
5,012.50 Ia
5.000.00 Ia
4,556.25
$35,S73.00 $36,406.25
FORM S
NAME, OF BANK
Blank National Bank,
LOCATION
Blankville, Md.
Total Loans and Investmnts
$1,500,000
Capital, sur?lus, profits and reserves
210,000
Analysis of securities as of June 23, 1931.
Rating
I
II
Book
Vpaue
Per cent
of
Total
VI
IV
III
Market
Value
Apprec.(+) or
Deprec. (-)
Desirability
Weights
Index of
quality
(II x V)
1a
55,449
13.
68,477
4. 3,628
loo
13.
lb
97,022
19.3
97,088
+
66
loo
19.3
lc
152,531
26.4
121,469
_ 11,062
yo
23.8
ha
112,481
22.4
90,150
- 22,331
80
17.9
IIb
57,962
11.5
43,631
_114,33l
50
5.8
lie
24,415
4.9
17,275
_ 7,141
lo
.5
IIIa
4,815
1.0
4,225
-
590
0
o
IIIb
7,425
1.5
3,450
-
3,975
o
o
IIIc
0
0
0
0
0
0
IVaIVbIVe
0
0
0
o
o
r
.)
Default - d
0
r
s_i
0
0
r
,,,
rJ
Not rated
0
0
C
0
0
0
Not listed
0
0
0
0
0
0
445.765
- !-KS.VV2,
-
80.3
TOTALS
502.101
NOT:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
10M
,
Do not include U. S. Governments pledged to secure circulation,
F. R. Bank stock or securities of company owning bank building.
•
FORMS
Federal Reserve Committee on
Branch, Group and Chain Banking
'JAME OF BANK
LOCATION
Total Loans and Investments
Caoital, Surplus, Profits and Reserves
Analysis of securities as of (date)
II
Rating
Book
Value
Per cent
of
Total
III
Market
Value
V
VI
Desirability
Weights
Index of
quality
(II x V)
IV
Apprec.(+) or
prec. (-)
Ia
100
lb
100
Ic
90
ha
80
IIb
5
IIc
10
ilia
IIIb
IIIc
IVaI7DIVc
2g.f.au3.aC1
Not ratea
o
o
jot listed
TOTALS
NOTE:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Do not include U. S. Governments picked to secure circulation.
F. R. Bank stock or securities of company owning bank building.
t •
Office Correspondence
•
Fortu No. 131
To
Mr. Riddle
From
Mr. Mistr
FEDERAL RE:SERVE
BOARD
Date
July 13, 1031
Subject:
2-8495
The Florida study will have to be confined to National banks,
despite the fact that t3%e. fluctuations in the loans and investments of state
banks have ben greater than in NationA. banks, because no report of income
and expenses is required of state banks in Florida.
National Banks
June 30
Number
1920
1925
1930
53
57
55
Loans &
Inveetments
96,362
202,822
148,375
State Banks
Number
205
261
152
Loans &
Investments
86,125
231,589
64,209
Mr. Garlock's suspension data will be useful, but the period covered
by Mr. Blattner's earnings study is inadequate and special data will have to
be compiled.
The emphasio of Mr. Blattner's earnings study is upon the size
of banks and the size of communities.
In this localized study, conso- idated
data in which all National banks in Florida are grouped tor:ether into one
large bank can be used, or it may be advisable to concentrate upon the banks
located in the sectiona of the st,lt-: in which land speculation wan greatest.
The trend of gross earnings, expenses, net prefif.s and losses,
based on earning assets (or capital and surplus), can be s: own as in Mr.
Blattner's Iowa study, with - further comparison of loans on real estate as
a percentage of total loans and investments.
I should like to have you look over the case on the First National
Bank of Miami in Vanderblue's book.
be used.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Perhaps some 2hase of the approach can
•
Office Correspondence
Form No. 131
To
Dr. Goldenweiser
From
Mr. Riddle
410
FEDERAL RESERVE
BOARD
Date
July 9, 1931
Subject•
01,0
r
Mr. Wickens was placed on the Committee's salary list for
a period of three months which ended June 30th last. He reports that
he has spent about two-thirds of his time on the work of the Committee.
That means he has now done about two months' work while We have paid
him for three months. It is very obvious, however, that he will not
be able to finish the project undertaken in another month. In fact
it will take several months, and his Bureau has raised the question
as to whether he should be continued a while longer on the Committee's
salary list or whether he should go back to the Bureau's pay roll and
then an adjustment be made when his work with the Committee is finished.
He feels that if a rough estimate could be made as to additional time that will be renuired to complete the project it would
be better to retain him on the Committee's salary list for a while
longer in order that another transfer later might not be required.
I am inclined to think that view is correct and suggest that we
keep him on our pay roll two months longer. If he continues to
put in about two-thirds of his time on the Committee's work, that
would allow him until the middle of November or the first of December to complete the projrct. That is about as close an estimate as
I can make on it at this time.
If you approve of this suggestion, you might notify Mr.
Rounds to continue Mr. Jickens on the salary list during July and
August.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2-8495
J
July 8, 1931
Dr. Goldenweiser
Mr. Riddle
The New York people including Mr. Rounds think that on the
whole it would be better for each Reserve Bank to prepare the quality
index of the investment holdings of the selected fifty banks in its
district. The two reasons given were: let that it would be a distribution of the labor, and 2nd that it would be very desirable for
the Reserve aanks to become familiar with that kind of an analysis
of investment holdings of member banks. Apparently the work involved is somewhat more than we had thought. Mr. Osterhus, who
worked out the index, estimates that to prepare the index for
550 banks would require the work of one man for about six months
or six men for one month. I had expected to have the work done in
New York under the supervision of Mr. Osterhus, but it seems that
he is going away at the end of this week for a six weeks' vacation.
If we ask each Reserve Bank to prepare the index for its fifty banks,
it would amount to about two weeks, work for one man at each bank.
In view of the labor which San Francisco says is involved
in copying these bond accounts I think we might ask them to hold up
the project until tey receive our instructions regarding the preparation of the index. The other sserve Banks have photostated or are
photostating the bond accounts, but this work will not be lost because
it gives them the working material in a more usable form.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL RESERVE BANK OF SAN FRANCISCO
July es la,,
Jr. le A. Ooldemmeteer,
Chairmen. Ottee on Siemeho °soup and Chaim Bookimi,
foderel Jessie* lesed,
westiedloss D.C.
Deer Dr. Goldemoolsers
0 the sale et essork& thrembest
east—
lavisi eitmes,
t
a savesart
Ia eerperstloset we sew appear to te es the
dimatiou.
tmlereeta
Trsdimg
deem time eoe, the Ooldmme
Oimpoir to whet,
et
sit
verklag
plasm fir
thakieriess
an intimation
ibish surest, forblerasessust
to.
emmerehip, tot they have mot
aipplele ease bee mew ease to
Oemmi
er study at this time 4,
Mahe held br the Peeifie
ny stoestion, is the form
some
the resale
I am embedrisi berets far the semtldemtlal isformatiom
lemaispomatiem, *best
it..) oew *Ca litter vessived from the Sesager of oar
St the members of;ppor
asPortlie
Is*or 411s 44r
felled** teaks)emmed bi thembmoriems Demeerperatiom thrs Its
emstral et the Peelfle lemessoesatioso have tees sold to Lesal pimple is
amommaiti to ihtit these talks egessies
thm
Mask, Imreitteldo Orion (lessiesshas)
Bow
of Protie Potato 40Wile PeiMis Ore. ("*se)
6 terebeets Omsk. Oiquille, Ore. (Samommeher).,
v7Or %Le nest pert this limeametteme sepseeest as *sheep et steak
is the fiettle lisseerporsties amd Ameefess Itemiseyeestles held br stools.
header* In the Opee
dletulai, fir Aerie of steak is the teaks maths
is the ease et Myrtle Mat red Nerehtleld soma soak lo Imveaveds ar the
lemeeipeostkos may be impelled I. seamy some of the tea steak *Use sue.
flideitansserimitles stook Is set available for asehassee. I am Wormed
by fir. fleedale, preeldest of thallimeerporatioso that the sale et these
beet* has tees seas at their eerrytmo valise and at se less I. the empiretits.
'Ti ewer' that at the time Wr. Charles fell, the seeded is Ihrehtletd,
erosessed these books a emesidaymble amount of the Paelflo lesserporatios steak
ems meld Is the Sees Mir seemmmitios emd for acme Use 'meals, divide's., sera
paid es this steak. ass talus war amd almadele aseetsef sestrei et the
imesed
resifts Immeeryeratles lbq evessised the Ammomiimm imieseperatles
their Nettle theesegesatiom steak Is am4 etfired all ether Peens Immeerporiaa
si
bsraTilko
t lineiD alttga
alCitipstatt
"
l=
g=tit=h1=flert:Ae
(*Probably intended American National Corporation.)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL RESERVE BANK OF SAN FRANCISCO
. 1.141ealerlser - - 2
4ividem44* She Orel bey sterthelders have sever emsramed the :mivilegp tea.
shinnAme their .to and, te fest, bare beam very hostile to the arremgmmmat and
tedigamat bessmee so dlei4eo4a have bess paid is their resifts lamsespormame
eta** Some time age Slesdkle soot a eels deem there to esgemise these steak.
holders se tint the stook amid be tormsterd to ammo pestles with is the
Morisse Ommoorperatioa meld demi emd reshape is to some satistestery
admummt. rowevere the vesmits to to metieehp seeteorp to
the expeetetime et the amerisma Immeeoperattes* Ihe Pulite Samssoperatioa
pore eogsmised sod the stork trusteed, bet the Wastage bed some =tr
..
their is amd see* to Pertlemd mod mode a demomd em Simadials that these these
books be sold to the resifts IseeorporetS-0
Osermmities
is *irk the batiks operate*
'As a matter et bet, them, diasrma
stimidoelderilheve for soma
time bees melds( a sitmetias *doh to
tlier'Aittilhat for •limbs
se the Ameriesm Samsesperotica flea*
to
Sashbso1,s diresters
hove molested the Somesopepatiam s
to 1 somemilp shish the beak
deeired for its steibbelders fed the
ef
is. Redo is a basis a'
$41*10 fir the Posifie lemsorperatiom
ems bright a* about $87.80)
sod the oemtliS Islas a
as the
ef the Bemsesperatiam*
'The imerleaa
t us mew
all of the Pasifie amd
Merton Semeerventi stalk held tfl the
Day Distr.'s% wed lames the
haerisas
.iu4 with the
Ishinael
Pertlamde
Ma
Seek of
Astoria
Mai
States
anal Simko Jogemeo
Sigmas
and Ssmiais Mesh. Pospme,
/first liatinsel Sea Sordimers
Saitemal limbs Silimetom*
eit is the pompoms of the Amoriema 10040eptwatico to Sell the
first
as
of
vertem amd megm4latiomm ame see helms serried
eith
tma
different
Your!. very tivisiy,
is. to Nre imead
Its4 leads
Mr* nem*
ire Mile
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(Climileg from Portland Savalag Oesemmiss, July 24, 192)*
6.-te
eftlaillse Or. Aar ge (410mvls1)- She Peelfte Sassewperatiiss shish vas
inoorpoostadaft 14 bast puoihmmed four Mahe la sewthimaAMmaiChveass seem&
tog to Sisateriharles Sall el larebetald, as at ths imesepewsksest it vas
lesamed bees trier with wood thmt as of the SeemIlle beam vas tmatsded ta
the perehass.
It use also ammemmeed 10 Nall that $180.000 with at steak had alms*
beam eabooribede masb St this beim vamolisited. It Is the sepses of the
Puittaasomperatias to pmeehmes Mak steaks amid ass us holding sempemp
fee them. She emepevetlos will halm the eastern' oempsaiess setups it vele
lammed from Nall. Ovum steak will be paid le In fells as a probation to
the preferred stalk whisk is epos to investmes.
lime theemmad Ammo st the Peeing Seseerporetionis steak All be
ammulativoperefeereds eith a gamewebeed dividend of $11.72 per shames Oms
thalami ahem are to be somas steak mad viii drewa divides' up to $1.711
per shames after whisk' all MA1114040. wale of the amelmeutiom are to be
partisipeted ta equalir by the peeftreed sad omen steak holders. loth
teaks sweat no pee valve.
'
Mall palsied out that all beaks lave bees pmeshased ma a soak beats.
bows is beakteceirelaws having esiewised the Sok of South...teem
well
le La
Owego* mad the Morisse beak of Ilsrakfielais betag at the pewit time presi.
dant of the homeless bomb. Its meet meat astivity was ta seemestioa with
the eseger et the taidpemdmat telephone sompeales se Oman sad Washimetwas
Ukiah were moviad tale tho Soot Spain l'elarbere sampamtes0
free loll Waft isomial. Jim 14 USA
0PertImed 4. Aweless Selloael 406,., a heldisi seepar, bus assa
with eapital of 00,000 Shares et She peril stoat ad MAO Maros me perils
Is tree ever an an amibmage baste the stalk of Peskin* Immaeepase4iseeshish
Imelda a oasteolltai interest In hometown betiomal of Portland wad sight wooslated Wks to as
evegpm4
"Steildwadero of resifts Mistaseparettea 411 be Garret Verge am
Ammo 4110,616 a Shmomat mammal dividend tar sash Ohms held.
las evelleee of the moo holding emapow vill be to allow a more flexible
setoups sempeme Wiest. told Dee, Jesse èSe. Ms tamediete 'lama are to
twerease the eapitalisatiom of Ameetema Sehlomal Smik ame, to held emdfisiamt
resoureme In reserve to allse farther empeasion in outside barks as oppeetem
MAT promote,
litaidale* divests?s in heeriewm
J. L. Meier, 1. L. Ihempoon land 1.
National Seeks have embesetbed the total 2 tame mad 10,000 A shares at
$10 a shave.
• seatmemneal dirtier* a SU seats as A steak will be doelared mm
et
' ae
•
able tmlr
to stalk of reseed Jame SO mud thereafter at grafted;
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
copy of this letter and attached memorandum tent to all F.
except New York.
July 6, 1931
Mr. 'Frederic R. Curtiss
Federal Reserve Agent
Federal heserve Bank
Boston, Massachusetts
Dear Mr. Mantles:
We are endl sing for your examination certain material on bank
affiliations in New England which we 11,../e compiled on a special form (Form
C) for use with the iederal Reserve Board's roordL on the subject. It
covers securities companies and other nom-banking affiliates as lel' as
affiliations between two banks. The Board's existing records on chains
and groups, which are based on reports famished by the geserve Banks in
compliance with the Board's letter, it, 6386, November 18, 1929, do not
include information on these two items.
Specifically, this compilation has been prepared to includc the
following kinds of affiliates of banks:
(1) All non-banking affiliates of state and
nat1ow.1 banks, includin securities companies,
mortgage companies, investment trusts, insurance
companies, holding coweinies, foreign banking companies and safe de-losit companies. In each case
the name of the bank and the names of its subsidm.
iaries or affiliates are given.
(2) All affiliations between two banks only.
This affiliation may exist either through common
stockholding interest, trusteed stook, direct ownership, or other means. The crimmonest examples of this
are the affiliation of a trust compel with a nation -1
bank and of a savings bank with a oompercial bank.
The campilation has ben made principally from three general
Moody's Manual of Banks, the directory of Security Dealers of North America,
and Rand McNally's Bankers' Directory. Our remest is that you check our compilation, make the necessary corrections and additions indicated by your credit
files, examiners' reports, and other sources of information, including reference where advisable to the organizations thamselvos, and return the revised
material to us as soon as possible.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
vr-
Mr. Frederic H. Curtiss, #2
July 6, 1931
A memorandum is enclosed which explains the terms used in the compilation, and gives such other information as is necessary to interpret and
J.rrect it properly.
Very truly yours,
E. A. Goldenaeiser
Chairman. Committee en Branch,
Group and Chain Banking.
finc.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 2, 1931
Yr. L. R. Rounds, Deputy Governor
Federal Reserve Bank
New York, New York
Dear Mr. Rounds:
We are enclosing for your examination certain material on bank
affiliations in/ New York yhich we h ve compiled on a special form (Form C)
for use with the Federal Reserve Board's records on the subject. It covers
securities companies and other non-banking affiliates as well as affiliations between two banks. The Board's existing records on chains and groups,
which are based on reports furnished by the Reserve Banks in compliance A7ith
the Board's letter, St. 6386, November 18, 1929, do not include information
on these two items.
Specifically, this compilation has been prepared to include the
following kinds of affiliates of banks:
(1) All non-banking affiliates of state and
national banks, including securities companies,
mortgage co.:inanies, investment trusts, insurance
companies, holding com2anies, foreign banking
co.apanies and safe deposit companies. In each
case the name of the bank and the names of its
subsidiaries or affiliates are given.
(2) All affiliations between two banks only.
This affiliation may exist either through common
stockholding interest, trusteed stolk, direct
ownership, or other mans. The commonest examples
of this are the affiliation of a trust company with
a national bank and of a savings bank wit:. a commercial bank.
The comnilation has been -lade principally from three general sources-Moody's Manual of Banks, the directory of Security Dealers of North America,
and Rand 1:cNally's Bankers' Dire-Aory. .;e have also used in the case of your
cVstrict the confidential summary prepared by you on Chain and Group Banking,
November 18, 1930. 'Jur re'luest is that you check our clnpilatio(,., make the
necessary corrections and additions indicated by your credit files, examiners'
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. L. R. Rounds, #2
May 2, 1931 -
reports, and other sources of information, including reference here advisable
to the organizations themselves, and return the revised material to us.
It is anticipated that most trouble may be encountered in correcting
the description of the Transamerica affiliation. The listini;s we enclose are
taken mainly from their last annual report, which appears however not to mention all their subsidiaries. It is hoped that you can procure from them a
complete statement of their present structure.
A memorandum is enclosed which explains the terms used in the compilation, and gives such other information as is necessary to interpret and
correct it nroperly.
We are taking up this matter of affiliations with you in advance
of the other Reserve Banks, because the subject is ...ore important in your
district thin elsewhere, and also because we belirve you have given the
'subject m,re attention than the other banks. For this reason we trust
you will make such comments as to procedure, classification, terminology,
etc., as your experience suggests.
Very truly yours,
E. A. Goldenweiser
Chairman, Comnittee on Branch,
Group and Chain Banking.
Enc.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Federal Reserve Committee on
Branch, Group and Chain Banking
July 7, 1931.
AFFILIATIONS
4p1anation of InfOrmation compiled on Form C
Form C has been prepared for the purpose of compiling informs.
tion regarding the following types of affiliates of banks:
(1) All non-banking affiliates of state and national banks, including securities companies, mortgage companies, investment trusts, infernos some
ponies, holding sespanies, foreign banking companise
and safe deposit companies. In each case the name
of the bank mad the names of its subsidiaries or
affiliates are gives,
(2) All affiliations betmeen two banks only.
This affiliation may mist either through common
stockhoding interest, trusteed stook, direet
ownership, or other means. The oommonest examples
of this are the affiliation of a trust oompany
with a national bank and of a savings bank with
a commercial bank.
The information described is intended to supplement the existing
records of the Flideral Reserve Board on the subject of chain and group affiliations, whisk at present include only affiliations comprising three or
:ore looks. It is desired that the material compiled on Form C be examined
by the Beeerve Bank, checked for accuracy and completeness with its records,
and returned to the Committee. It is assumed that the Reserve Banks already
have reoords of this information in some fora for their own use, but if not,
perhaps a Cheek may be made by reference to credit files and examiners' reports, or, where advisable, by direst reference to the organizations which
are listed.
The compilation has been made as of current date in so for as
possible. Changes and corrections in the information may be made directly
on the face of the Form itself if desired. A supply of blank foras is also
enclosed for recording affiliations that need to be added.
Perheps the most important single item of information is the mode
of control of affiliates, which is set down in the second oolumn of FOra C.
In the majority of affiliations there is one bank or cor)oration which is
dominant over the other affiliates, and which is oontrolled not by any
other bank or corporation, but by its own general stockholders. Accordi
ingly waerever the name of the dominant menber of an affiliation appears,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
the verde ellemeeel eteehhelders" have been used in the eolumn headed *Bow
eontrolled," it mama met difference *ether the stoic* is *lovely held or
not. Thus, for =ample. the First fationai Bank or Sew York is controlled
by its general steehholders, so far as this study is concerned. The First
Securities Company, homier, Is controlled by the First National through
trusteeship of the securities omm2any's stock. Accordingly, in the proper
column the words "General stoekholders" are used to describe the control
of the bola itself, which is dominant, and the words "Stock trusteed for
First National" are used to describe the control of its affiliate,
In summary, the earls or 1anmer of control will come under the
following five heads:
I Ownership of oontrolling stook by 7,eneral stookholders.
This applies to the dominant meMber of the affiliation.
II Trusteeship of the stock of one member of the affiliation for the stockholders of another member of the af..
filiation.
III Ownership of controlling stock of one :ember of the affiliation by another member, the stock being a direct
asset of the latter member.
IV Ownership of the controlling stock of the different mombore of the affiliation Iv &I individual or group of individuals.
V Control of ame =Ober of the affiliation by another Afraber, not through euncrehip of control of stock but through
the fact that the offioers of the dominant meMber are also
officers of the controlled member. This applies in the
ease of 'mutual savings banks.
In the ease of II, III, and IT the per cent of a subsidiary's
eteek that is awned should be given where it is known, even though the
eompilation as it stands shows only Najority" or "minority" interest.
In oases where the per cant of stock owned is not knomni the terms,
"ninerity interest" or "-ejority interest' should be used.
Examples of designations at the five different forms of control
as shown in the compilation follow:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I "General stookholders"; as in the case of the Chase National
Bank, indicating that it is the dominant member of the Chase
affiliation.
.3..
II "Stock trusteed for Chase National"; indicating how the
Chase Securities Conp _ay is oontrolled.
III
IT
V
Majority interest owned by Irving Trust"; as in the ease
of Irving Investors Management Company.
"Zajority interest owned by same stockholders"; as in the
case of the Putnam County National and the Nahopae Nation.
al, the names of the members of the affiliation being
bracketed.
"Same Uanagemont"; as in the case of Bath National Bank,
and Beth Savings Institution (a mutual savings bank) of
Bath, Maine.
In the absence of definite knowledge it is often difficult to tell
whether a given interest should be called an investoent or an affiliation.
Affiliation implies participation in management* whereas investment* as a
rule does not. If as such as 25 per seat of the stock of a bank or corporation iw owned, therefore, the presmpotion is strong that there is pare
tieipation in management* and that the interest may be called an affiliao
tion. But if there is lest than 25 per cent control there is much more
lesstion whether to call the interest one of affiliation or simply investment. In any given caws where the facts are known an to the extent of
participation in nanagement the interest should be classed accordingly,
regardless of the per cent of control; but in the absence of knowledge
of sueh facts, the interest should be considered an investment if the
control is lees than 25 per cent. It is not thc purpose, of mores* to
include invostmeats in the compilation.
It will be apparent from the foregoing paragraphs that certain
teems are used in a special and perhaps novel sense. The term Wilts.
tion, which is often used in a general sense implying the fact of a °ono
amnion, is here used in a particular sense as designating the group or
eystem itself leach is made up of the affiliates. Thus the "National
City affiliation" consists of the National City Bank, the National City
Company, the City Bank Farmers Trust Company* International Banking Corporation, etc., all of these corporations being )mmebers of the affiliation." The National City Bank is the "dominant maker of the affiliation,"
and the others, directly or indirectly, are "controlled or subsidiary memo
bars." The term affiliation as used therefore will apply to the ease of
two institutions linked together as well as to a "group" or "chain" of
any rtumber of institutions.
The function of the concerns listed has been indicated as *bank"
also a trust sampaey engaged in oommereial banking* "securities,"
neans
which
"insuranoe*
" %ortolan ate.
"holding,"
The intensities regarding the state issuing the charter and the
date of the darter is desired for non-banking affiliates only and is not
neessmary in the ease of bank..
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
It is desired that the figures for capital stook and lemma and
investment be supplied by the Merle Reserve Bank. In the ease Of beAcs
the figures should be taken from the March call report, if practicable.
In the case of affiliates, Aar *doh oapital stock alone is to be given,
the figures should be taken from the date nearest the Aarch call report.
It should be made clear in all cases whether it is the bank or
a non-banking affiliate that holds control. It is also necessary to indioate all intermediate means of control, as Ir. caSS4 where a concern that
has a subsidiary is in turn the subsidiary of a oUler•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
July 3, 1931
Statistical Tabulation Bureau,
230 Barr Building,
Washington, D. C.
Gentlemen:
In accordance with my conversation with Mr. Way regarding the, card punching and tabulations of the schedules on
Fern Loans of Banks, I suggest that you procure the necessary
machines and order immediately 100,000 cards. At the sane
time I suggest that you give us a sritten estimate of the
cost of the punching and tabulations. After which we shall
authorize yo-.1 to proceed with the work.
Very truly yours,
J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.
ii
July 2, 1931
Mr. Hamlin (at Mattapoisett)
Mr. Smeaa
Banks controlled by State bank
members of the Federal Reserve System,
As Mr. Horbett told you over the telephone Tuesday afternoon, the
only data we have on the ownership of bank stock by state bank members
of the Federal Reserve System are contained in our records on group and
Chain banking. These records were not designed for the purpose you have
in mind and, therefore, the information obtainable from than is fragmentary
&loci incomplete. This is t.-oe in 'art because our records on group and
chain banking cover groups and chains of three or Tore banks only and in
general include only those banks over which control, either actoal or
potential, is exercised by the head of the grour or chain.
We are attaabing keret° a list of the state bank ambers which,
according to the above mentioned records, control other haulm through stock
o ,nership. You will note that in practically all cases the baW-s hold more
than 50 per cent of the stook of banks controlled.
Cite a number of state bank members not included in the attached
list are tied up in one way or another in group or chain systems, generally
through ownership of a substantial stock interest by another bank or holding
company. There are a camber of instances also where officers, directors or
stockholders of state bank members own control of other banks which are not
inch:Le:ad in the attached. list.
If desired, the Federal reserve agents eonld no doubt comrile
reaacnabli complete data covering the ownership of bent atndk by state
bank members.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
pf Bari
, 4
',°Peraciport-,
BANKS CONTROL:LE BY STATI BANK MUMS 07 THB UDALL Man ST
Based on 7. R. Agents* reports of croup aad ahmin bunking, 3ach reports do .
include groups or chains consisting of less than 3 r.
The list below,
f',erefore, is not nc-:ps.l.irily
Method
legree of cont.n):i
an 00.11U21.1c
Merchants Trust Caw,
Red Bank, NJ.
JJ-i, 01 AL-C
3loomfield Bank & 'Pruqt
Bloomfield, N.J.
Watasssing Immik
Bloomfield, N.J.
96.5 of stock
N.J.Title Guaranty & Tr. Co.,
Jersey City, N.J.
Oman Ave. Besk,
Ban:: of Lafayette,
Jersey City, N.J.
51% of stc,0
71ef ejf
eacoast irust Co..
Asbury Park, N. J.
Bank oi montoiair,
Montclair, I.J.
0C1C.
Montclair, N.J.
Montclair ?ru.st Co.,
Montclair, N.J.
First National Bank
Cedar Grove, N.J.
Peoples National BrMontclair,
50.1t of stock
Fidelity Union Trust Comvany
Newark, N.J.
Mom County Trust Co.,
last Orange, N.J.
74% of stock
Bank of Nutley,
Nutley, N.J.
Pranklin National Bs&
First National Dank.
Antler, N. J.
4
Peoples Bank & Trust Co.
Passaic, N.J.
Americas Istlonai
Passaic, N.J.
30% of stocir.
Plainfield Trust doapany
Plainfield, N.J.
Guaranty Trost Co.
Plaistfield National I)
Plainfield, N.J.
Rahway Trust Co.,
Rahway, N.J.
Rahway National
Ballow, N.J.
.4eAl1Ak
almk
ef stock
stoc17
001 of stook
73. of stoc'
754 0f str
Camden Safe Deposit and Trust Co. Oak)" National Bank'
Camden
Haddonfield Trust Co.,
Haddonfield, N.J.
40% of sti- ;
52.5% of
Worcester Bank & Trust Co.,
orcester, Mass.
99% of stock
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Worcester Zonnty Nat. _Bemdc
1Fbrtettsr Ias,.
North Brookfield Nat.. Bank)
North Bookfield, Mass. ,
Seoond National Bunk
liarTe, Mass.
Spenrer sat. liem14 Spengler.
!First Nat. Bank, Webster )
Clinton Trust Co., Clinton)
Stock held in trust for
Worcester Co. Nat. Bank
Which Is owned 99% by the
Woroester Bank & Trust t Co.
2
Into.Iliat-bs*
liejlayotte South Side Bank 4 Tr.
St. Louis, Mo.
Colonial Trust Caspany
Pittsburgh, Pa.
blia.4111122113011
Method sad
ildalL.21-0211titla.
South Side National lank
All stook szoopt director:
qaalifyiaz shares
Freehold Beak
Pittsburgh. Ps.
All steak except direotorL'
clialifling share%
Peoples-Pittsburgh Trost Co.,
Pitt*burgh, Pa.
Ibrmont &wings & Tr. thr. Majority of .to*
Dormont Pa.
Pint National Nook
Ifilkihasiatris Pa.
Union Trust OmKomw
Pittsburgh, Pa.
Kellen ilietdonal No& )
Wheat Savisiga Doak
)
Pittsberdts
22DIIIRAL IINSININ BOARD
DIVISION 07 ZANE OPNELLTIONS
MY 26 1931
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
A11 stook ennert Directon.
goalifYing *glares
FG.sti-L- 11 I
Perehase of stook IA &NW banks by State maw bade
P&P
Loek: Maven Trust Co., Lock:Haven, Pa., purchase of 343 sbaros of
6/8/27
Mill Rail State Bank, Mill Hail, P26, apponrod
497
Liberty State Bank and Trnst Co., Mt. Carmel, Pa., holding of
57 and purchase of 12 shares of stoat of latiomal City
Bank of New York, approved
4/13/28
526
Bank of Auburn, Penn., permission to hold 10 shores of National
City Bank of New Torkirsmia‘
2/19/29
174
Application to hold stock of iniiemel 01.14r2sodtommmdmod
milkomi approval
2/23/30
178
Bonk to dispose of stock in reasonable Use
3/19/30
287
Amerieen Bank:and Trust Co., Richmond. Va., purch4se of 2312
shares of Vest bid Bank without permissioa
2/12/30
154
In lanivert 4est Ind Sauk into bran& or dive's of atonic
2/24/30
200
Caleb Ihatheoto Must Co.. Soormiale, N. T., purshaeo of SO
shores mirk of 1st* of IMWMaloboa Co., Itmitable
at
In.. omd Ummensenrors Tomei Ob.. annelid om sonditien
kemirrefrain from forikorionrelmoso without permit.
2/24/30
don
196
Reply of bank that no more porebomm will be mode without
ariproval
3/6/30
241
Purchase of 50 shares of Chase Notional larkspproved
3/26/31
310
Pardbase of 50 shares of Nalhers Trust Co. apparmsd
3/31/30
321
Purchase of 40 Shares of Corn Exohange Bank Trust Co.
approved
4/15/30
350
Colonial
it Co., Sevark, I. J. permission to retain stooks
poichamod in violation of condition of mmikersid.
appeored
4/30/30
401
Oohing. &met 00.. Smut, N. J., smthoriky to retain stocks
pardlimet *Mott perniaidat granted
4/23/30
384
elenside Smirk mmd Timm. On., Ilemeddo, Pa,, permission to carry
stork of raftwialk National Donk in assets tar reasonable
this
4/8/30
344
Intogrity Trust 0o.(o14), Philadelphia, Pa., violation of condition of membership Irr purchase of filmdom witb:rut per3/27/30
mission
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
316
latest* bast Os.(),Philadoiabia, Ps, aoqpdsitiea of $O
dimes it PW11.dsl111.1asal Pa* approval
9/26/3O
lassiale MI* sad Snot 0o., Leastala, Pa., peostssisa
els* at Sational Otiss* grads&
Pais
1411
WA
4/100
3mo
Liberty sump Desk ad bast Os., HU Saasol, Pa., applioation
IS hold essisia lindostosks scpresed
4/11/30
liposotos* Ifirssi Os., tkparstosa, NU• spidioation to bold oartain
bank stodge ikrircrist
4/18/3D
Pith
Title aii last 03., Wilemsdo N. 44. aPPliestisa to
hold sertsio beak stooks apporpod
4/18/30
Siam Deposit Solt ant but Co., Was,Pa.. Illeadielsa be
bald steak of *Menai OW Sark of No link
4/15/3)
Moils* but 0o., Pidialolphia, P
big additiims1 ehioss la :;:gs
r
al****-1
Is aellail
isahowit irk
Wasim
*AM
Peoples Pittibss.tont Co., Pittsbappho Ps., poscbsooit
aontrelling interest in Writ MOSisasi Saikst
Wilkinsborge Paw, astioadassald
4/9/30
541
ii
loosisitios at otockdiassiosi
2/19131
Isplioatios sat apnargoi sad lankadsisal to dispose of
steak
3121/31
Plea for disposal of stalk
0/31
Pima Sur Alaposel of am ~se sad for Ulnas aid
sogaivisig oaten ammo
5/29/31
Illielfrag
mg twat 0o., Ristasomi, Pas, pesolosisa to
Mei Sew blast= of bask *Was pardiosol by it
SomolloOh: asi but Os., St. Louise as OtIoltionto
Mame 135 &tree ofisioral arid. Mat Os.
•
2.1.0. Nees Snot ft., Pall lime,
prolissisa to
retain sleek of Pall Ilkwit YikAtatal Seek awe UM,
and to lamas. boldligs
XJ4
7/22/30
12/31/30
1/2S/31
Stompiorais Osopsay for laseamossealineast
alesositios. Philatilplda, Pa., sissies=Idam
Siosoliinbiss
Oita
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
N
467
1
Form No. 131
Office Correspondence
To
FEDERAL RESERVE
BOARD
411 110W-- //
Date
June 26, 1931
Subject:
Miss Keeton
From Mr. Hammond
2--8•195
Although there are actually two private banks in operation
in the state of South Dakota, ,=
11
have been more than that in the past;
he fact that they are, by law, under supervision of the State Banking
A,41
Superintendent has apparently 14ed the Minneapolis Bank to classify them
as state banks.
This is not in accord with the classification followed
in the case of other states, of course, where also there is state supervision of private banks but where, nevertheless, we have counted them
separate from incorporated banks.
In the Bank Changes study, inasmuch as we have a separate
record of the private banks, we are taking them out of the summary of
A
state banks.
It seems to me you should do the same for your classifi-
cation of banks on the B Forms and also in the suspension study.
The
trouble is, of course, that you do not know what the names or sizes of
these private banks are, but this could be determined either from our
records or by referring the question to Minneapolis.
If this is not done, of course, the Bank Changes figures
will not be in agreement with yours, but inasmuch as you know that
these are private banks, it seems clear that the practice should be
followed generally that we are following in the Bank Changes studyorktiir
Dosposir4,0-0,imskr—
'
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
,/,2c/
frO
,
Ira (3-12 'w*%:1'-T')lk.w
-
/-1,-,44.447
&Pat
-1'NA-CS(
')ra
lc/r_-15
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'
June 25, 1931
Hoxton
Mr. William
Federal Resorve 1.gent
Federal Reserve Bank
Riehmcmd, Vi gifts
Dear Mr. Hoxton:
14 are enclosing herewith the names of 50 Innis: in
your district and would appreciate it if you could send us a
list of the bonds, securities, etc., held by each of them at
the time of the last examiilation. The Committee is undertaking to make an analysis of the investment holdings of a representative group of banks throughout the country in order to
determine their investment policies. These banks have b)en
selected at random in order that they may be representative.
Perhaps the investment list in e,oh case, ohich usually appears on page 7 of the lational bank.examiner's report, can
be photostated at a minimum of time and cost.
In returning these lists, it mould be of much assistance if you could give the total loans and investments of each
bank in order that we may group them according to sise. The
items included in tow looms and investments are set forth
articles 1 to 4 inclusive of the Board's Form 105a.
Very truly yours,
E. A. Goldenweiser
Chairman, Com:iittee on ir.Lneh„
Group and Chain Bankinc
1
uune 25, 1931
Dr. Goldenweiser
Mr. Riddle
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
These bond lists can doubtless be supplied at a very
small cost of both money and time and will help us to work out
the quality index of investment securities for representative
banks all over the country similar to the index which the
Federal Reserve Bank of New York has prepared for member banks
in that district.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
r•
•
FEDERAL RESERVE FIANTriVrg:CFRANCISCOAp
A Gel%
June 23, 1931.
" 0
A0 tr9
A41 Ill
<k‘
4
-Itir')% fo
104.
Mr. E. A. Goldenweiser,
Chairman, Cowmittee on Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Mr. Goldenweiser:
I have before me your letter of June 17th\,
addressed to Mr. Clerk, in which you inquire whether
it is his intention to prepare a report on branch banking in California suitable for inclusion in the Committee's general report.
Mr. Clerk is at present on vacation and will
until
July 6th. However, I have communicated
return
not
with him by telephone, and he advises me that he had anticipated undertaking this work and that it will proceed as
rapidly as possible upon his return.
Yours very truly,
•
Pr
June 22, 1931
Dr. Goldenweiser
Mr. Riddle
Here is the material which Ur. lastr has collected for use
in writing a chapter on economic background for bank changes. It is
not very well organized on the whole, but perhaps sollie of it will be
usable. I believe you made some suggestions to him once as to the
type of material that might be collected, but whether he has followed
them I do not knaw. If you have time to look it over before you go
away, perhaps you may have some further vuggestions as to additional
material which might be assembled.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
June 18, 931
Dr. Goldenweiser
Mr. Riddle
Here is the revised schedule after our conference of Tuesday.
We were able to get soma reduction in the number of items but not much.
Do you have any farther suggestions before printing?
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
June 18$ 1931
Mr. Ire Clerk
Deputy Governor
Federal Reserve Bank
San Francisco, California
Dear Mr. Clerk:
Upham tells me that he would like to have a little information
California transactions ralatad to group banking, if convenient.
two
about
1. California Benefactors, Inc. seems to have bean organised
a bona fide attempt to assist independent unit banks in com
as
either
peting with the Bank of Italy branch system or else to develop such a
":nuisance-value" that the Bank of Italy would have to buy them out. In
of Italy
any event, the first issue of Fortune indicates that the :lahlc
into
written
as
of
history
affiliations
the
although
over*
tern
did take
of
mention
no
makes
Banofactort.
here
hearings
the House
2. Mt. Bacigalupi testified before the Rouse Committee, (Part
II of the Hearings, p. 1430) that in 1926 aancitaly Corporation acquired
the French American Bank, and in 1927 the United Bank & Trust Company,
both of San 7rancisoo, and consolidated them in April* 1927. The Coast
Banker for May 20, 1927, p. 469, in a story on the consolidation of
,M-7,a made no reference whatever to Bank of Italy interests* but referred
Seto it as the nucleus of a big chain of banks to be located throughout
California* an independent chain of a groat banking institution." Are
we correct in inferring that at the time of tha purchase of these banks
and their consolidation, it was not publicly known that Bank of Italy
MA involved?
Any infor%iation on these two situations which you
to develop will be appreciated.
Very truly yours,
J. a. Riddle
Secretary, Committee on Branoh,
Grou) and Chain Banking
7
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
grr
June 17, 1931
Mr. Ira Clerk
Deputy Governor
Federal Reserve sank
San Francisco, Calif.
Dear Mr. Clerk:
We Ilve receivcd your letter of June 11th together with
a symposium of branch banking in California which you forwarded by
express, We note your statement that much of the material comes
from the confidential files of your bank and is intemied merely
as a guide to.those engaged in the study of the development of
branch banking in California, and should not be embodied in the
report of the Committee.
It is not clear from your letter whether on the basis of
this material you are undertaking to prepare, or to have prepared
under your direction, a report on branch banking in California, or
whether it is your intention that we should prepare the report here.
As you know, we have not assigned any member of the research staff
to this particular project; but if you feel that writing the report would seriously interfere with your administrative duties or
that your administrative yalties would unduly delay the preparation
of the report, perhaps it would be better to secure some experienced research man to write it under your direction.
You have compiled in a very workoble form the basic
material necessary, but it will still be a major task to digest
and organize this material nto a suitable chapter for the Committee's report. Other things being equal it could probably be
done much better by sorts pe...son who is already tmniliar with conditions in California, but this is nit absolutely essential. Will
you be good enough to let us know what you Iron: in mind ,s to the
lest method of handling the further work on this project?
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Very truly yours,
E. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain danking.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
dr&
FEDERAL RE SERVE BANK OF SAN FR_AN CIS CO
. 91
,
1.%
4
6/
L-
k4
0
tteittp8
0
/
7
June 11, 1931
4'44
Dr. E. A. Goldenweiser,
Chairman, Committee on Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Dr. Goldenweiser:
There is being forwarded to you by express
a report of some six hundred pages containing a symposium on branch banking in California.
This is intended as a guide to those engaged in the study of the development of Branch Banking in California, and should not be embodied in any
report of our Committee because it contains much information taken from the confidential files of our
bank.
I think it desirable to return the report
to San Francisco when it has served your purpose.
Yours very truly,
,Ya
1.0t
Deputy Governor.
cc. to Mr. E.
Mr. L.
Mr. M.
Mr. J.
L.
R.
J.
H.
Smead
Rounds
Fleming
Riddle
Form No. 131
Office CorrespoitidAe
To
From
_r. Riddle
RESERVE
BOARD
Datelke 5, 19.31
Subject:
Garlock
Assessments on Stockholders
of Active National Banks 1921-1930
• •
Data relative to assessments on stockholders of active
national banks during the period 1921-1930 is not available in the annual reports of the Comptroller of the Currency.
This material can be
obtained from the semiannual earnings reports of national banks in the
Comptroller's office, but according to Li-. Kane, Head of the Statistical
Division, no attempt has been made by his staff to summarize this information.
A considerable amount of work would be required, therefore,
to get the data into usable form.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(72A.1,ei
2-4Mg6
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL•RESERVE BANK
OF
NEw YO R K
June 2, 1931.
Mr. J. H. Riddle, Secretary
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
Yours of May 28 has been received enclosing
copy of minutes of the meetings of the Committee on Branch,
Group and Chsin Banking.
These seem to me to properly reflect
the business done, and I have no suggestions to make.
Very truly yours,
LAL
L. R. Rounds
Deputy Governor
Form No. 131
•
Office Correspondence
To
mr.
From
::Ass 'eston
FEDERAL RESERVE
BOARD
Riddle
Date June 2. 1931
Subject:
4
State Banks
forms have been received for the following
states:
Pennsylvania
Y.ichigan
Wisconsin
Illinois
Indiana
L.,1owa
Oregon - /_, ,,
1
1930 figures are missing for:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Laryland
north Carolina
South Carolina
West Virginia
Virginia
0
2-805
May 29, 1931
Mr. Mistr
Mr. Riddle
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
About five weeks ago you told me you would submit to
me the material on the various topics suggested at the rate
of about one every two days.
only three.
Up to this time I have received
In your memorandum of May 26th you said that
No. 4 would be comnleted May 27th and ro. 5 by May 28th, but
I have not yet received either of these.
Will you please see
that I get 4-10 inclusive as outlined in that memorandum by
June 15th?
It is highly essential that we get something to-
gether in short order so that some one may begin writing the
chapter.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Lay 26, 1931
Mr. M. J. Flaming, Deputy Governor
rfOefal 7ieserve Bank
Cleveland, Ohio
Dear Lr. Fleming:
Enclosed is a copy of the minutes of the recent
meeting of the Committee on Branch, Group and Chain Thinking.
If you have any suggestions or corrections to make,
please let me %flaw.
I am also enclosing a copy of the instructions
to members of the research staff for preparing reports,
which I neglectrA to hand you while you 7/ere in V;ashington.
Very truly ::ours,
J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.
Enc.
wr-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1931
Mr. L. R. Rounds, Deputy Governor
Federal Reserve Bank
New York, New York
Dear Mr. Rounds:
Encl)sed is a copy of the minutes of the recent
meeting of the Committee on Branch, Group and Chain Banking.
If you have any suggestions or corrections to make,
please let me know.
Very truly yours,
J. H. Riddle
Secretary. Committee on Branch,
Group and Chain Banking.
Enc.
I
Office Correspondence
To
Mr. Riddle
From
Mr. Mistr
tr•
FEDERAL RESERVE
BOARD
Date Ma_y_ 28,
Subject:
P
Projects Completed
1.
The influence of improved methods of transportation upon small
towns and small town banks.
2.
The lack of relationship between changes in population and postal receipts in communities in which banks failed.
/3. The lack of relationship between post office discontinuances
and bank failures
Pro e
under way
The effect of bank failures upon postal savinr.s
To be completed May 27
The extent of chain distribution and its effects upon communities
and banks
To be completed May 28
C.
ChanFes in *annals of distribution (other than chain stores)
and their effects upon banking
To be completed about June 3
7. Changes in 000perative marketing and their effects upon country
banks
To be completed about June 10
,. Recent changes in industry
To be completed June 17
9. Population trends in the geographical divisionsof the country
To be completed June 24
1/10. Changes in urban real estate values
i
To be completed about July 1
11.
Changes, and their causes, in the volume of savings
To be completed about July 8
12.
The decline of the small town as an independent social unit
To be completed about July 15
13.
Comparison of the number and location of commercial failures with
the number and location of bank failures
To be completed about July 22
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-. `14.4
2
Mr. Riddle
May 26, 1931
Yr. Mistr
Projects Proposed
3. The selection of 100 active banks in states in which bank failures have
been frequent and 100 active banks in states in which bank failures
have been infrequent. These banks are all to be in agricultural areas
in communities of approximately the same population, 1,000 or any
other figure under 5,000. The growth in deposits and loans and investments of these banks (ten year intervals, 1910-30) is to be arrived at and a median growth calculated for each of the two grours.
Then the communities in which the banks are located are to be studied
to determine whether or not there is a tendency for the banks with
less than average growth to be located in communities Which are losing
their position as trade centers.
2. A study of banking trends in rural communities along the lines of 0.S.
Powell's study for the Minneapolis Federal Reserve Bank
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
yay 23, 1931
Condition of State Bank Suspen-
Lir. Riddle
'slr. Garlock
sion 3eports from North Carolina, South
Carolina and Virginia
North Carolina
We received approximately 190 schedules from North Carolina which
laried widely as to the value of the th:ta reported therein. Sixty of thebe
schedules show nothing as to what disposition vas made of the bank after
closing. Of the 87 banks which are now in process of liquic;.ation the schedules on those which failed prior to 1927 (15 banks) do not report either
claims or payments. Very few of the schesules give any information aE to
assessments after suspension and practically none record the assrssments
prior to suspension. Generally speaking the North Carclina sched.iles are far
from satiafactory.
South Carolina
The following luotation fram Mr. Fry's letter of January 26, 1931,
relative to the South Carolina susnension schedules prob?bly explains the
high expense of their preparstion.
"The State Department of South Carolina hss gone
to a trenendous expense in order to obtain the information as reported. The Chief Examiner estimates that
the examirs- r doing this :Fork travelled about 4,500
miles in order to get the information he has gotten
fras receivers of suspended banks."
The 226 Eched..11-s aE s'Jbmitted - are in reasonably satisfactory oondition.
Virginia
The 56 suspension schedules from Virginia are in good condition,
unless unusual difficulties aere encountered in preparing them, it would
seem that Mr. Ritchie's bill is highly eXarbitant. (It averages out as almost Ta0 ty,r schedule) Corros?ondence frau is:r. Fry regardiss-7 the Virginia
schedulrs does not indicate nny particular trouble in assembling the data.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Form No. 131
Office Correspadete
To
Dr. Goldenweiser
From
Ur.
FEDERAL RESERVE
BOARD
Date •16, 1931
Subject:_
Ridd e
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
)
0
I plan to have Yr. Greer come down about next Thursday evening in order to be here on Friday to meet the Committee
and tell them what he is doing on the Canadian study. Does
this meet with your approval?
r
2-84$6
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
:lay 15, 1931
Mr. L. R. Rounds, Deputy Governor
Federal Reserve Bank
New York, New York
Dear Kr. Rounds:
Thank you for your letter of May 13th enclosing
a copy of a memo andum which you dictated on the general
subject of bank failures.
I am having copies of this
made in order that some of the other members of the COM..
mittee and of the research staff inay h'..ve copies.
I pre-
sume you have no objection to this.
Very
yours,
l!'L.P1.
J. H. Riddle
Secretary, Committee or Branch,
Group and Chain Banking.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
p.
FEDERAL RESERVE BANK
OF NEWYORK
May 13, 1951.
Mr. J. H. Riddle, Secretary
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
Enclosed you will find copy of a memorandum which
I first dictated in January on the general subject of bank
failures, discussing the causes and possible preventive measures.
This is the memorandum about which I spoke when down there and
which you expressed a desire to review.
Very truly yours,
Enc.
LAL
L. R. Rounds
•
BANK FAILURES --
There are two principal conditions which bring about bank failures
a.
Losses actually taken or in prospect, which impair the solvency
of the institution,
b.
The enployment of too large a proportion of the funds of the
institution in assets of a non-liquid character.
Many solvent
institutions have closed from this cause.
The causes for tnese conditions are varied - perhaps the largest
single factor is management.
In any case, that is the reason most often given
for bank closure, and while there is considerable justification for this view,
consideration should also be given to factors which in some measure at least
are beyond the control of the local bank management.
In the following uis-
cussion of this subject the causes for bank closures are taken up under two
heads, those due to local conditions for which the management is primarily
resnonsible, and those due to more --eneral conditions and to greater or less
extent beyond the control of the management.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
LOCAL
conimors oa 1,ANAGE:aET
Losses result mainly from the following causes:
I.
Poor judgment in the selection of bonds.
2.
Losses on collateral luans generally due to decline in security
values and failure to require maintenance of a proper margin of
security or to sell out the account.
Such conditions will most
frequently exist in the smaller banks of the larger cities, and
in suburban territory as the average country bank does not have
a very large proportion of this type of loan.
-2-
3.
Crop failure and the resultant necessity of carrying the farmer
over to the second or even third season with increased loans on
reduced security.
This condition has not been present in connec-
tion with the closure of any bank in the Second Federal Reserve
District, but is believed to have been an important consideration
in some sections of the country.
4.
Granting of excessive lines of credit to one general industry,
leading to too great concentration of risk.
Large lines to
single individuals or groups, particularly when affiliated with
the management of the bank.
These latter tend to be larger than
good credit judgment approves and are particularly difficult to
reduce or keep within reasonable limits when the business of the
borrower does not prosper.
6uch conditions often lead to the
practice of sending good money after bad,
5.
Loans secured by or predicated upon real estate sometimes made
on the basis of boom prices, but more often perhaps under conditions where the loan is permitted to run over considerable period
with a resultant depreciation in the value of the security.
Inability to meet the demands of depositors because of a non-liquid
position generally results from the failure of the management to pursue sound
general policies in respect of the following -
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1.
Maintaining a substantial secondary reserve, liquid in character.
2.
Real estate loans or loans predicated upon real estate.
3.
Granting of large lines to industries or businesses which are not
making progress,
4.
?urchase of bonds and other investments which are not readily
marketable.
Banks too often buy yield instead of luality fre-
•
•
-3-
quently making it impossible to dispose of bonds when funds are
needed, except at a substantial loss.
5.
Diversification of earning assets (other than secondary reserve)
in respect to maturity of investments and realizable maturity of
loans which would assure a regular turnover.
Very few bankers
have any conception of the need for proper maturities in their
investment account and loans.
6.
A periodical amortization of real estate mortgage loans which
would give added safety to this class of investment.
7.
Lack of an intelligent budgeting of income and expenses and
failure to include as a current expense probable or possible
losses in loans and investments.
This leads to a distorted
picture of net profits available for dividends, which in'turn
encourages the payment of exces:Ave interest rates on deposits
and often too large dividends.
In general it may be said that the existence of any or all of the
conditions so far discussed is the result of poor management, the extent of
the losses taken or in prospect being a reasonably accurate index of the quality of management.
Considerable justification for this view can be assumed by
the fact that sound banks generally can be found in nearby territory operating
under identical or very similar conditions, but with a management which has been
able to avoid the losses incurred by numerous other banks.
It is, however, too broad an indictment to say that all of the ills
of banking are the result of bad management.
For instance, it will be at once
recognized that many banks have had to face severe losses on bonds due to depreciation in market values, even in cases where bonds have been selected with some
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
-4degree of care and intelligence.
Such depreciation is largely due to changes
in the economic situation, which are entirely beyond the control and generally
beyond the understanding of the average banker.
Losses on collateral loans are
also in part due primarily at least, to economic conditions.
Losses as a re-
sult of crop failures and poor prices for crops are, with respect to the primary
cause at least, totally beyond the control of the management of the local bank.
The past year has been a period of most drastic liquidation in the
nrices of practically everything that hns to do with the assets of a bank.
Bonds
have suffered a most severe liquidation, reducing the value of the bank's investment account; stocks have suffered an even more severe liquidation, very greatly
depreciating the value of the security back of many of the bank's loans; commodity
prices have also fallen, and general business has been very materially affected to
such an extent as to impair the credit and standing of many business establishments which are the borrowing custaners of banks; real estate in many sections
has also undergone severe liquidation.
A year of such drastic liquidation will
perhaps only occur once or at most twice within the business experience of the
average banker.
Such a period naturally presents many problems which he is not
qualified to foresee or to deal with when they arrive.
The fact of the matter
is the average small-town bank officer or director can hardly be expected to
be a c=petent mechanical banker and at the same time an expert in the selection
of bonds, an economist and a business prophet.
Under the present system of banking the following factors must obviously be the responsibility of management regardless of whether or not the mantigement has complete control of the factors.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I.
Selection of bonds.
2.
Making of collateral loans.
-5-
3.
Loan
to famers for the purpose of growing or carrying
crops.
4.
_
Granting of(excessive lines of credit.
5.
Loans secured by or predicated upon real estate.
With respect to losses resulting from the first three of these factors, bank supervision can have only limited influence for the simple reason
that
by the time the losses have developed and the loans have become subject
to criticism, it is generally too late to do anything about it, and up to that
point the judgment of the examiner is pitted against the judrpent of the banker.
With respect to the last two mentioned causes, supervision can have
a somewhat greater influence since large lines and excessive real estate loans
do not ordinarily develop quickly in a bank and the tendency can generally be
detected in time to prevent, or at least minimize serious conse!uences.
But
even with respect to these causes, supervision is n)t and cannot be all nowerful since criticisms which may be made sufficiently early to prevent losses, can
only reflect the difference of opinion between the examiner and the management
of the bank.
An examiner is not infallible and by the time he is proven to be
correct, it is often too late to prevent a loss.
The conditions leading to a non-liquid position sometimes result from
a lack of understanding of the principles of banking and a failure to appreciate
the necessity of maintaining a liquid position, and in such cases bank :.uoervision should be able to exert a considerable influence by constructive criticism
of the policies being pursued.
This is particularly true in connection with the
handling of the bond account, and since bonds represent roughly one-third of the
total earning assets of the banks in this district, any improvement in the handling
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-6-
of that account would be of very material help to the banks.
The fact is the bank examiner makes a very critical examination of
the loans of the bank, particularly those which have been in the bank for any
considerable period of time.
His examination of the bond account has general-
ly been limited to the preparation of a list of the bonds and a comparison of
their book value with the existing market value, thus showing the appreciation
or depreciation, as the case may be.
Very rarely have criticisms been made of
the bond account except when it shows a depreciation.
Existence of deprecia-
tion is generally taken as prima facie evidence that the bond account is poor,
and it then comes in for generous criticism.
In many instances, however, the
same bonds have been hc.ld through previous examinations without showing a depreciation and have not received critical comment.
This matter of criticism
of the bond accounts of banks is an important one and should receive careful
consideration with a view, if possible, to working out some plan whereby criticism of the bond list would be made before the depreciation actually shows up.
Bank sunervision as developed under the jurisuiction of the Comptroller
of the Currency and by the banking departments of many states, is reasonably effective in correcting the abuses of bank management, and in checking bad practices.
Theca is undoubtedly room for improvement in this regard, but it may be questioned
whether any substantial part of the cure for the present situation can be found in
a more effective supervisory control of banks.
The sunervisory authority can only
aid the banker somewhat and emphasize his responsibility.
The responsibility for the solvency of banks and the safety of the depositors' money must inevitably be that of the bank management.
and management cannot be separated.
Responsibility
Supervision cannot and should not undertake
the responsibility for passing on loans at the time they are made, or for the
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
-7-
purchase of investments.
Yumerous situations develop where the directors of banks have been
both incompetent and negligent, leaving complete operation of the bank in the
hands of either one man or a small group.
disaster.
Such a condition freouently precedes
The cure for this particular evil would seem to be to find some way
to make directors assume a greater responsibility for the conduct of banks.
This may need some revision of law, but possibly only a more rigid enforcement
of laws already in existence.
The view is expressed that if directors were
held strictly accountable for the conduct of the banks they are presumed to
direct, and were made to suffer severe penalties for failure in this regard,
and if such penalties were
rigidly imposed in all cases, there would be a
very auick change in the management of many banks, and the quality of banking
would immediately improve.
Instances would probably develop where the better
members of boards would be unwilling to assume the responsibility for acts of
less capable or trustworthy members.
tors would ouickly be eliminated.
Under such conditions undesirable direc-
Only a few examples would have to be made
beforei there would be a change for the better.
GErERAL CMITIONS
There are numerous factors quite outside the province of local bank
management which affect very materially the quality of banks and bank management, and which would need to be considered in any constructive move to increase the safety of the depositors' money.
Among these may be named the fol-
lowing.
I.
The nresent Dual Banking System
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
At the present time we have ap roximately 8,000 national banks
-8-
operating under and subject to laws passed by Congress, and under the supervision of the National Banking Department which renders a reasonably consistent
supervision with respect to all national banks.
7:e also have approximately
twice as many banks in number, some 16,000, operating under State charter subject to laws of the various states and subject to such supervision as is provided by the various state banking departments.
In some states the degree of
state supervision compares favorably with that provided by the National Banking
System, in some states it amounts to practically nothing at all, and in many
others it varies all the way in between.
There are neither uniform laws nor
uniform supervision with respect to state banks.
Furthermore, the very fact
of a dual system with the Congress and the states in effect competing for the
creation of a banking system, makes a condition under which both laws and supervision will be much too generous.
During recent years the aim of the lawmakers
has been to attempt to meet each other in being liberal with a view to enabling
the banks in each group to colpete on favorable terms with those in the other
group.
Such a condition is not designed to strengthen the banking structure,
and has undoubtedly resulted in some cases in important banks assuming a trading
position in dealings with the banking department under whose supervision they
happen to come.
If all the banks of the country were obliged to operate under
one system, whether it be national or state, both banking laws and supervision
woulu be more intelligently handled.
7o some extent also a third system is super-
imposed through membership in the Federal Reserve System, since that system also
has some authority and power with respect to its members, and may, and frequently
does subject them to examination.
2.
Bank Directors
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Consideration should be given to the desirability of making changes
I
•
-9-
in the banking laws with respect to bank directors.
Their responsibilities
should be clearly defined by changes in law if necessary, and severe penalties
should be provided for failure.
No bank should ever be permitted to have more
than fifteen directors, probably a less number would be better.
If banks de-
sire a board of directors which will function as a new business department,
provision for this could be made in some other manner, but a group of not
exceeding fifteen should be held strictly accountable for the conduct of all
of the bank's affairs in any way affecting the safety of its operations.
Con-
sideration might also be given to the luestion of granting the banking department the Dower of removal of directors "for the general good of the institution."
There are obvious objections to giving a banking department such power, but there
have been numerous cases where such power would have been of value.
3.
Group, and Chain Banking
Consideration should be given to the enactment of laws designed to
prevent both group and chain banking and possibly also with regard to the permitting of branch banking, which if permitted at all should be allowed to grow
only by very slow degrees because of the management problems involved.
This whole iuestion is receiving intensive study by the Federal Reserve System through a special committee.
More complete information on this
subject and more definite conclusions can be arrived at after the committee's
report has
4.
been submitted.
Affiliated Security Conpanies
Consideration should be given to the enactment of laws designed to
prevent the operation of security companies by banks or the stockholders of banks.
It may be considered too drastic to prevent entirely the organization
of such companies by banks, but in any case such companies should either be subject
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
-10-
to examination by the banking department, and reouired to publish regular
statements, or should be prohibited by law from borrowing either directly
or indirectly from the affiliated bank or any other bank.
Banks should be
prohibited frau buying or loaning money upon their own stock or the stock
of affiliated companies, either directly or indirectly through any affiliated
companies.
Among the most frequently observed losses being taken by small
banks are collateral loans secured by bank stocks, and very frequently the
security is found to be the stock of several of the very largest banks.
Bank of United States had many loans of this kind.
The
It had also made through
its affiliated companies many loans on the security of its own stock.
The
fact that a bank operates a security selling company is likely to lead to
the recommendation of second-rate bonds to correspondent banks.
5.
Reserve Bank Lending Power
COnsideration should oe given to an amendment to the Federal Re-
serve Act which would permit Federal "ieserve Banks to make loans upon the
security of sound but ineligible assets of a member bank at a rate say 24
above the current discount rate in emergencies, and only with the specific
approval of the Federal Reserve Board with respect to each loan.
The arguments favoring such emergency power are that occnsionally instances will arise where sound institutions will have an insufficient
amount of eligible paper to see them through a ran or other drastic liquidation of deposits.
Experience demonstrates that the time which must necessar-
ily be consumed in the event of sach an emer,7ency in negotiating and arranging
for loans at another institution, is likely to be so great as to necessitate
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-11-
the closing of the bank before assistance can be rendered,
In such cases
also .there the reserve bank has already advanced as much as it legally may
upon the security of eligible paper, there inevitably arises the question
of security for the loans, and security which may appear adequate to enable
the reserve bank to see its :liember
through its difficulties becomes inade-
nuate for two banks if it is to be divided between them.
There will also
result a division of responsibility, which is unfortunate.
If the reserve
bank is to render the greatest possible assistance in such cases, it should
have the legal power to make loans sufficient to be effective in saving the
situation in cases where it is satisfied as to the solvency of the bank.
6.
Segregation of Savings Funds
Consideration should be given to the advisability of laws designed
to regulate tde operation of savings departments.
The questions to be con-
sidered should be -
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a.
Segregation of assets representing the employment of savings
deposits, and limitation of the use of such assets for no
purpose except the liuuidation of savings deposits.
b.
Limitation of investments held by savins department to investments legal for trust funds, or, if this is not thought
practical, to investments meeting satisfactory tests as to
quality and safety.
This would greatly iaiprove the ouality
of bank investment accounts.
c.
A requirement that the savings uepartment be operated as a
complete separate unit with its separate balance sheet and
profit and loss account.
Such a requirement would necessi-
tate knowledge on the part of the bank's officers with res-
-12-
pect to the earnings of that department and should in itself not only safeguard the interests of the savings depositors, but also act as a corrective with regard to rates
of interest paid on such deposits.
The above suggestions are not intended as recommendations.
It is
be no means clear that the solution to this particular problem rests with
the segregation of savings funds.
Consideration might also well be given
to the elimination of the present distinction in reserve renuirements on
time and demand deposits.
It may be seriously nuestioned whether any par-
ticular class or type of deposits should be preferred over another class.
7.
Supervision of Bond Investments
Consideration might well be given to the advisability of requiring
the National Banking Department and the state departments to maintain some
kind of supervision over bond investments.
approval before purchase.
This need not necessarily be an
It might be sufficient if, following each examina-
tion of a bank, a careful analysis of the bank,
bond account were made to
determine the following:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a.
If there is proper diversification
b.
If there is proper distribution of maturities
c.
If the list includes any issues of nuestionable merit
d.
If the average grade of all bonds held is sufficiently high
e.
If purchases have been made at such prices and/or with such
mnturities as would reasonably protect the bank against undue depreciation in a changed money market.
S
-13-
If the above reconmendation were to be completely effective, the
aupervisory authority would need the power to require the removal from the
bank's assets of any objectionable issues.
The granting of such power carries
with it considerable responsibility, and there are obvious arguments against
such a course.
Very much could be accomplished in this direction without any
change in law or increase in power of the supervisory authorities through the
adoption of a policy of constructive criticism of investment portfolios.
SMEARY
During the period since the establishment of the Federal Reserve
System to December 31, 1930, ten member banks have closed in the Second Federal Reserve District.
Kine of these banks had deposits of less than $1,000,000,
and seven of them closed as the direct result of defalcation on the part of officers of the institutions.
Of the two remaining small institutions, one closed
as the result of legal complications precipitated by a stockholders' suit; the
other closed as the result of a badly frozen condition.
believed to have been solvent.
30th institutions are
The status of the one large institution, the
Bank of United States, is still in doubt.
The character of bank supervision needed varies somewhat with the
type of bank.
In the case of the larger institutions the points of greatest
importance are to determine whit are the general policies of the institution,
character of its management, the character of its investments, nuality of its
loans, and its loaning policy, particularly with respect to the larger lines,
It is not so important to make a detailed audit of the cash items, customers'
ledgers, etc.
In the smaller banks the situation is nuite different and it
is very essential that the examiner should satisfy himself as to the accuracy
of all accounts, since in the small institutions the possibility of serious
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-14-
•
losses resulting from embezzlement, defalcations, etc., is greatly increased.
As has been demonstrated many times, it is ..luite possible for an officer of
a small bank to abstract considerably more than the total capital funds of the
bank, and it is obviously necessary that the bank examiner should conduct an
examination of such type as would disclose such conditions
The next most important points to be covered by the examiner are a.
Character of supervision given the institution by its directors.
b.
Close
scrutiny of loaning policy, particularly with respect to
all sizeable lines.
c.
Careful examination of bond account and constructive criticism
with n view to preventing losses before they occur.
While the bank examiner and bank supervision can do much to guarantee
the quality of banks, it seems clear that supervision alone can never reach the
point where it can in effect guarantee the depositors' money.
The view is ex-
pressed that the most effective work along this line can be done by taking steps
which will result in a better supervision of banks by their own directors.
May 12, 1931
LRB/LAL
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FEDERAL RESERVE BANK
OF NEWYORK
May 15, 1931.
Mr. J. H. Riddle, Secretary
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
Yours of yesterday' is received with the suggestion that I bring my golf clubs along.
I shall be glad
to do this as a little relaxation ought to be o good thing
at that time.
Very truly yours,
L. R. Rounds
LAL
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1931
kr. Ira Clerk, De2uty Governor
Federal Reserve "dank
5a!: Francisco, California
'.ear Yr. Clerk:
Recei7A is acknowledged of your letter of ::,ay 9th,
rw copy of
and in order to nvoid any delay I am sending you
tee on
part Ale of the hearings before the Senate sub-coimit
Banking and Currency.
I hope it reaches you before you
leave for the east.
lery truly yours,
J. H. Riddle
Secretary, Calimittee on Branch,
Group and Chain Banking.
En c.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Kay 12, 1931
Mr. L. R. Rounds, Deputy Governor
Federal Reserve Bank
New York, New York
Dear Kr. Rounds:
When you come down next week for the meetings of
the two committees, I suggest you bring your olf clubs.
I want the members of the comittee to go with me to the
Congressional Country Club for dinner on Thursday, the 21st,
and thought perhaps the committee might adjourn early enough
that afternoon to go out and have a game of golf beforehand.
In which case the time lost could be made up by having an
evening session at the club house.
Mr. Smead and Dr. Goldenweiser are both agreeable
suggestion,
and unless the gtather is bad or some
to this
objection is raised by other members of the coAmittee, we
will consider the golf and the dinner at the club a part
of the program.
7ery truly yours,
J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.
Form No. 131
•
Office Correspondete
To
From .
-ounsel
FEDERAL RESERVE
BOARD
C 0
•
Dat.e,
11, 1b31
Subject:_
r. icCielland
10
Referring to your memorandum of May 6th
you are advised that,
after discussing the matter with Doctor Goldenweiser, Chairman of the
Committee on Branch, Group and Chain Banking, it has been decided
not to publish at this time in the Federal Reserve Bulletin the
Digest of State Laws Relating to Private Banks or Bankers, but to
hold it for incorporation as an appendix in the report which is to
be made by the Committee on Branch, (3-roup and Chain Banking.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
,Itt:1
•
Office CorrespondenceBOARD
Form No. 131
it
FEDERAL RESERVE
To
From
Dr. Goldenweiser
Date
_slay 11, 1931
Subject:
ljr. Riddle
o
o
Mr. Blattner and Miss Cohen think it essential in connection
with the chanter on Branch Banking in England to go through the Public
Library of New York to see what materials may be available there.
The
Library of Congress is reported to be rather weak in its foreign publications, while the Public Library of New York is prob&bly one of the
best.
Mr. Blattner suggests in this connection that the Committee send
Miss Cohen to rew York to see what additional material can be found.
I
think the suggestion a good one, and if you approve,I shall authorize
Miss Cohen to make the trip at her convenience.
It is difficult to es-
timate in advance how long it will take her, but presumably not more
than three or four days.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2-8495
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
t•
FEDERAL RESEIZVE 13ANK OF SAN FRANCISCO
ay 8, 1951.
Mr. J. H. Riddle,
Secretary, Committee on Branch, Group and Chain Banking,
c/o Federal Reserve Board,
Washinicton, D. C.
Dear Mr. Riddle:
I would appreciate it if you could obtain
and send to me one copy of Part I, January 1930, of
the Hearings before a Sub-Committee of the Committee on
Banking and Currency, pursuant to S. Res. 71, Operation
of National and Federal Reserve Bankiny: Systes.
Yourr very truly,
Deputy Governor.
Form No. 131
Office Correspoldeite
To
Mr. Riddle,
From
Mr. Wyatt-General Counsel.
FEDERAL RESERVE
BOARD
Subject:
Date tay 6, 1931.
Digest of State laws
re private hanks and
banking.
•I•
This office has now completed work on the final revision of the digest of State laws relatinc to private banks and
banking which a-grepared at the request of the Committee on Branch,
Group and Chain Banking, and I am handing you herewith for your information a. copy of such final revision. I can supply you with any
reasonable number of additional copies that you may desire.
Very truly yours,
1.-I
(Le.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Walter VIN t,
General /Cbunsel.
2-8445
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
••
•
FEDERAL RESERVE BANK
OF NEWYORK
flik,„414ii. frk`o
'4174440. 03/
"44N?
4<-
May 6, 1931.
Dr. E. A. Goldenweiser, Ghairman
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Lashington, D. C.
Dear Dr. Goldenweiser:
Your letter of May 2with blanks
Form CI has just arrived. I shall be glad to have this information checked up as quickly as possible, after which I
will write you our comments and any suggestions that may occur to us as a result of this checking.
olith respect to your comment about
the Transamerica affiliation, I think we can furnish pretty
complete information there since we have recently checked it
out and now have a reasonably fair understanding of how it
works.
Very truly yours,
L. R. Rounds
Deputy Governor
LAL
_
Federal Reserve Committee on Branch,
Group and Chain Banking
May
5, 1931.
INSTRUCTIONS TO MEMBERS OF THE RESEARCH STAFF
FOR PREPARING REPORTS
In preparing the chapters on his particular topic each member of
the research staff should keep in mind that the report should be:
1.
Objective.
objective viewpoint.
Each chapter should be written from an entirely
The approach should be scientific and not prejudiced.
The vriterls own opinions should neither be expressed nor implied.
If you
are an advocate of a particular form of banking structure this fact should
not appear in your statement of the facts.
This, of course, does not
prevent the drawing of conclusions which are definitely predicated upon
the facts presented, so long as the material at your disposal is not
arranged with the view to proving a case.
No references should be made to the first person or to aliases,
such as "the writer."
2.
Yon-argumentative. Avoid an argumentative tone.
Do not
present the two sides of a question in the form of arguments for and
against, or set up "straw-men" for the purpose of knocking them down.
Merely present the facts available as if no controversial questions existed.
3.
Concise and pointed.
The facts should be presented as briefly
as possible consistent with thoroughness and clarity.
that the whole report be kept within reasonable bounds.
It is essential
Bizarre and ir-
relevant or merely "curious" episodes or facts should be omitted regardless
of how interesting.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Make your statement as brief as possible.
Avoid every
-2-
appearance of padding.
Conciseness, however, should not be an excuse for
incomnlete presentation of essential data.
closer analysis and "tighter" writing.
In fact brevity should imply
The main story of the chapter should
stand out in clear outline, supported but not obscured by the necessary
details.
Diagrams and tables should be simplified to the highest degree.
If they cannot be readily interpreted by the average reader, they lose
much of their usefulness.
With their captions they should be self-explana-
tory and not dependent upon the text for description.
A diagram should
tell but one story, as a rule, and a one-line diagram is perhaps the ideal.
If any member of the staff has any definite suggestions to make
as to conclusions which might be drawn from the whole investigation or as
to recommendations which might be made, they should be outlined and submitted in a separate statement, not as a part of the special chapter of
the report which he is writing.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
' Federal Reserve Committee *ranch,
'
Group and Chain Banking
IESTRUCTIONS
RESEARCH STAFF
0 MEM3ERSQ
REPORTS
,LPARING
<
In preparing the chapters on his particular topic each member of
the research staff should keep in mind that the report should be:
1.
Objective.
objective viewpoint.
The(triter's
Each chapter should be written from an entirely
The approach should be scientific and not prejudiced.
wn opinions should neither be expressed nor implied.
If you
are an advocate of a particular form of banking structure this fact should
1-n .elrery-1Erragrarranh written.
not •biaLeelettrtis-
This, of course, does not
prevent the drawing of conclusions which are definitely predicated upon
the facts presented, t-f-4ig1-44-4ever-tn a manner-woh does not indicate
11,44
vhs.4-4he_xcitex-has.betn_stiamating-to-siake-a-cace.
No references should be made to the first person or to aliases,
such as "the writer."
2,
Non-argumentative.
present the two sides of a
Avoid an argumentative tone.
Do not
question in the form of arguments for and
against, or set up "straw-men" for the purpose of knocking them dawn.
Merely present the facts available as if no controversial questions existed.
3.
Concise and pointed.
The facts should be presented as brief-
ly as nossible consistent with thoroughness and clarity.
that the whole report be kent within reasonable bounds.
It is essential
Bizarre and ir-
relevant episodes or facts should be omitted regardless of how interesting.
)
t V44;44t
C ^11.1
;
me.
,
p)e---ftert-ttee--4meRty....41agea.....for . what .a49.414,-Iret
. Avoid every
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
appearance of padding.
Conciseness, however, should not be an excuse for
incomplete presentation of essential data.
closer analysis and "tighter" writing.
In fact brevity should imply
The main story of the chapter should
stand out in clear outline, supported but not obscured by the necessary
details.
Diagrams and tables should be simplified to the highest degree.
le*
If they cannot be readily interpreted by the average reader, they etre-tete,
rErszl- With their captions they should be self-explanatory and not dependent upon the text for description.
A diagram should tell but one story,
as a rile, and a one-line diagram is perhaps the ideal.
If any member of the staff has any definite suggestions to make
as to conclusions which might be drawn from the whole investi,Tation or as
to recommendations which might be made, they should be outlined and submitted in a separate statement, not as a part of the special chapter of
the report which he is writing.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Hammond
— r. Riddle
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Here is an outline which Mr. Lauck has prepared
on the subject which he is covering. Will you please look
it over and see if you think it overlaps too much with
your chapters on branch banking or with any other of the
Committee's protects? At the same time I should like to
have any constructive suggestions which may occur to you
regarding his method of handling the subject.
May 2, 1931
Dr. Golden7miser
Mr. _addle
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Here is a proposed letter to Mr. -Rounds which ILI-. Hammond has prepared asking the
oserve 3ank to check and supplement
information which has been compiled regarding bank affiliates.
The attached document explaining the information compiled on Form
VA, prepared by kr. Haanond in cooperation with uir. Smead and
C'
,
Mr. Rorbett.
The thought is Lhat after getting Mr. ,q)und's re-
action to the project we might compile similar informL:tion for
other Federal reserve districts and ask the Reserve banks to
check It.
You may recall that Mr. Smead wrote a memorandum to
the governor about two or three months ago sugesting that the
Division of Bank Operations copile this information on affiliations.
In so far as member banks are concerned I think his sug-
gestion vas that the information might be askd for on the call
report.
Apparently no action has been taken Al this memorandum
by the '.iovernor or the Board.
This raises the question as to
whether the Committee sh,Tald proceed with this proeot !fithout
speakinfr to the Governor about it.
May 2, 1931
::r.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
In replying to Mr. Fleming's letter suggesting that
the committee members be advised beforehand as to what specific
tiestions will be discussed at the forthcoming meet in
I suggest
a oaragrarh about as follows regarding the Committee on Branch,
Groun and Chain Banking:
Your suggestion hns been called to the attention of Dr. Goldenweiser and Mr. Riddle. At
present it is the intention to have the members
of the research staff meet with the members of
the CoLlmittee in order to report on the stntus
of the various projects at that time, and as
yet no specific questions for discussion by
the Committee h,ve been outlined. If it should
be decioed prior to the meeting, however, that
there are some problems to which the Committee's
attention should be especially directed, Mr.
Riddle will make a note of them and write you.
Lay 2, 1931
Nr. L. R. Rounds, Deputy Governor
Federal Reserve Bank
New York, New York
Dear Mr. Rounds:
Vie are enclosing for your examination certain material on bank
affiliations in New York vhich we have compiled on a special form (Fora 0)
for use with the Federal aeserve Board's records on the subject. It covers
securities campantes and other nor-banking affiliates as wall as affiliations between two banks. The Board's existing recorus on chains and groups,
which are based or reports furnished by the Reserve Banks in compliance wi,
the 3oard's letter, at. 6786, :ovember 18, 1.29, do not include informatic
on these two items.
boecifically, this compilation has been prepared to incluae the
following kinds of affiliates of bnrks:
(1) All non-banking affiliates of.state and
national banks, includinR securities companies,
mortgnge companies, investment trusts, insurance
companies, holdirv companies, foreign banking
companies and safe deposit co.ipanies. In each
case the name of the bank ant the name of its
subsidiaries or affiliates are given.
(2) All affiliations between two banks only.
This affiliation may exist either through common
stockholding interest, trustPed stock, direct
ownership, or other means. The coamonest examples
of this are the affiliation of a trust company with
n national bank and of a savings bank Tith a commercial bank.
The compilation has been made principally from thrre aeneral sources-aloody's Manual of Banks, the directory of 3eourity Dealers of n)rth ame
and Rand :,:oNally's Bankers' Directory. 7;e have also used in the case at
district the caafidontial swanary prepared by you on Chain and Group Bankin ,
November 18, 1930. Our reouest is that you check _air coapilatlon, make the
necessar7 corrections and additions indicated by your credit files, examiners'
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Kr.
F. Tiounds,
Lay 2, 1931
2
reports, and other sources of information, including reference where advisable
to the organizations themselves, and return the revised material to us.
It is anticipated that most trouble may be encountered in correcting
the description of the ',:ransamerica affiliation. The liatings we enclose are
taken mainly from their last annual report, 'which appears however not to mention all their subsidiaries. It is hoped that you can procure from them a
comPlete statement of their present structure.
A memorandum is enclosed which explains the ter.:is used in the c pilaton, and gives such other information as is recesst:iry to interpret a.
correct it properly.
are taking up this mattcr of affiliations 7ith ::ou in advance
or the other Reserve Banks, because the subject is more ttoortant in your
district than elsewhere, and also because ve believe you ha7e given the
subject :Iore attention than the other banks. For this reason we trust
you will .ake slch comments as to procedure, classification, ter:Anology,
etc., as ::our experintIO suggests.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
7ery truly yours,
E. A. Golden-veiser
Chairman, Committee on Branch,
Group and Chain Banking.
'
Federal Teserve'Committee Oh
Branch, Group and Chain Banking
:iiay 2, 1931
explanation of Information compiled on Form C'
Form :1 has been prepared for the purpose of compiling information regarding the following types of affiliates of barks;
(1) All non-banking affiliates of state and national banks, includirw securities com2anies, mortgage companies, investment trusts, insurance compiries, holding compPnies, foreign banking companies
and safe deposit companies. In each case the name
of the bank- and the /lanes of its subsidiaries or
affiliates are i,7iven.
(2) All affiliations between two banks only.
This affiliation may exist either through coamon
stockholding interest, trusteed stock, direct
ownership, or other means. The commonest examples
of this are the affiliation of a trust company
with a rational bank and of ,1 savirws bank with
a commercial bank.
The information described is intended to supplement the existing
of
the Federal Reserve Board on the subject of chain and group afrecords
filiations, which.at present include only affiliations comprising three or
more banks. It is desired that the material compiled on Form C be examined
by the Reserve 3ank, checked for accuracy and completeness with its records,
and return.d to the Committee. It is assumed that the Reserve Banks already
have records of this information in same form for their own use, but if not,
perhaps a check may be made by reference to credit files and examiners' reports, or, where advisable, by direct reference to the organizations which
are listed.
The compilation has been made as of current date in so far as
possible. Changes and corrections in the information may be mde directl;
on the face of the Form itself if desired. A supply of blank forms is also
enclosed for recording affiliations that need to be added.
Perhaps the most important single item of information is the mods
of control of affiliates, which is set down in the second coluiLn of Form C.
In the majority Of affiliations there is one bank or corporation which is
dominant over the other affiliates, and which is controlled not by any
other bank or corporation, but by its own eneral stockholders. Accordingly wherever the name of the dominant member of an affiliation appears,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-2-
the words "General stockholders" have been used in the column headed "How
controlled." It as no difference whether the stock is closely held or
not. Thus, for examnle, the First National Bank of New York is controlled
by its general stockholders, so far as this study is concerned. The First
Securities Company, however, is controlled by the First Rational through
trusteeship of the securities company's stock. Accordingly, in the proper
column the words "General stockholders" are used Lc) describe the control
of the bank itself, which is dominant, and the words "Stock trusteed for
First National" are used to describe the control of its affiliate.
In summary, the means or manner of control will come under the
followino five heads:
I
II
III
IT
V
Ownership of controlling stock by general stockholders.
This applies to the dominant member of the affiliation.
Trusteeship of the stock of one member of the affiliation for the stockholders of another member of the nffiliation,
Ownership of controlling stock of one member of the affiliation by another member, the stock being a direct
asset of the latter member.
Ownershio of the controlling stock of the different members of the affiliation by an individual or group of individuals.
Control of one member of the affiliation by anothor member, not through ownership or control of stock, but through
the fact that the officers of the dominant member are also
officers of the controlled member. ?his aoplies in the
case of mutual savings banks. Apparently this type of
affiliation does not occur in New York.
In the case of II, III, and IV the per cent of a saosidiary's
stock that is owned should be given where it is known, even though the
compilation as it stands shoms only "maority" or "minority" interest.
In cases where the per cent of stock omned is not known, the terms,
"minority interest" or "mejority interest" should be used.
Examoles of designations of the five different forms of control
as shown in the compilation follow:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I
"General stockholders"; as in the case of the Chase rational
Bank, indicatino that it is the dominant member of the Chase
affiliation.
-3-
II
III
"Stock trusteed for Chase National"; indicating how the
Chase Securities Company is controlled.
"'Majority interest owned by Irving :rust"; as in the case
of Irving Investors Lanaganent Company.
17
"'Majority interest oaned by sane stockholders"; as in the
case of the Putnam County National and the aahopac National, the names of the members of the affiliation being
bracketed.
7
"Same Management"; as in the case of Bath National Bank,
and Bath aavings Institution (a autual savinee bank) of
Bath, Maine.
In the absence of definite knowledge it is often difficult to tell
whether a given interest should be called an investment or an affiliation.
Affilintion imnlies participation in aanaaement, whereas investment, as a
rule, does not. If as much as 25 per cent of the stock of a bank or corporation is owned, therefore, the prevamption is strong that there is participation in management, and that the interest may be called an affiliation. But if taere is less than 25 per cent control there is auch aore
suestion shether to call the interest one of affiliation or simely investment. In any given case athere the facts are anown as to the extent of
participation in management the interest should be classed accordingly,
regardless of the per cent of control; but in the absence of knowledge
of such facts, the interest should be considered an investment if the
oontrol is less than 25 oer sent. It is nst the purpose, of course, to
include investments in the compilation.
It will be apparent from the foregoing paragraphs thet certain
terns are used in a special and perhaps novel sense. The term affiliation, which is often used in a general sense implying the fact of a connection, is here used in a particular sense as designating the group or
system itself which is made un of the affiliates. Thus the "National
City affiliation" oonsists of the National City Bank, the National City
Company, the City 3ank Farmers Trust Company, International Banking Corporation, etc., all of these corporations being "members of the affiliation." The National City Bank is the "doainant member of the affiliation,"
and the others, airectly or inairectly, are "controlled or subsidiary members." The term affiliation as used therefore will aply to the case of
tvo institutions linked together as well as to a "group" or "chain" of
any number of institutions.
'Me function of the concerns listed has been indicated as "bank"
means
also a trust company engagsd in coamercial banking, 'securities,
which
"holding," "insurance," anortgage," etc.
The information regarsing the state issuing the charter and the
date of the charter is desired for non-banking affiliates only and is not
necessary in the case of banks.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-4-
It is desired that the figures for capital stock and lonns and
Investment be sunplird by the Federal Reserve 3ank. In the case of banks
the figures should be taken from the ::arch call report, If practicable.
In the case of affilietes, for which capital stock alone is to be given,
the figures should be taken from the date nearest the !arch call
ort.
It should be made clear in all cases whether it is the bank or
a non-banking affiliate that holds control. It is also necessary to indicate all intermediate means of control, as in cases where a concern that
has a subsidiary is in turn the subsidiary of another.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Form No. 131
Office Correspondtice
To
FEDERAL RESERVE
BOARD
Date May 2, 1931
Subject:
Mr. amead
From 11r._Riddle
4/0
• In replying to Mr. Fleming's letter suggesting that
the committee members be advised beforehand as to what specific
ouestions will be discussed at the forthcoming meetin, I suggest
a paragraph about as follows regarding the Committee on Branch,
Group and Chain Banking:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Your suggestion has been called to the attention of Dr. Goldenweiser and Mr. Riddle. At
present it is the intention to have the members
of the research staff meet with the members of
the Committee in order to report on the status
of the various projects at that time, and as
yet no specific questions for discussion by
the Committee inve been outlined. If it should
be decided prior to the meeting, however, that
there are some problems to which the Committee's
attention should be especially directed, Mr.
Riddle will make a note of them and write you.
2-8495
Form No. 131
Office Corresporcleike
To
From
FEDERAL RESERVE
BOARD
1
19312-1/*
Subject:
Dr. Goldenweiser
r.
Date_ I.
Riddle
k
giro
2--2i495
Here is a tentative outline which Lir. Lauck has
prepared on the project which he is handling, "Competition
between National and Jtate Banks."
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
f
1
fr
Fr,deral 'eserve Committee o. Jraneh,
Clrodp and Chain 3anking
INSTRUCTION:: 221HICEliBERZ OF MI
FOR .TE?J,RII,TO
LTAFF
In preparing the chapters on his particular topic each member of
the researlh staff should keep in mind that the report should be:
I.
ObJective.
Each chapter should be written from an entirely
o4ective viewpoint. :he approach should be scientific and not prejudiced.
The writer's own opinions should neither be expressed nor implied.
If you
are an advocate of a particular form of banking structure this fact should
not be obvious in every !laragragraph written.
This, of course, does not
prevent the drawing of conclusions which are definitely predicated upon
the facts presented, if this is done in a mnnner which does not indicate
0
that the writer has been attempting to zake a case.
No references should be made to the first person or to aliases,
such as 'the writer."
2.
Fon-argumentative.
present the two sides of a
Avoid an argumentative tone.
Do not
uestion in the form of arguments for and
against, or set up "straw-men" for the flurpose of knocking them down.
Y,erely present the facts available as if no controversial questions existed.
3.
Concise and pointed.
The facts should be presented as briar-
ly as possible consistent vith thoroughness and clarity.
that the whole report be kent within reasonable bounds.
It is essential
Bizarre and ir-
relevant episodes or facts should be omitted regardless of how interesting.
Do not use twenty pages for what could roll be gut into five.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Avoid every
-2-
appearanoe of °adding.
Conciseness, hover, should not be an excuse for
incomplete presentation of essential data.
closer analysis and "tighter" writing.
In fact brevity should imply
The main story of the chapter should.
stand out in clear Tatline, supnorted but not obscured by the neoeesary
details.
7Aagrans and tables should be simplified to the hit-hest degree.
If they cannot be readily internreted by the average reader, the: are useless.
With their captions they should be self-explanatory and not depen-
dent upon the text for description.
A diagran should tell bat one story,
as a rile, and a one-line diagram is perhaps the ideal.
If any member of the staff has any definite strgestions to make
ls to co-clusions 77hich might be drawn fro..,: the whole in7esti-ation or as
to recommendations which might be made, they should be outlined and submitted in a separate statement, not as a part of the special chanter of
the report which he is writing.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Lay 1, 1931
Dr. Goldenweiser
Mr. Riddle
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Please mark this up as you see fit.
I an inclined
to think that lhatever we :nay write the most good will come
from a staff meeting in which we can discuss the points
raised.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
April 30, 1931
Mr. L. R. Rounds, Deputy Governor
Federal Reserve Bank
New York, New York
')ear 7r. Rounds
connectiJn wItil Jur bLauy u. tnc uuill
system and of bank supervision, we have prepared "Form H"
for the purpose of collecting certain information regardinc
state banking departments, their powers, methods of supervision, etc. A copy of this form is enclosed herewith,
It is our purpose to send it to the Federal reserve banks who will presumably be able to supply a part
of the information. That they can't supply they can
doubtless get from the state banking departments. ile
should like to have your suggestions both as to the advisability of sendirg out such a reluest and as to the
contents of the form as drawn up.
Very truly yours,
Riddle
Secretary, Committee on Branch,
Group and Chain Banking.
J. H.
Fnc.
r
Form No. 131
Office Corresponclikke
To
Ur. jmead
From
Mr. Riddle
of sank Operations file
FEDERAL RESERVE
BOARD
Date
April 29. 1931
Subject:_
ore,
2—144U5
Attached is a form which Mr. Lauck proposes sending to the various
state banking departments in order to collect certain information regarding
state supervision of banks.
I should like to talk it over with you after
you have had time to read it.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Federal Reserve Cofamittee on
Branch, Group and Chain Banking.
FORLI H
State
Year
A.
Chief Officer of Banking Department
1.
Title
2.
Name of present officer
3.
How long has present officer held the position?
4.
Appointed by
5.
Term of office (years)
6.
What qualifications, such as banking or accounting experience, residence in State, etc., are required for anpointment of chief officer?
7.
Has he a legal right to borrow froal banks under his supervision?
8.
Has he a legal right to be a stockholder, director, or officer in a
bank under his supervision?
9.
B.
Salary of the position
Staff of Banking Department
1.
Total number of employees
2.
Number of bank examiners
3.
Number of stenographers, clerical workers, and other employees
4.
By whom are employees appointed (by Chief Officer, Governor, Board,
or by Chief Officer with approval of Governor, etc.?)
5.
That are the qualifications and other requirements (such as banking
or accounting experience, residence, etc.) for appointment as exaainer?
6.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Are applicants for appointment as examiners required to pass competitive or other examinations?
0410
-2-
•
2orm H (Cont,d)
Instil.utions under Supervision
D.
Number
I.
Commercial Banks and Trust Companies*
2.
Mutual Savings Banks
3.
Building and Loan Associations
4.
Other Institutions (Specify kind)
5.
Total of all institutions
Examinations made
Resources
Department
1.
Minimum number of examinations required by law per bank per year
2.
Total number of examinations made in 1930
3.
Number of examinations actually made per bank in 1930
4.
Cooperative arrangement between state banking department examiners
and Federal reserve examiners for examination of state member banks
of the Federal Reserve System (are state member banks examined by
state examiners, state and Federal reserve examiners jointly, or
by Federal reserve examiners?)
E.
Reports of Banks to Banking Department
I.
Minimum number of reports required by law per bank per year
2.
Number of reports called for per bank in 1930
iinancing of the Banking Department
G.
1.
Source of funds (fees, appropriations or other sources?)
2.
Total fees received
3.
Total receipts from all sources
4.
Total disbursements for bank supervision
Method of Incorporation of Sank
1.
Are banks incorporated as all other corporations, or under special
laws?
2.
Must application for a charter be approved by chief officer of denartment, by regular board in charge of bank supervision, by a special
board, or other agency?
3.
(describe procedure)
In passing upon applications for charters, are incorporating authorities required to investigate:
a.
Character and fitness of incorporators
* Including stock savings banks doing a co.:Imercial business
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Form H (Cont/d)
4.
b.
Public convenience and advantage
c.
Other relevant facts and conditions
If application is denied, may appeal be taken by applicants, and, if
so, to whom?
H.
Capital and other Requirements
1.
2.
5.
4.
Amount of capital repuired for banks to commence business operations:
a.
Fixed amount
b.
Minimum amount according to population
c.
Maximum limits
Payment in cash on capital required:
a.
Full payment
b.
Partial payments, and instalments
c.
Other provisions
Authorization for increase or decrease of capital:
a.
Is approval by bank supervising authority required?
b.
Other provisions
";:hat special provisions, if any, are made for the authorization and
establishment of branches?
5.
Must surplus be accumulated annually from earnings until it equals a
certain proportion of capital?
6.
Is it required that combined capital and surplus shall equal a certain
proportion of demand and savings deposits?
I.
Provision for Receiverships
1.
Does the law provide that a receiver for an insolvent bank should be
appointed directly by the court?
2.
Does the bank aupervising authority apply to court for a receiver?
3.
Does bank supervising authority appoint a receiver?
4.
Does bank supervising authority act as a receiver?
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
April 27, 1931
Mr. L. R. Rounds, Deputy- Governor
Federal Reserve sank
New York, New York
Dear Mr. Rounds:
I have just been looking over the tables which you sent down
soue days ago summarizing results of a mestionnaire sent to a selected
list of banks in the Second District in order to ascertain the extent
of their activities outside of the field of stenight commercial banking.
You will doubtless recall that at the last meeting of the Committee on
Branch, Group and Chain Banking It was suggested that some of the other
Reserve banks might be asked to collect similar information. We have
not contemplated, of course, asking a major study of bank activities
which would entail sending lueationnaires to all of the banks of the
country. This, of course, would be interesting, but it is perhaps not
essential to the Committee's work aa a whole and we must draw the line
somewhere. In fact there is some feeling here that your tabulation is
a sufficient indication of what the banks are doing and that it is not
even necessary to ask any of the other Reserve banks to mnke a samnling
In their districts such as the one you made.
Another suggestion is thot we might hold this subjeat in abeyance for the time being and raise it for discussion at the next full meeting of our Coamittee. ?erhaps you may have some suggestions to make.
I was very much interested in your reference while in Washington the other day to the tabulations which;'our bank is making with reference to investment holdings of ban ,- :a in the Seaond District. This sounds
like it might be a very useful supplement to the information being compiled
by our Committee if you thought it might be made available to us. If it
isn't too much trouble, perhaps you could have some one familiar °with these
tabulations drop me a note telling more about them, tht is, how the index is made up, how many banks have been tabulated thus far, how they have
been selected and what further tabulations you expect to make. I have had
a feeling for some time that we would have to ;lake some kind of an analysis
of investment holdings of a selected list of banks. Whether it should be
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. L. R. Rounds, #2
April 27, 1.931
a representative cross section of a district or the countr:: ;.s a whole,
or a list pickA on some other basis I don't .now.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Very truly yours,
J. H. Riddle
Secretary, Committee on Branch,
Group and °Win Banking.
April 24, 1931
Dr. Goldenweiser
••
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
WI
ter and tables
not sure whether you have seen the attached letro::1 7,1r. lounds, waramrizing resqlts of a oues-
tionnFlire sent to a selected list of ba ks in the Second District in order to ascertain the extent of their activities outside the field of straight coluercial banking.
It was suggested
at the 1-.st meeting of the ';ommittee on Branch, Troup aria Chain
Banking that so.;le of the other reserve banks might be asked to
collect similar information.
I can't Iiite make up :try own .uind
as to vhether this lould be worth while.
Ease su7gestions to make.
Perhaps you may hate
•
GENERAL ACCOUNTING OFFICE
WASHINGTON
CHIEF CLERK
IN REPLY PirAsr.QiJOTE
April 24, 1931.
SS
Mr. X.H. Riddle,
Treasury Department,
Room 807, Otis Building,
810 - 13th Street N.W.,
':.ashington, D.C.
Sir:There is delivered herewith, as you requested, one comptometer which is to be returned to this office within two
months.
Treasury Department
Received from the General Accounting Office Comptometer
No.207046-10 bank.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Signature.
Title.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
April 23, 1931
Mr. M. J. naming
Deputy Governor
Peoria Reserve Bank
Cleveland, Ohio
My dear Mr. Fleming:
have your letter regarding the release of the
study on the competition of nonbankiag institutions is
Ohio.
I believe that the Committee's position in the
matter is that the material orsges414 for the '2oeisittee
*Meld not be published or released uatil after the report has been made public. IImes that in case of a
seedy in the Minneaaolis bank, which was published, the
Ossmittee wrote to the bank expressing its judgment that
UNA was not the proper thing to have dose. I believe,
therefor*, that it would bo beet for you not to release
the study for the present. I see no reason, however, why
yes could not give some copies to individuals for their
ismridential use, provided you feel sure that they will
sat let it get into the press.
Very truly yours,
B. A. Goldanweiser,
Chairman, Branch, Group and Chain BankAng.
I/14:Dr
F,orm No.
Office Corresponance
To
From
Mr. Limball. Secretary to the
Comptroller of the CurrenCY
MW—Smead
FEDERAL RESERVE
BOARD
c,`
nnorptinns Tile
Da e' 'April 23. 1931
Subject: Branch. Group and Chain
Banking. December 1_930
••e
2 -8495
In response to your memorandum of yesterday. I am handing you herewith
two additional copies of our memorandum of April 21 (B-313) on the subject
of Branch. Group and Chain Banking as of December 31. 1930.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
crirtt--
•
April 22, 1931
Yr. :1cClelland
Tliddle
Mile in St. Louis recently I requested the Reserve Bank
n
to give the Committee on Branch, Group and Chain Banking certai iny and
formation rega,.-ding the Rogers Caldwell interests, 3ancoRentuc1
A. B. Banks group and rl,Aed interests.
They infOrmed me that they
were compiling the same type of inform,tion in response to a letter
received from you, and that when the material -vas collected they
would send you several copies with the 81,7gestion that you give 3ne
to the Oomnittee.
I prealme that material will be in within a few
days, and we will appreciate it if you will let the CommLtee have
a cony of it.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
April 22, 1931
Mr. L. R. Rounds, Deputy Governor
Federal Reserve Bank
New York, Lew York
Dear
. ,:ounds:
-,;(3 have not yet received sohedules for state
in the state of New York during the last
suspensions
bank
are also about twenty suspended priThere
1930.
half of
were
under the superAsion of the State
which
vate banks
for which we have not rec7,ived
Banks
of
Superintendent
be
possible to expedite the preparait
schedules. Would
schedules?
tion of these
I hope you will find time shortly to revise
your memorandum on bank failures so that we may have a
copy.
Very truly yours,
J. E. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
••
FEDETIAL RESEFIVE BNIi
OF CLENTEI,AND
April 21, 1931
Mr. E. A. Goldenweiser, Chairman,
Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Mr. Goldenweiser:
You have, no doubt, seen a copy of the
memorandum covering the competition in Ohio of nonbanking institutions.
Our Statistical Department was particularly active in procuring information compiled in
this book and are continuously being bothered with requests for copies of it, for example, by the following:
Ohio Agricultural Experimental Station,
Cleveland Public Library,
Business Week,
Finance and Industry,
and many other organizations.
I have rather hesitated to authorize the
release of this matter for publication or otherwise and will
not do so until a release has been approved by you as Chairman of the Committee.
ar from you
I shall be glad to
with reference to this matter at your e9.rly co venience.
Yours very
o the Committee
Br 'ch, Group and Chain Banking.
F.m
•v..
•
.•
?Orin
IS
No. 131
010
Office Correspondence
FEDERAL RESERVE
BOARD
Dat'11
Federal Reserve Bocrd
Subject:
To
it. tom
Mr. Snead
21, 1931
Branch, Group and Chain
Banking, December 1930.
Attached hereto is a memorandum on chances in branch, group and
chain banLing during the last half of 1930, prepared by Mr. Horbett.
In addition to the points brought out by Mr. Horbett, it is
interesting to note that of the 28 branch systems that suspended during
the last half of 1930, 16 banks had 28 branches -- all outside head
office cities, and the 12 remaining banks had 99 branches -- all in
head office cities. The four principal branch banking systems which
suspended operations during the last six :aonths of 1930 operated 89
branches, all in head office cities, as follows:
Bank of United States
Bankers Trust Company
Louisville Trust Company
Chelsea Bank & Trust Company
New York
Philadelphia
Louisville
New York
58 branches
19 branches
6 branches
6 branches
In the group and chain field, the reports show that the 17
groups and chains in which ban': suspensions occurred controlled 155
banks in June 1930. Of these 155 banks, however, only 87 suspended,
in fact in only 3 cases out of the 17 did all the banks in the chain
suspend. The largest group or chain to suspend operations was the
Rogers CEldwell - A. B. Banks group, which controlled 63 banks in June,
of which 44 suspended -- 42 of these 44 banks being in Arkansas. The
11 banks in the A. T. Hudspeth chain, all of which suspended, were
also in Arkansas.
The suspended ban :s in the BancoKentucky Corporation, of which
the principal bank was the National Bala2:. of Kentucky, had loans and
investments of about $72,000,000; in the Caldwell group the suspended
banks had loans and investments of about $48,000,000; and in the Albert
N. Greenfield chain of Philadelphia, of which the Bankers Trust Company
was the largest bank, $34,000,000. In no other chain did the suspended
banks have loans and investments of as much as $4,000,000.
,Stat.
Copies of this stencil (and/B-313) were furnished the following:
Governor Meyer
Mr. Hamlin
Mr. Miller
Mr. James
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr.
Mr.
Mr.
Mr.
Pole
Mills
McClelland
Noell
))4.ko , 7d,.4.j,ette. (g)
//4,
(B-313)
•-•
-4-
%
April 20, 1931
Federal Reserve Board
Branch, Group and Chain Banking,
itr. Smead
December 1931
Attached hereto is a memorandum on changes in branch, group and
chain banking during the last half of 1930, prepared by Mr. Horbett.
In addition to the p,ints brought out by Mr. Horbett, / wish to
state thst ?plias 28 branch sirstons that sus )ended during the last half
of 1930, 16 balite were operatiug 2ebra
/nches outside the head office
cities, aed 12 banks were operating 99 branches in the head office
cities. the fens prlicipal branch banking systems which suspended
operations darins the last six months" 1930 operated /19 btanches, all
in the heed Wise cities, as follows:
iof
58 branches v
Waited
New 'fork
States
Beik of
19 branches v
2,07Kors Trust Compaq,
Philadelphia
6 branchesv
isulsville Trust Compamil
Louisville
6 branches,/
Trust
Gápany
Hew York
Chelsea Bank &
/
In the group and Otain field, the reports show that the/ 17 groups
and chains in which bOat suspensions occurred controlled 155 banks in
June 1930. Of these 155 banks, however, only 87 suspended, in fact in
only 3 eases out oI, the 17Ndid all the lanvs in the chain suspend. The
largest group or Obain to suspend operation was the Roger Caldwell -A. B. Banks gr*, which controlled 63 benhs in June, of which 44 suspended -- 42 of these 44 banks being in Arkansas. The 11 banks in the
A. T Hudspeth chain, which also suspended, were also all in Arkansas.
the suspended banks in the Bancokenteck7 Corporation, of which the
principal bank was the Natynal Beak et Nsansecy, had loans and investments of about $72.000,000; is the Oniansal pomp the suspended banks
had. loans and investments of ibent 014000,)10; and in the Albert I.
Greenfield chain of Pbiladalahia, of *WO the Bankers Trust Company was
the largest beak, $34,010,000.' In no ether chain did the snspoadsi
banks have loans ,-.nd investments of antimml. as S4,000,000. V
Conies of this memo('t stencil B-313) furnished the following:
Mr. Pole
Governor Meyer
Mr. Mills
Mr, Hamlin
Mr, McClelland
Mr. Miller
Mr. James
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
hit, • vw..IL
SEE STENCIL B-313 , (Yelow memo and stat).
•
•
V
:Tot for -oublicntion
BRANCH, GROUP AIM CHAIN BAFICL'G, DECEISER 31, 1930
Changes in last half of 1930. Both the number of branches and the
number of group and chain benks declined during the last half of 1930,
the total number of branches in operation at the end of the year being
3,539 -- 79 less than at the end of June, and the number of banks belonging to groups or chains 2,088
g7 less than in June. The decreases
were largely the result of banh suspensions, though quite a number of
branches were abolished or merged with other branches, particularly in
California. The number of banks operating branches declined during the
six-month period fro:l S17 to 776, and the number of groups and chains
from 296* to 27.
The gross decrease in the number of branches in the six-month period
was 211, including 84 branches that were abolished or merged with other
branches and 127 that suspended (with the suspension of the parent bank).
Partly offsetting these decreases, 61 branches were opened de novo, 59
balks were absorbed and converted into branches, and 12 branches of suspended banks resumed operations.
There was a gross decrease of 181 in the number of banks belonging
to groups and chains, of which g7 resulted from suspensions, 36 from the
merger of banks belonging to the same groups, S from other mergers, and
50 from withdrawals, sales to other interests, or the dissolution of
groups and chains. These decreases were partly offset by the addition
of 75 banks to existing groups and chains, and the inclusion of 19 banks
in new groups.
These changes in branch, group and chain banking are summarized in
Table A.
Classification of banks and branches. At the end of 1930 there were
22,769 banks** and 3,539 branches in the United States, or a total of
26,30S bank offices. Of this total, 3,60S banks and branches belonged to
groups and chains -- including 1,948 banks without branches and 140 banks
operating 1,520 branches. Loans and investments of all banks in the
United States agrregated $56,200,000,000, of which $11,300,000,000 represented loans and investments of banks belonging to groups and chains.
*Revised.
**All reporting national, state, savings, and private banks, and trust
companies, except private banks not under State supervision.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
3-313
The following table :ives a classification of the number and loans
and investments of all banks and branches at the end of 1S.'30:
CLASSIFICATIO: OF NUMBER AND LOANS AND INVESTMENTS
OF ALL BANKS AND BRANCHES, DECEMBER 31, 1930
Total
In groups Not in
groups
or
or
chains
chains
TOTAL NUMBER OF 3A17.7.3 AND BRANCIES
26,30g
3,60g
22,700
Number of banks - Total
22,769
2,088
20,6g1
21,993
1,948
20,045
736
543
'43
90
14o
lob
Banks without branches
Banks with branches
Local systems*
'County systems ...
State-wide systems
636
16
437
125
74
2,398
20
91
2 01
1, '82
399
742
s5
519
314
223
All benks and branches - total
Banks without branches
6,209
32,070
11,279
5,085
44,930
26,985
Banks with branches - Total
Local systems*
County systems
State-wide systems
24 1
21,379
285
2,475
614
17,91p
,117
92
1,985
17,262
193
490
Domestic branches - Total
In head. office city .
In own county (outside head o2fice city
In othor counties
18
LOANS AND INVESTMENTS (millions of dollars)
*Includes all banks operating branches only in the head office city and
contiguous territory, also 5 banks which in the aggregate had 114
other
branches in the head office city. and contiguous territory,
branches in the home county and 4 branches outside the home county.
It will be noted from the table that of the total of 22,769 banks
(head offices) in operation at the end of 1930, 776 were operating branincludinL 543 "local" branch systems, 143 "county" systems, and SO
"state-wide" systems. A number of those branch systems -- in fact some
of the largest ones -- were also members of bank groups or chains.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
B-313
The large majority of the 3,539 branches
cluding 2,398 located in the same cities
in the same counties (though outside the
cf the branches were located outside the
463 were in California.
of course, were "local:1 inas their parent banks and 399
head office cities). Only 742
home counties, and of these
Branch systems taken as a whole had aggregate loans and investments
of approximately $24,000,000,000 as compared with $56,000,000,000 for all
banks, but about $21,500,000,000. represents the loans and investments of
local and county systems and only $2,500,000,000 of state-wide systems.
Furthermore, many of the 90 state-wide systems, with loans and investments aggregating $2,500,000,000, were of relatively small size. This
is apparent from the fact that the 4 principal state-wide systems in
California account for $1,650,000,000 of the aggregate loans and investments of the entire group.
Principal bank groups. Although group and chain banking is quite
wide-spread, comprising 3,608 bank offices (2,088 banks and 1,520 branches) embraced in 287 groups and chains, there are relatively few groups
of large size. The largest groups, from the standpoint of the number of
bard: offices operated, are listed in Table B. It will be noted from this
table that of the total of 3,e08 bank offices included in bank groups and
chains, 1,506 banks and branches with total loans and investments of
approximately $5,300,000,000 were embraced in the 10 largest groups. The
40 largest groups comprised 2,089 bank offices with loans and investments
of approxtmtely $8,000,000,000, while the remaining 247 groups and chains
comprised 1,519 bank offices with loans and investments of approximately
$3,200,000,000.
The largest group from the standpoint of total banking offices is
the Transamerica .Corporation, which had only 13 constituent banks but,
in addition, was operatin 449 branches, 368 of these being located outside the head-office city. All but one of the banks and nearly all of
the branches in this group are on the Pacific coast, the remaining i)afl with
35 branches being located in New York City. From the standpoint of the
number of banks, i.e., exclusive of branches, the largest groups are, of
course, the Northwest Bancorporation and the First Bank Stock Corporation,
both of Minneapolis, which at the end of 1930 controlled 117 azd 103 banks,
respectively.
The two groups last mentioned, as is generally known, control banks
throughout the Ninth Federal reserve district*, their field of operation
being considerably wider than of some other well-known groups. The
Detroit Bankers group, for example, comprises only Detroit banks and
banks in the surrounding metrol)olitan area; the Guardian Detroit Union
group has a somewhat larger field embracing Detroit and the lower part of
Michigan; the banks in the Wisconsin Bankshares Corporation group are all
in the State of Wisconsin; those in the First National Old Colony group
of Boston are nearly all in the Boston metropolitan area; the 17 banks in
the Marine Midland group are located mostly in Western New York, but some
*The Northwest Bancorporation also controls a number of banks
in three other districts.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
B-313
of them are in other parts of the State, including one in New York City.
Some of the groups, therefore, correspond closely to local or county
branch systems, and others to state-wide branch systems. There are no
branch systems that correspond to the district-wide groups in the Ninth
district.
During the last six months of 1930 there was a net increase of 9 in
the number of banks controlled by the Northwest Bancorporation, 3 in
the First Bank Stock Corporation, and 18 in the Wisconsin Bankshares group.
Some of the other groups show small reductions in the number of constituent
banks due to mergers, in fact there was a net reduction of 36 in the total
number of group and chain banks as the result of the merger of constituent
banks, principally in the larger groups.
It is of interest, in connection with the recently formed groups, to
note that in quite a number of cases the constituent banks are located in
towns of small population. This is brought out in the following table
which covers five of the principal groups:
Number of banks
located in places
with population
of -
irst
Northwest
.oank
BancorStock
peration
Corp.
E
Total
nrisconsin
Southwest
3ankShares Bankshares
CorporaCorp.
tion
Tulsa, Okla.
6
4
7
0
3
2
13
11
2
4
17
14
9
1
1
In home city
Outside home city:
Less than 500
500 -1000
10004500
1500-2500
2500-5000
5000 and over
Guardian
Detroit
Union
Group
3
14
1
13
2
2
6
16
46
16
48
10
1
2
44
18
117
103
30
13
36
Principal branch bank systems. While a total of 776 banks were operating branches at the end of 1930, only 90 of these were "out-of-dounty"
systems, and of this number only 14 barl more than 10 branches. These 14
state-wide systems had a total of 799 branches, or approximately 75 per
cent of all of the branches that were being operated by "out-of-county"
systems. In addition, 12 other banks in this group had from 6 to 10
branches each, while the remaining 64 banks in the group were operating an
average of two branches each. The largest state-wide systems are, of course,
those in California, but as indicated in Table C one system in South
Carolina had 41 branches and one in Maryland 20 branches.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
B-313
S.
SO
5
411••
There were 543 "local" branch systems at the end of 1930 with a
total of 2,301 branches. However, as indicated by Table C, 1,278 of these
branches were being operated by only 46 banks, in fact the 14 largest
local systems -- each with more than 30 branches -- had in the aggregate
736 branches. All of these 14 systems were located in the cities of New
York, Detroit, Los Angeles, Cleveland and Buffalo.
The principal state-wide and local branch systems are listed in
Table C.
Changes in branch banking since June 1924. The reduction in the number of branches during the last half of 1530 -- resulting largely from bank
suspensions -- is the first decrease reported since June 1924, the first
date for which complete branch banking statistics are available. There wae
a steady growth in the number of branches up to June of last year, the
number increasing from 2,293 in June 1924 to 2,900 in February 1927 (when
the McFadden branch banking amendment became a law) and to 3,618 in June
1930. The net increase in the number of branches between June 1924 and
December 1930 was 1,245.
There has, of course, been a constant reduction in the last decade in
the number of banks (head offices), due principally to suspensions and consolidations, and this continued in the last half of 1930. Until last year,
however, the decrease in the number of banks was partly offset by an increase in the number of branches. The net decrease in the number of banks
between June 1524 and December 1930 was 6,227, while the net decrease in
the total number of banking offices (bellies plus branches), after allowance
is made for the increase of 1,246 branches, was 4,981.
From the standpoint of the individual states, the largest decrease in
the number of banking offices occurred, of course, in the states prohibiting the establishment of branches. In these states, 22 in number, the
total number of banking offices declined from 16,000 in June 1924 to
12,350 in December 1930 or by approximately 23 per cent. In the 5 states
that have no provision in the State law regarding branch banking, the to',.a.1
number of banking offices declined from 2,287 to 1,423 or by 38 per cent.
On the other hand, in the 12 states in which the establishment of branches
is permitted though restricted generally to head-office cities, the total
number of banking offices remained nearly unchanged -- 9,448 in June 1924
and 9,407 in December 1930. In the 10 states (including the District of
Columbia) in which state-wide branch banking is permitted, the number of
banking offices declined during the 6-1/2 year period from 3,554 to 3,128,
or by 12 per cent.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
3-313
A distribution by states of the number of banks, branches and total
banking offices in June 1924, June 1930 and December 1930, is given in
Table 5, and a summary classification is given below:
1Dec. 311June 30
I
1530 I 1930
Dec. 31 1Feb. 25 1 June 30
1329 I 1927* I 1924
Banks operating branches
776
817
822
779
714
161
160
364
165
169
414
166
1E0
407
145
169
108
191
66
3
65
4
337
5o
3s7
Es
3
3,539 3,618
3,547
Total
National banks
State bank members
Nonmember commercial banks
Hutual savings banks
Private banks
8
26
(a)
Number of branches
Total
2,9oo
1,929
2,432
423 )
971
692 )
2,293
1,5os
In head office city
2,39S
Outside but in own county
399
In other counties
742
2,470
Of national banks
Of state bank members
Of nonmember commercial
banks
Of mutual savings banks
Of Private banks
1,106
1,286
1,041
1,308
1,027
1,299
390
1,560
248
1,137
1,039
104
1,164
101
1,115
4
4
8E3
76
11
908
(a)
(a)
42s
72o
(a) Not separately tabulated; included with
* Date of McFadden Act.
99
7
785
nonmember commercial banks."
Changes in group and chain banking since June 1929. The first statistical sunuary of group and chain banking was prepared as of June 1929, at
which time (on the basis of the latest revised figures) 1,831 banks were
members of groups and chains, as compared with 2,0S8 on December 31, 1930,
a net increase of 257 banks for the period of 1-1/2 years. Corresponding
figures for each state for June and December in both 1929 and 1930, are
shown in Table 4. Increases in the number of constituent banks have, of
course, been confined to what are known as bank "groups," nearly all of
which came into existence in the last two or three years, while the decreases have been largely due to the guspension of "chain" banks.
Tables by states and classes of banks. All of the data presented herein
are shown in greater detail in Tables 1 to 5, which give separate figures
for each state, also totals for each class of banks -- national, state
member, and nonmember.
B-313
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
7
•••
National banks, it will be noted from Table 5, were operating 1,106
branches at the end of 1930 as compared with 243 in June 1924, the first
date for which complete data are available; state bank members were
operating 1,236 branches at thu end of 1930 as compared with 1,137 in
1924; and nonmember banks had 1,147 branches at the and of 1930 as compared with 903 in 1924.
In the field of group and chain banking, 324 national banks were
reported as members of groups or chains at the end of 1930 as compared
with b55 in Juno 1929, the first date for which comparable data are available. Durins the same period of 1-12 years, the number of constituent
state bank members increased from 10 to 120, and the number of nonmember
banks in groups and chains from 1,071 to 1,144.
Recent State legislation on branch banking. In the accompanying tables,
in which figures of branch, group and chain banking are given for each
state, the states hzwe been grolTed into four classes -- (1) State-wide
branch banking permitted, (2) Branches restricted as to location, (3) Establisment of branches prohibited by law, (4) No provision in State law regarding branch banks.
This is the grouping used in former summaries, and all of the states
have been grouped exactly the same as in the June 1930 summary. However,
in Marah of the present year, three states enacted branch banking legislation, as follows:
(1) In Montana the state law now permits the establishment of branches
in the same county as the parent bank or in adjoining counties, provided
suaL branches result from the consolidation of two or more banks and the
consolidated bank has a paid-up capital of $75,000 or more. In other words,
if two or more ban2ns located in the same or adjoining counties consolidate,
all offices may continue in operation, one as the parent bank and tho remainder as branches.
(2) In Indiana the law now permits the establishment of intra-city
branches in county-seat cities of 50,000 population or over, also intercity branches within the same county as the parent bank provided there is
no bank. in operation in the town in which the branches are to be established.
73.;- ;TIs establishing intra-city branches must have a paid-up and
unimpaired capital and surplus of $225,000 for each such branch.
(3) In Iowa the law does not permdt the establishment of "branch
banks" but it does permit the establishment of "offices" in towns in which
no banks are in operation in the county in which the bank is located and
in adjoining counties, these offices being authorized simply to receive
deposits and cash checks and to perform other clerical and routine duties.
FEDERAL RESERVE BOARD
DIVISI= OF 3= OFERATIOITS
APRIL 18, 1931
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
B-31_
if
Table A -- ANALYSIS
CHLITGES IN PRAYCH, GROUP AND CHAIN BANKING
'
Number of branch systems
At beginning of period
Increases -New branch systems
Suspended branch systems reopened
Decreases through -Mergers with other banl:s (net) . • • •
Suspensions
Discontinuance of branches
At end of period
Number of domestic branches
At beginning of period
Increases
I. novo branches
Banks converted into branches
Resumption following suspension .
Decreases-Discontinued
Suspended (with suspension of parent ban'..c:
At end of period
Ntmber of groups or chains
At beginning of period
Increases -- new groups .
Decreases through -uspensions
Mergers of banks
Sales and withdrawals
At end of period
Number of group and chain banks
At beginning of period
Number of banks in new groups-II
Transferred from othcr groups
Other banks
Increases in existing groups or chains-Transferred from other groups
Other additions
Decreases through -Mergers with banLs in same groups . .
Mergers with banks in other groups
Other mergers
Suspensions
Sales to other groups
Withdrawals or other disposal
Dissolution of group
At end of period
First half
of 1930
B-313
Second half
of 1930
S22
g22
817
43
3
+46
32
2
11
1
3g
4o
20
12
18
2S
-92
-39
-53
776
817
776
3,547
3,547
3,618
15o
121
14
61
59
12
+285
89
62
2
+153
+132
IA
'49
-293
Go
22
-82
84
127
-211
3,539
3,618
3,539
Year
1950
'
297
2•.2
+19
+13
+6
14
5
10
-29
3
3
8
11
2
2
287
11296
287
2,105
Ej2,105
2,175
#4
76
#4
59
19
#27
204
+282
#15
129
+188
#12
-1
+94
65
2
13
112
29
7
36
2
6
#31
25
#19
87
#12
5g
49
S.
3
24
-118
25
25
-181
2,088
Ej2,175
2,088
ri Revised.
Not included in the total - represents merely transfers from one group to
another.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
z
SO
Table B -- PRINCIPAL BANK GROUPS, DECEI.33R 31, 1930
Number of ban:::ing offices
Loans and
Branches
investments
H. O.
Out.. (thousands
Total Banks .
city and side
of dollars)
county
462
13
81
368
1,285,840
224
21
657,648
203
4
180
118
58
565,671
134
)4
101
462,644
29
120
117
345,810
3
106
103
333,451
3
74
104
30
375,160
69
17
52
477,048
34
21
55
577,913
46
52
6
248,877
1,506
376
455
5,330,062
675
Name and lmation of group
Transamerica Corporation
Detroit Bankers, Inc.
Goldman Sachs Trading Corporation
Security First National Co., Los Angeles
gorthwest Bancorporation
First Bank Stock Corporation
Guardian Detroit Union Group
Varine Midland Group
First National Old Colony Corp., Boston
Wisconsin Bankshares Corporation
Total, first 10 groups
American State Bankers Group, Detroit*
American National group, Nashville, Tenn.
Financial Institutions, Inc.,Augusta, He.
5out;i7ast Bank Shares Corp., Tulsa, Okla.
First Securities Corp., Syracuse, N.Y.
Filst Security Corporation, Ogden, Utah
3oca7zat Corporation, Charleston, S.C.
Did Na.ttunal Corporation, Spokane, Wash.
Vestern New York Investors, Buffalo, N.Y.
3ancOhio Corporation, Columbus, Ohio
lamilton National Associates, Chattanooga
knglo National Corporation, San Francisco
litizens & Southern Holding Co., Savannah
3hawmut Association, Boston
First National group, Atlanta
Ladustrial Trust Co., Providence, R.I.
Enterstate Trust & Banking Co.,New Orleans
Tederal National Investment Trust,Boston
;ommerce Union Bank, Nashville, Tenn.
Tirst National Corporation, Louisville,Ky.
;alcasieu National group,Lake Charles,La.
Vorchoster County Bk & Tr.Co., Worchester
lxchange National group, Tampa, Fla.
Inited States Nc.tional Corp.,Fbrtland,Ore.
;entral Trust Company, Chicago
rational Republic Bancorporation,Chicago
'3oples Trust & Guaranty Co.,Hackensack,Nla
tarine Bancorporation, Seattle, Wash.
rirst Seattle Dexter Horton Securities
Company, Seattle, Wash.
'irst National group, Chicago
Total, 4o groups
2!Lig other groups and chains
Total, 287 groups and chains
40
11
29
41
20
20
1
4o
36
14
36
19
-
7
-
28
28
26
24
22
21
21
18
18
17
17
17
16
15
16
15
28
10
24
13
-
12
-
104,634
14
4
-
-
61,842
74,714
78,022
77,515
36,975
40,965
32,743
3
19
-
141,44s
10
16
17
11
-
70,224
5
-
31,181
1
-
143,346
7
6
7
3
3
11
10
9
8
5
67,425
177,365
97,817
149,527
S
8
8
-
23,443
7
3
s
3
6
10
5
-
54,988
15,559
_
-
-
3
6
6
7
14
13
12
11
10
10
10
10
12
11
10
10
10
10
9
9
7
9
2,039
1,519
720
1,368
3,608
43,465
14,694
72,299
15,577
69,264
191,575
170,838
26,293
33,195
2
-
75,094
866
503
539,821
8,061,910
135
16
3,217,090
2,088 4,001
519
11,279,000
*Group dissolved upon merger of iLlerican State Bank, the principal bank in the
group, with the Peoples Wayne County Bank of the Detroit Bankers group.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
NMI
•
•I
Table C
PRINCIPAL BRA:7CH BANE: SYSTEMS, DECEMBER 31, 1930
B-313
Number
of
branches
Name and location of parent bank
Loans and
investments
(thousands)
STATE-WIDE BRANCH SYSTEMS
Bank of America National Tr. & Say. Assn.,
San Francisco
Security-First National Bank, Los Angeles
Amarican Trust Company, San Francisco
Bank of America, Los Angeles
Peoples State Bank of South Carolina, Charleston
Eastern Shore Trust Co., Cambridge, Md.
Tennessee Valley Bank, Decatur, Ala.
Industrial Trust Company, Providence, R. I.
North Carolina Bank & Trust Co., Greensboro, N.C.
Commerce Union Bank, Nashville, Tenn.
Grenada Bank, Grenada, Miss.
Valley Bank and Trust Co., Phoenix, Ariz.
South Carolina Savings Bank, Charleston
Page Trust Company, Aberdeen, N. C.
351
919,560
130
461,565
214,910
50,760
94
63
41
20
15
14
24,179
16,449
5,862
138,890
14
38,446
12
12
11
11
11
10,077
7,078
11,424
5,472
3,239
799
1,907,911
99
129
204,938
362,151
1,027
2,475,000
Peoples-Wayne County Bank, Detroit
Bank of Manhattan Trust Company, Zer York
Corn Exchange Bank and Trust Co., New York
Cleveland Trust Company, Cleveland
California Bank, Los Angeles
National City Bank, New York
Chase National Bank, New York
Manufacturers Trust Co., New York
Guardian Detroit Bank, Detroit
Bank of American National Assn., New York
Citizens National Trust & Savings Bank, Los Angeles
Marine Trust Co., Buffalo
Public National Bank & Trust Co., New York
First National Bank, Detroit
137
78
66
57
55
49
45
44
38
35
34
33
33
353,851
342,442
212,544
257,204
94,186
926,918
1,782,481
226,885
103,959
265,476
98,626
224,244
32
113,938
141,462
Total, 14 banks with over 30 branches
736
5,144,216
542
184
839
4,140,612
1,149,437
10,944,735
2,301
21,379,000
211
285,000
3,539
24,139,000
Total, 14 banks with over 10 branches
12 banks with 6-10 branches
64 banks with less than 6 branches
Total, 90 banks
LOCAL* BRANCH SYSTEMS
32 banais with 11-30 branches
24 banks with 6-10 branches
473 banks with less than 6 branches
Total, 543 banks
143 county systems (each with less than
Total, 776 banks
6
branches)
*Includes all banks operating branches only in the head office city and contiguous territory, also 5 banks which in the aggregate had 114 branches in
the head office city and contiguous territory, 8 other branches in the
home county and 4 branches outside the home county.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
B-313
•
Table 1
State
TOTAL NUMBER OF BANKS, BRANCH SYSTEMS, AND BRANCHES: Dec. 31, 1930
B-313
Number of domestic branches
Banks
Outside
In
In
Total
with- Total
head but in
other
Local County Stateout
office
own
counwide branches
city
county
ties
Total
banks
and
branches
Number of banks
Branch systems
U.S. Total
National
St. members
Nonnembers
22.759
7,033
1,019
15,864 14,717
Total
Arizona
California
Delaware
Dist.of Col.
Maryland
No. Carolina
Rhode Island
So. Carolina
Vermont
Virginia
1.834
68
41
1,2)49
421
61
4s
65
39
26,308
8,139
2,305
543
148
145
250
143
3
6
134
90
10
4,993 3,539
6,872 1,106
2,398
705
9
859 1,286 1,156
71 14,262 1,147
537
399
45
45
309
742
350
85
301
441
_
275
3
26
71
13
17
8
239
9
90
4
644
-
40
2
3
12
13
11
BRANCHES RESTRICTED AS TO LOCATION
212 441
8
28
666
1
405
542
365
519
5
5
316
196
616
213
128
445
10
1,148
272
664
722
51
2149
1
556
55
1,809
1,099
102
1,242
1,680
965
1,501
42
56
STATE-WIDE BRANCH BANKING PERMITTED
Total
Georgia
Kentucky
Louisiana
Maine
Massachusetts
Michigan
Mississippi
New Jersey
New York
Ohio
Pennsylvania
Tennessee
Total
Alabama
Arkansas
Colorado
Connecticut
Floriia
Idaho
Illinois
Indiana**
Iowa**
Kansas
Minnesota
Missouri
Montana**
Nebraska
Nevada
New Mexico
Oregon
Texas
Utah
Washington
West Virginia.
Wisconsin
Total
New Hampshire
No. Dakota
Oklahoma
So. Dakota
Wyoming
sg
3,128
352
403
72
237
112
509
517
12,350
332
305
266
221
318
35
16o
6o
4
20
1
lo
s
-
25
3
12
15
6
lo
3
58
5
8
3
4
15
2
8
2
1
102
449
1,528 1.294
32
27
368
828
41
13
27
26
192
131
289
85
37
23
148
77
10
95
413
6o
5
5
350
3
1
28
11
1
1
10
512
174
104
81
5
5
4
359
561
239
1
2
498
3
7
1
-
997
• 919
1,428
424
0
23
103
35
55
225
35
54
225
1,215 1,215
99
99
330
335
3
-
-
1
-
869
1446
2
-
1,012
-
_
-
2
_
-
1
-
_
-
1
-
1
-
_
_
-
_
_
990
21
51
13
7
..7
62
28
8
18
2
14
20
20
51
18-3
8
2
47
81
12
1
38
22
-
68
171
426
23
108
710
277
151
426
1
98
710
2)45
179
169
280
20
-
6
s
6
6
2
2
5
16
2
28
4
lo
16
19
7
3
1
16
14
-
-
-
-
-
-
-
-
7
1
1,1146
174
745
35
53
225
1,215
99
-
-
-
-
-
-
-
1
327
3
5
_
280
940
1
931
5
925
9
NO PROVISION IN STATE LAW REGARDING BRANCH BANKING
1.423 1,422 1
1,421
1
122
121
1
120
1
_
_
_
321
321
321
569
569
569
_
_
_
328
328
328
_
_
83
_
83
83
280
39
21
450 10
12
4
67
32
ESTABLISHMENT OF BRANCHES PROHIBITED BY LAW
12,301
14
3 1 2,279
5
149
26
315
2
1
312
17
304
1
303
1
_
266
266
231
231
201
201
_
136
136
1,589
1,589
231
201
136
1,589
881
873
1,146 1,146
1,012 1,012
992
998
1,146 1,1146
174
174
749
747
18
463
6
-
1
1
1
*Includes all banks operating branches only in the head office
city and contiguous territory, also 5 banks which in the acgregate had 114 branche
s in the head
office city and contiguous territory, 8 other branches in the
home county and 4
branches outside the home county.
**State branch banking law amended since last summary - see accompanying
text.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Oa
ell
Table 2 -- NUMBER OF GROUP AND CHAIN BANES AND NU= OF THEIR BRANCHES:
December 31, 1930
3-313
Total
Number of group and chain banks Number of domestic branches
gT oup
of group and chain banks
and chaii
Branch systems
Banks
Outside In
In
State
banks an Total
with- Total head but in other
their
Local* County State- out
office
own
counwide
branches
brandvs
county ties
city
U.S. Total
3,608 2,088 106
18
1
1.948 1,520 516
519
85
National
314.
824
46
1
1,579
5
772 755 368
38
St. members
659
120
31
1
85
539 468
3
7
Nonmembers
1,370 1,144
29
16
8 1,091 226
443
go
106
STATE-WIDE BRANCH BANKING PERMITTED
Total
750
75
62 675
161
42
3
3
472
7
Arizona
6
1
1
1
7
5
California
694
51
2
43 643 153
14
2
455
35
Delaware
3
3
3
Dist. of Col.
Maryland
No. Carolina
1
1
1
Rhode Island
17
14
1
4
2
3
5
5
So. Carolina
28
11
1
8
17
2
4
1
12
Vermont
Virginia
BRANCHES RESTRICTED AS TO LOCATION
Total
88
64
•6
1
44
8
824
14
Georgia
25
1
23
20
12
Kentucky
6
_
1
8
g
5
Louisiana
43
20
2
13
23
6
12
5
Maine
48
17
10
31
19
3
9
Massachusetts
111
51
13
2
36
80
58
2
Michigan
1482
138
28
110
344
344
Mississippi
140
28
27
12
12
New Jersey
126
83
17
64
43
37
1
5
New York
317
100
19
81
217
217
Ohio
21
10
1
9
11
11
Pennsylvania
63
50
6
2
42
13
11
2
Tennessee
8
2
1
78
25
42
36
28
11
3
ESTABLISHLENT OF BRANCHES PROHIBITED BY LAW
Total
1.192 1,171
21
23
1
Alabama
26
26
Arkansas
6
6
Colorado
11
11
11
Connecticut
14
14
14
Florida
49
49
49
Idaho
45
45
45
Illinois
106
106
106
Indiana**
24
23
29
5
5
Iowa**
70
70
70
Kansas
89
89
89
Minnesota
276
270
2
268
6
6
Missouri
27
27
27
Montana**
46
46
146
Nebraska
67
67
67
Nevada
14
14
14
New Mexico
6
6
6
Oregon
33
33
33
Texas
gl
81
gl
Utah
26
26
26
Washington
14
84
SO
1
78
3
West Virginia
Wisconsin
87
81
78
6
3
6
NO PROVISION IN STATE LAW REGARDING BRANCH BANKING
Total
278
278
278
New Hampshire
North Dakota
96
96
96
Oklahoma
97
97
97
South Dakota
6o
6o
6o
Wyoming
25
25
25
^
^
^
^
•••
(For footnotes, see Table 1)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MM.
SO
Table 3 -- LOANS AND INVEST1ZNTS OF ALL BANKS AND THEIR BRANCHES, AND OF GROUP
AND cum BANKS: December 31, 1930
(In millions of dollars)
Of group and chain
banks and their branches
State
Branch System
Banks
Branch Systems
Banks
Total Local* County State- without Total
State
without
LocallCounty
wide
branches
wide branches
U.S. Total
56,209 21.379
285 2,475
32.070 11,279 4,117
92 1,985
5,085
National
21,426 6,901
12,898 6,566 2,127
31 1,596
27 1,475
2,937
St. members 13,434 9,057
• 1460
148
3,869 2,892 1,683
36
382
791
Nonmembers 21,349 5,421
206
1420
15,302 1,821
307
29
128
1,357
STATE-WIDE BRANCH:BANKING PERMITTED
Total
6,293 1,6o6
104 2,205
6
2 1.816
2,378 2,044
220
Arizona
69
3
47
19
17
16
1
California
3,285
715
42 1,752
776 1,828
1 1,647
3
177
Delaware
165
65
3
38
1
1
59
248
Dist.of Col.
_
152
96
Maryland
_
286
-2
481
825
33
No. Carolina
_
278
16
14
159
99
3
3
Rhode Island
537
218
164
155
II
139
150
So. Carolina
141
10
1
67
63
45
12
30
3
Vermont
237
16
3
8
210
Virginia
508
141
10
25
332
BRANChTS RESTRICTED AS TO LOCATION
Total
8 010
lo
260
8
16 08
1
16
161
Georgia
300
99
2
59
140
164
56
70
38
Kentucky
458
77
378
43
18
3
25
Louisiana
385
170
33
13
169
61
21
13
20
7
Maine
430
27
25
104
274
89
10
51
28
Massachusetts 4,237 1,734
42
2,461
906
773
35
98
Michigan
1,897 1,148
749 1,173
959
214
Mississippi
156
8
5
11
132
27
19
New Jersey
980
36
518
267
36
57
2,350
1,277
186
29
_
_
New York
17,046 11,499
5,547 1,522 1,342
180
Ohio
2,544 1,415
4
1
1,124
29
70
4a.
Pennsylvania
5,659 1,989
22
3,648
871
115
2
7514
Tennessee
368
161
7
12
lgs
143
119
10
114
ESTABLISHMENT OF BRANCHES PROHIBITED BY LAW
13,17
464
Total
4
12,696
9
142
00
Alabama
246
1
6
239
66
6
131
Arkansas
1
12
130
12
_
254
Colorado
254
25
25
Connecticut
1,326
1,326
92
92
_
Florida
192
192
118
118
74
Idaho
74
4o
140
_
Illinois
3,704
_
3,704 1,280
1,280
_
Indiana**
1414
732
688
57
37
_
Ioww!*
_
708
708
75
75
_
_
Kansas
352
352
43
43
Minnesota
862
161
701
541
161
380
nssouri
1,119
1,119
141
141
Montana**
128
128
76
76
Nebraska
320
7
313
63
63
Nevada
36
36
23
New Mexico
36
36
1
Oregon
239
1
238
126
_
_
_
Texas
909
114
509
Utah
155
155
51
51
Washington
442
64
1
374
64
203
3
136
3
West Virginia
319
319
Wisconsin
889
187
1
154
285
701
131
NO PROVISION IN STATE LAW REGARDING BRANCH BANKING
Total
915
1
914i
217
217
New Hampshire
296
1
295
North Dakota
93
56
56
93
Oklahoma
360
360
98
98
South Dakota
1114
1114
145
5
Wyoming
52
52
18
lg
Of all banks and their branches
41.•
(For footnotes, see Table 1)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Table 4 -- CHANGES IN NUMBER AND LOANS AND INVESTMENTS OF GROUP
AND CHAIN BANNS: June 1929 to December 1930
Number
Dec.
1930
U.S. Total
2,088
National
824
State members
120
Nonmembers
1,144
State
Total
Arizona
California
Delaware
Dist. of Col.
Maryland
North Carolina
Rhode Island
South Carolina
Vermont
Virginia
Total
Georgia
Kentucky
Louisiana
Maine
Massachusetts
Michigan
Mississippi
New Jersey
New York
Ohio
Pennsylvania
Tennessee
Total
Alabama
Arkansas
Colorado
Connecticut
Florida
Idaho
Illinois
Indiana**
Iowa**
Kansas
Minnesota
Missouri
Montana**
Nebraska
Nevada
New Mexico
Oregon
Texas
Utah
Washington
West Virginia
Wisconsin
Total
New Hampshire
North Dakota
Oklahoma
South Dakota
75roming
6
51
3
3-313
Loans
investm
and
ents
of group
of group and chain banks
and chain banks
June
Dec.
June
Dec.
June
Dec.
June
1930E
1929E
1929L
1930
1930.
1929E
1929E
2,175
2,105
1,831 11,279 12,151 11,730
8,842
841
807
656
6,566 6,6o5
6,383
4,639
127
126
104
2,892 3,43D
2,509
3,391
1,207 1,172
1,071
1,821 2,125
1,955
1,690
STATE-WIDE BRANCH BANKING P MITTED
4
2
2 044 21
21
2,123
6
6
17
18
18
18
58
1,828 1,974
1,998
59
1,943
59
3
3
1
1
3
1
3
1
3
3
150
45
3
153
1
564
25
6
20
17
51
138
28
83
loo
10
50
36
1 1 1
26
6
14
49
45
106
24
70
89
270
27
46
67
14
6
33
81
26
50
81
278
96
97
60
25
BRANCHES RESTRICTED AS TO LOCATION
586
1426
6 og
2
25
22
20
16
166
173
13
4
16
43
134
124
21
21
21
61
6o
6o
17
12
89
so
70
5
49
906
50
895
33
879
138
140
91
1,173 1,216
1,246
32
32
32
27
31
31
so
72
67
518
44o
522
103
105
82
1,522 2,082
2,032
13
6
86
70
99
49
52
48
871
809
8014
42
143
23
176
33
1149
ESTABLISHMENT OF BRANCH2S PROHIBITED BY LAW
1 22
1 1"
1
42
4
26
22
19
66
37
32
66
69
48
12
49
55
12
12
25
28
28
8
10
92
72
37
4g
40
43
118
142
134
44
41
41
4o
39
37
lol
86
1,280 1,242
1,217
91
27
25
14
67
64
57
90
87
77
67
71
75
89
gs
85
143
47
46
276
541
230
270
580
567
31
30
141
149
30
14s
46
41
28
76
82
80
67
74
63
79
61
65
14
13
16
24
23
3)
6
1
2
9
9
3
36
36
126
33
82
135
83
go
114
105
103
79
26
26
27
51
50
53
74
62
203
189
207
79
63
54
285
211
253
53
NO PROVISION IN STATE LAW RECARDING BRANCH BANKING
281
275
250
217
243
231
96
98
62
25
92
98
6o
25
153
1
86
85
54
25
56
98
45
18
.r/ Revised.
** State branch banking law amended since last summary
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
3
153
44
59
116
48
20
52
131.2
20
4,107
157
6o
53
530
421
31
4ol
1,572
782
92
410
7
41
28
129
37
996
31
68
44
259
147
44
30
23
3
82
92
51
91
207
202
41
102
39
20
see accompanying text.
Table 5 -- CHANGES IN TOTAL NUMBER OF BAN-ICI:VG OTTICES, IN NUMBER OF 7-A1KS,
AND IN NUMBER OF BRANCHES: June 1924 to December 1930
Total banking offices
Number of banks
banks plus branches)
State
Dec. r Juno I June
June
Dec. 'June
1g24
1930 11930
1930 130 1 1924
26,308 27,470 31,289 22,769 23,852 28,996
U.S. Total
National
8,139 8,288 8,328 7,033 7,247 8,080
State members 2,305 2,376 2,707 1,019 1,068 1,570
15,864 16,806 20,254 14,717 15,537 19,346
Nonmembers
B-313
Number of domestic
branches
Dec. I June I June
1930 1930 1924
3,539 3,618 2,293
248
1,106 1,041
1,286 1,308 1,137
1,147 1,269
gog
STATE-WIDE BRANCH BANKING PER1:ITTED
Total
3,128 3,267 3,554 1,834 1,559 2,719 1,294 1,308
835
41
44
71
83
63
Arizona
68
27
27
20
421
437
675
1,249 1,250 1,213
828
California
853
538
48
48
47
61
65
18
Delaware
13
13
65
65
46
Dist. of Col.
65
40
26
25
19
39
Maryland
352
221
226
250
131
129
83
55
338
475
620
351
85
84
403
318
554
66
No. Carolina
45
71
Rhode Island
72
66
21
35
35
37
36
21di
431
So. Carolina
237
173
411
160
20
77
71
Vermont
112
105
113
102
10
105
10
10
449
462
509
568
6o
60
45
522
523
BRANCHES RESTRICTED AS TO LOCATION
Total
9,407 9,710 9 44g ' 212
g01
4
2,257 1,397
Georgia
432
405
665
365
42
390
612
4o
53
Kentucky
542
624
519
549
612
31
580
23
12
93
Louisiana
330
344
103
108
316
213
222
251
Maine
197
137
128
68
66
47
156
131
150
449
44g
Mat;sachusetts
546
445
171
168
616
617
98
426
731
Michigan
1,148 1,165 1,050
722
718
434
332
318
360
249
293
23
272
25
25
335
475
Nor Jersey
556
560
664
500
108
666
106
21
710
New 'York
1,809 1,872 1,482 1,099 1,122 1,120
750
362
965
986 1,107
277
Ohio
1,242 1,250 1,310
264
203
179
194
Pennsylvania
1,680 1,735 1,748 1,501 1,541 1,650
98
548
475
569
622
450
67
517
69
Tennessee
53
ESTABLISBNENT OF BRANCHES PROHIBITED BY LAW
49
12,350 12,949 16,000 12,301 12,897 15,939
Total
61
52
315
321
362
17
17
Alabama
381
332
19
338
3014
396
485
4ss
1
Arkansas
305
399
3
3
266
342
Colorado
342
270
266
270
237
231
222
Connecticut
222
231
237
1
207
Florida
201
239
300
201
207
Idaho
136
177
137
177
136
137
Illinois
1,589 1,683 1,906 1,589 1,683 1,906
Indiana**
915 1,106
881
924 1,116
8
873
9
8
Iowa**
1,146 1,216 1,616 1,146 1,216 1,616
Kansas
1,012 1,051 1,293 1,012 1,051 1,293
Minnesota
992 1,015 1,422
6
6
11
998 1,021 1,433
Missouri
1,146 1,235 1,612 1,146 1,235 1,612
Montana**
174
185
248
174
185
248
Nebraska
74,9
747
2
2
2
77,) 1,102
773 1,100
Nevada
34
34
35
35
35
35
_
New Mexico
54
76
53
76
5-+
53
Oregon
1
1
1
225
228
277
226
229
278
Texas
1,215 1,275 1,522 1,215 1,279 1,522
Utah
102
116
102
116
99
99
Washington
330
335
338
385'
333
379
5
5
7
W. Virginia
280
290
350
250
290
350
945 1,002
Wisconsin
931
9LP0
936
993
9
9
9
NO PROVISION IN STATE LAW REGARDING BRANCH BANKING
Total
1,423 1,544 2,257 1,422 1,543 2,257
New Bhmpshire
122
122
121
121
123
123
North Dakota
321
366
321
366
687
687
Oklahoma
59s
598
sos
808
569
569
South Dpjkota
328
328
374
553
374
553
Wyoming
84
83
116
116
84
83
**State branch banking law amended since last summary - sec accompanying text.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
rU 20, n31.
Mr. Elmer E. Adams
senate hamber of the State of Minnesota
LA. Paul, Minnesota
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dear Ur. '(11s:
Thank you for yolr letter of April 9th together with
the enclosed copies of bi1l6 840 and 1064. I also received the
material which you forwarded to me at the ?ederal Reserve Bank
of Minneapolis and have read ith much interest your testimony
before the House Committee at Washington last June. I also
Rot a good laugh out of the naarnhlet entitled, "Where Does the
West Begin."
I enjoyed very much my coniersation with you wnile in
Minneapolis and greatly apnreciate your lourtes.; in coming over
from St. Paul to see me. It is only by getting in contact with
people like yonreelf who have lived with banking problems for
many years that I can get the proper background. We hope very
much in time we can nrepare a report which will give a fair
and accurate -cloture of banking conditions.
Aain thanking -;ou for your courtesy, I am
Very truly yours,
J. H. Aiddle
Secretary, Committee on Branch,
Group and Chain Banking.
I
Form No. 131.
Office Correspondence
To
From_
Miss Hammil
FEDERAL RESERVE
BOARD
1
Date_
April 1S, 1931
Subject:_
Miss Sullivan
2-8496
•P 0
Will you please let me have Virgil Willitis "Selected articles on chain,
group, and branch banking" as soon as Mr. Riddle returns.
The library reported
this as charged-out to Mr. Riddle when I requested it from them.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
April 13, 1931.
kr. L, ?. :iounds, Denuty Governor
Fe de ral
sc4 two Bank
New York, r.ew ?or3K
Dear L:r.
U.AJ.3
Both Ur. Goldenweiser and Lr. 2iddlo are oat
town
ani so I shall a_lknowledi;o for th format, yoar letter of the
9th with its enclosure of material on the activities carried
on by banks in addition to °commercial banking. I was i.q3ressed
as you were with the proportion of oases in which those additional oporations are reoorted as profitable.
Very truly :,,ours,
C. B. Hamra:nd
?or the amaittee on Branch,
Group and Oho in 3anking.
•
/
•
G. HOWARD SPAETH,SECRETARY
NRY ARENS, LIEUTENANT GOVERNOR
Sitate of Yninne5ota
SENATE CHAMBER
ELMER E. ADAMS
SENATOR 50TH DISTRICT
April 9, 1931
FERGUS FALLS, MINNESOTA
r. J.H. Riddle, Secretary
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
the
I forwarded to you at Minneapolis a copy of
ttee at
hearing which I attended before the House Commi
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Washington on June tenth.
I also sent n folder
to be read
which Mr. Gear 7 spoke nbout, whichvill have
in the spirit in which it
V1!.6
written.
you
You will doubtless find in your office when
House
reach "fashington a copy of the hearin s in the
also the
Committee which occurred on June tenth and
second.
hearings before the 3enate Committee on 7arch
I did not
You stated during our conversation that
thought I would
appear as hostile to group banks as you
be.
I do
I recognize the fnct that they are here and
s there is
not know whether they can be unscrnmbled unles
some form of branch banking, which I hope will not come.
I realize thnt our bank has to do business with the large
Twin City banks and for thnt reason I want to get along
as peaceably as possible and at the same time maintain
my policies of independent ownership.
-2Mr. J. H. Riddle
I feel that my talk with you was too rambling
and perhaps failed to touch the points in which you
were interested.
I was, very glad to meet you and have an opportunity
to exchange views with you.
bectfully your
77A.H
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
,ass•atamow_saserhaL—regist616.
_
•
289
STATE OF MINNESOTA
FORTY-SEVENTH}
SESSION
S. F.
No. 840
Introduced by Mr. Lightner.
March 10, 1931.
Referred to Committee on Banks and Banking.
Reported back March 20, 1931.
Matter in italics is new; matter in capitals when in()is old law to be omitted.
A BILL
For an Act Authorizing the Organization of State Banks With a Capital of Not Less Than $50,000.00 Under a Corporate Name Which May Include the Words "Trust" or "Trust Company" and Need Not Contain the Word
"State";
(------
uthorizing Such State Bank to Exercise Fiduciary Powers and Privileges; and Prescribing the Con-
ditions Upon Compliance With Which Such Bank May Commence Business and Exercise Such Powers and
Privileges.
Be it enacted by the Legislature of the State of Minnesota:
SECTION 1. State banks may hereafter be organized in the manner now provided by law, with authority to
2 exercise the fiduciary powers and privileges set out in Mason's Minnesota Statutes of 1927, Section 7663, provided
3 that the capital of any such bank shall not be less than $50,000 if its principal place of business is to be located in a
4 municipality of less than 25,000 inhabitants, and that the capital of any such bank shall not be less than $75,000
5 if its principal place of business is to be located in a municipality of 25,000 or more but less than 100,000 in habit6 ants, and that the capital of any such bank shall not be less than $100,000 if its principal place of business is to be
7 located in a municipality of 100,000 or more but less than 200,000 inhabitants, and that the capital of any such bank
8 shall not be less than $200,000 if its principal place of business is to be located in a municipality of 200,000 or more
9 inhabitants.
SEC. 2. Any such bank may be organized with a corporate name which may include the words "trust" or
2 "trust company," in addition to the word "bank" or other words now permitted by law, and the word "state" shall
3 not hereafter be a required part of the corporate name of any state bank whatever.
SEC. 3. No state bank hereafter organized with authority to exercise fiduciary powers pursuant to the provi2 sions of this act, the corporate name of which contains the words "trust" or "trust company," shall transact any
3 banking or trust company business until it\shall have invested in and assigned, transferred to, and deposited with
4 the Commissioner of Banks the authorized securities described in and required by Mason's Minnesota Statutes of
5 1927, Section 7662, relating to the authorization of existing state banks to exercise such fiduciary powers, and until
6 the Commissioner of Banks has issued the certificate provided by Mason's Minnesota Statutes of 1927, Section 7646
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2
7 and a certificate stating that such bank is qualified to exercise the fiduciary powers set forth in Mason's Minnesota
8 statutes of 1927, Section 7663.
SEC. 4. After the application of the corporation shall have been favorably acted on by the Department of Com2 merce in compliance with Mason's Minnesota Statutes of 1927, Section 53-30 and upon compliance with the terms
3 hereof and the issuance of such certificates, such bank may commence the transaction of banking and trust company
4 business and may exercise, in addition to all the powers and privileges conferred by law on state banks, the powers
5 and privileges set forth in Mason's Minnesota Statutes of 1927, Section 7663, and such bank shall thereafter corn6 ply with and be subject to all of the provisions of law relating to state banks exercising such fiduciary powers and
7 privileges.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
392
STATE OF MINNESOTA
S. F.
FORTY-SEVENTH
SESSION
No. 1064
Introduced by Mr. Larson, H. A.
March 24, 1931.
Referred to Committee on Banks and Banking.
Reported
back
April
1, 1931.
Matter in italics is new; matter in capitals when in () is old law to be omitted.
A BILL
For an Act to Amend Mason's Minnesota Statutes of 1927, Section 7657, Relating to Financial Institutions and to
Advertisements by Such Institutions.
Be it enacted by the Legislature of the State of Minnesota:
SECTION 1. That Mason's Minnesota Statutes of 1927, Section 7657, be and the same is hereby amended so as
2 to read as follows:
3
"7657. No such financial institution shall directly, indirectly or by inference of any kind, display, represent,
4 hold out or otherwise advertise as its capital, resources, assets or financial strength or ability or availability
5 therefor any capital, resources or assets of any other financial institution or institutions, whether or not such other
6 financial institution or institutions are in any way connected with such financial institution through or by way of
capital
7 a holding company or other corporation or similar structure; nor shall any such financial institution, the
or
8 stock of which is in whole or in part controlled or owned by any such holding company, other corporation
is affiliated with or has any other
9 similar structure, display, represent, hold out or otherwise advertise that it
other than that which truly and actually exists;
10 connection with such company, corporation or similar structure
of
11 and no such financial institution shall advertise as its capital any amount other or greater than the amount
finan12 actual paid in capital, which it shall have at the time of the appearance of such advertisement, and no such
its stock13 cial institution shall advertise in any way the aggregate or individual responsibility or financial worth of
noluers, or in any manner seCK to convey LI1C nupresscon mac InC nuacct_tal 1CJVUILCS of its scockhulders above
15 the limit provided by law are available for the purpose of meeting its liabilities."
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
April 7, 1931
Hannond
Whenever I come into Room 601 I get the impression
that there is too much general conversation going on. Of
course, I dislike to speak of such a matter and hope that
this imoersonal way of calling attention to it will be sufficient. It will probably be easier to comply with this request if one of the doors is left open.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
April 7, 1931.
Mr. Ira Clerk, Deputy Govemor
Federal eserve Bank
San ?rancisco, California
Dear Mr. Clerk:
In msponse to your request of April lstifor
copies of the Hou!,e and Senate Hearings, we are enclosing
two conies
of the former.
Part one of the Senate Ami-
mittee, which you say you have, is all that has been
published of their hearings.
Very truly yours,
C. B. Ranmond
For the Committee on Branch,
Group and Chain Banking.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
i
r
0
FEDERAL RESERVE BANK OF SAN FRANCISCO
April 1, 1931.
Mr. J. H. Riddle,
Secretary, Committee on Branch, Group and Chain Banking,
Federal Reserve Board,
Washington, D. C.
Dear Mr. Riddle:
;re°.
The last pamphlet containing Hearings Before
the Committee on Banking and Currency, House of Representatives (H Res. 141) is marked volume 2, part 13. If any
further information has been printed, would you please
forward two copies of each to me.
I have received one pamphlet (part 1) of the
Hearings Before the Sub-Committee on Banking and Currency,
United States Senate (S Res. 71). If anything further
been printed, please send two copies to me.
Yours very truly,
,cve/
Deputy Governor.
_
/
r
....0•••••••••••••••••••
@FedFRASER