Full text of Records of the Federal Reserve System, Record Group 82 : Committee on Branch, Group & Chain Banking: Federal Reserve Bank of Dallas (Feb. 1931-1933), Box 1801, Folder 3

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Federal Reserve Bank of St. Louis

•
FEDERAL
OF

RESERVE

BANK

DALLAS

B. A. Mc KINNEY
GOVERNOR

August 14, 1933

Mr. E. A. Goldenweiser,
c/o Federal Reserve Board,
Washington, D. C.
Dear Dr. Goldenweiser:
I have received copies of the reports of the Federal
Reserve Comnittee on Branch, Group, and Chain Ranking, referred
to in your letter of August 7, and am returning to you under
separate cover the earlier summary which was distributed at the
Governors' Conference last November.
jith kind regards, I am
Si.'°roll yours,

Gov rnor.

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Federal Reserve Bank of St. Louis

Most

193,

Governor B4 14 Neinamy
Pedern1
Dank
Dallas. IMMO
dear Governer ligiamigr:
I take pleasure in semdiag yea order separate solver owls*
of the reports af tbe Podsful Beserve Committee ft Breathe OVesp.
amd Chain Banking, dbieb. the Cavernewe oppressed
desire le see
with the view to passing OR the desirability. of printing than.
The various reports. *doh are being transmitted, include:
(1) Brandi DnnkIng in ths Dated Slates; (2) Brondh Bankint7 tn
California; (3) Branch Peril-fug in **gland; (4) anent Badtblit
in Canada; (5) Banking Croups mod Chains; (6) Chnnest in the
Number red Size ef Banks in the gaited States. 104-1931; (7)
Bank Suipeasiems La tbe United States. 1E924931 (g) 225 Bmdk
Suspensions, Clfle rintordes from Examiners' Reports; (9) ann40.
tag Profits. 1CrAWmf).:1; (10) Dual Basking System in the United
States. I am ilso sending you a revised 9momary of the Reports
and. aft our supply of Marts is limited, r ohall be end if you
can conveniently return the copy of ths esrlier Sommer, Ski&
was distributed at the governors' Cooforanne last autumn*
Yew tral y yours,

R. A. Goldenweiser
assimman, Committme on Branch.
amplip amd Chain Banking.

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Federal Reserve Bank of St. Louis

January 11, 1933

Colonel C. C. r.alsh
Chairman
?serve Bank
Federal R,
Da11,1s, Texas
My dear Colonel talsh:
Thank you for your letter about the reort
of the Committee on Branch, Group, and Chain Banking.

I appreciate greatly the words of commenda-

tion, both as to manw-r and substance which you
wrote, and I also appreciate your crtticism of the
phrase "centers around".

This mongrel will be

eliminated.
tith best regards,
Sincerely yours,

E. A. Goldenweiser
Chairman, Committee on Branch, Group,
and Chain Banking.

FEDERAL RESERVE BANK
OF DALLAS
C . C . WA L S H

August 261 1932

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

Federal Reserve Board
Washington, D. C.
Gentlemen:

ATTENTION:

Mr. E. A. Gcldenweiser

Reference is made to your letter of July 9,
and Assistant Federal Reserve Agent Hall's acknowledgrent of July 12, regarding the desire of the Federal
Reserve Committee on Branch, Group, and Chain Banking
to obtain a summary of the important changes in State
legislation regarding banks and trust companies since
the inauguration of the Federal Reserve System.
Agreeable to your request, there is enclosed,
on the forms forwarded with your letter, a summary of
the important changes in State legislytion regarding
banks and trust companies in the State of Texas since
the inauguration of the Federal Reserve System.
Your letter suggested that the desired information be obtained from our legal depertment, or the banking departments of the States whose capitals lie within
this district. Texas is the only State the capital of
which is in the Eleventh Federal Reserve District, and
the enclosed information pertains to the State of Texas.
Very truly yours,

(
---Tic-3-deral Reserve Agent
Encl.

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Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK
OF DALLAS
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Federal Reserve Board
Washington, D. C.
Attention: E. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Banking.

Gentlemen:

In the absence on vacation of Federal Reserve Agent
is acknowledged of your letter of July 9,( advisreceipt
'alsh,
the Federal Reserve Committee on Branch,
of
ing of desire
to obtain a summary of the important
Banking
Group and Chain
regarding banks and trust companies
legislation
changes in State
Federal Reserve System. There
the
of
since the inauguration
forms outlining specifically
mimeographed
were also received the
the information desired.
The compilation of this information will have special
attention in this office and an effort will be made to send it
to you at a very early date. At the moment I am not certain
whether the information can best be furnished by our counsel,
or through the State Banking Department, but it will be obtained
from one or the other sources and transmitted as soon as possible.
Yours v

y truly,

s6d1r/b1(R/e/serveY4i()
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July 9, 1932

Mr. C. C. Walsh
Federal Reserve *gent
Federal Reserve Bank
nallas, Texas
nprtr 71r. Walsh:
The Federal Reserve Comrittee on Branch, Croup and Chain
Banking is very anxious to obtain a Twerary of the important changes
in State legislation regarding banks and trust companies since: the
inauguration of the Federal Reserve Systom. This is for use in a
stvly of the effects upon our banking structure of competition between various classes of banking institutions.
For some phases of banking legislation (e.g., reserve requirements and the operation of branches) our information is already
fairly complete. In other reerecte, however, it is inadeluato, and
we should like to ask your assistance in filling in these deficiencies.
The enclosed mimeogra.:hed forms outline speiically the
infomation desired. Would you be able to obtain for us this information from the banking departments of the States whose capitisis lie
within your district, or from your legal department? It is not necessary that we have all the details of every law earing upon tho points
enumerated. We want to know what changes have occurred since 1914
which have a significant bearing upon the negations of banking institutions and upon the tyres of assets hell by banks.
Very truly yours,

E. A. Goldenweiser
Chairman, Committee on Branch,
Group anti Chain Banking.
rne.

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Federal Reserve Bank of St. Louis

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FEDERAL RESERVE BANK
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OF DALLAS

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C C WA L S H

June 13, 1932

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGEN1

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Federal Reserve Board
Washington, D. C.
Gentlemen:

ATTENTION:

E. A. Goldenweiser, Chairman
Committee on Branch, Group and
ChAin Banking

Receipt is acknowledged of Mr. Goldenweiser's letter
of June 10, seeking information relative to the basis of
the classification, in the reports of the Comptroller of
the Currency, of State banking institutions into State
(commercial) banks on the one hand, and loan and trust
companies on the other, which distinction is made by the
banking department of New Mexico.
We are today writing the Department of Banking, of
the State of New Mexico, and when the information is received
will immediately inform the Board of the reply.
Very truly yours,
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Federal Reserve Bank of St. Louis

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Federal Reserve Agent

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Federal Reserve Bank of St. Louis

June 10, 1932

C. C. ".aleh
Federal Reserve I:gent
Federal floserve Bank
Dallas, Texas
Dear Mr. 'alsh:
The Committee on Branch, Group and Clain Banking
wishes to know the basis of the classification, ir the reports 6f the Comptroller of the Currency, of ;I:ttste bunking
institutions into Btc;te (commercial) banks or the one hand
and lonn and trust companies on the other. The office of
the (..!omptroller informs us that this clas:Afication is maCe
by the repective barking departnents xcher the fiFures are
reort'I to him.
Cculd you, therefore, find out from the banking
departmert of re:7 Mexico tho bnsis for the distinction between commercial banks and loan and trust comr)anies?
Very truly yours,

E. A. Goldenweisor
Chairman, Committee on Branch,
Group and Chain Banking.

June 4, 1932

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank
Dallas, Texas
near Mr. Walsh:

In recent years there ?lave been many changes
among bmking institutions from national charter to State charter
ani vice versa.
These changes have occurred through both conversions and consolidations. The Committee on Br,,..nch, Group and Chain
Banking, in connection with itsstudy of the dual banking system,
is desirous of obtaining accurate information as to the motives
for these changes.
We are enclosing herewith a selected list of these
conversions and consolidations in your istrict, an'
'ou1i appreciate it if you will address an inquiry to eAch institution asking
for a stateoent of the reasons or considerations which prompted them
to convert from one charter to the other, or, in the case of consolidations, why one chsrter was chosen in preference to ttso other for
the continuing institution. If we can secure from these institutions
frank and adequate replies to this question, it will doubtless shed
much light on the competitive factors between the two banking systems.
While we expect to tabulate and coL:Ant on the general results of the
replies received, the answers of the individual banks will be held in
strictest confidence and, of course, no banks will be menti .med in our
report, or designated in such a,annor as to be recognised.
We .7s,re-,s1bilatting this vestion to nearly one hundred
banks in t?ie various districts in order to secure a fair sample for
the country as a whole.
Very truly yours,

E. A. Goleienweiser
Chairman, CalLmittee on Branch,
Group and Chain Banking.
Fnc.
A

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Federal Reserve Bank of St. Louis

District :Jo. 11

Conversions from Jtato to ::ational Charters

Convorsions from National to jtate Charters

Consolidations where National Charter was Adaoted

Consolidt.ti)ns whore State C:n.oxtor wasAdoptod
allas, Tex. 1929
::ercantile National Bank (11)*
Uercantile Trust and Savincs Bank (4)

)

T`rmantile Boz.f:

Trust Co.

* Numbers in parentheses inuiCate ap'f)roximatO loans and investments
in millions of dollars.

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Federal Reserve Bank of St. Louis

S.
FEDERAL RESERVE BANK
OF DALLAS

March 19, 1932

Federal Reserve Board
Washington, D. C.
Attention:

.t;. A. Goldenweiser
Uhairman, Committee on
Branch, Group & Chain
Banking

Gentlemen:
I am enclosing reports showing items X, K,
and N as taken from the reports "Analysis of Bank
Earnings" for the state of Texas. This completes
the information requested in your letter of March 12.
Yours very truly,

•

eederal Reserve Agent

-Enclosures
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Federal Reserve Bank of St. Louis

•

•
•

FEDERAL RESERVE BANK
OF DALLAS

March 17, 1932

Federal Reserve Board
Washington, D. C.
Attention: Mr. E. A. Goldenweiser
uhairman, Committee on
Branch, Group and
Chain Banking
Gentlemen:
As requested in your letter of March 12, I
am enclosing reports showing items X, h, and N as taken from the reports "Analysis of Bank Earnings" for
the states of Arizona, New Mexico, Louisiana, and
uklahoma.
he reports on Texas will be forwarded to
you the first of next week.
fours very truly,
4Wa,
(
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(—Federal Reserve Agent

VVA.S \

•

•
•

FEDERAL.. RESERVE BANK
OF DALLAS
C C WA L S H

March 15, 1932

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

Federal Reserve Board
Washington, D. C.
ATTENTION:
GentleAeng

E. A. Goldenweiser, Chairman
Committee on Branch, Group, and
Chain Bank Banki.ng

This will acknowledge receipt of Mr. Goldenweiser's
letter of March 12, requesting certain information in connection
with proposals for guaranteeing bank deposits, enclosing tables
calling for three items to be taken from the "Analysis for Bank
Earning" schedules, which we prepared for the committee last
year.
You are advised that immediate attention has been
directed to the preparation of this information, and the compilations will be forwarded to you as soon as completed.
Very truly yours,

Federal Reserve Agent

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Federal Reserve Bank of St. Louis

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Federal Reserve Bank of St. Louis

March 1L, 19O2

Mk. C. C. Walsh
iederal iteserve 4,ent
Federal Reserve Bank
ie;oas
Deur Ar. .alsh:
For Lhe purpose or as6embling cert,in requesto information in connection with proposals for guaranteeing bank
deposits, we have prepared the attached tablea calling for three
iteIIs to be taken from the "Analysis of Bank Earnings" schedprepard for Lho dommittee last year. You still
ules .4nich .you
hold these schedules in your files and the items desired
K. and
on !Alga two. You will note that the tables cull
aggregare dollar amounts for all national banks in each size
group. This entails arranging the analysis blankz ror each
year by size of loans and investments, if they are not already
arranged, and then „a—..1:,-g Lna figuros 2or (:;.ch year for
each size group. In the case of each item a separate table
shoulI be prepared for each otate or iraotion of State in your
district.

In view of the purpose for which these data are needed
it will be appreciated if you Culi eJ:pedite the compilations.
Very truly yours,

E. A. Goldenweiser
Chairma:k,
Ltou
ranch,
Group and Chain Banking.

FED ERAL RES ERVBANK
,
F DALLAS
C C.WALSH
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

c-)
4?taber 6) 1931

Federal Reserve Board
Washington, D. C.
Attention: Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and Chain Banking
Gentlemen*.
Referring to your letter of November 23, I am forwarding you.
under separate cover, the data which you requested us to compile in
connection with six banks in this district which closed during the year
1931.
We found that in the case of two of the six banks listed in your
////
letter our files did not afford complete information, and therefore
made substitutions in accordance with your instructions. The data
which we are sending you cover the following banks:
\
1. Plainview National Bank, Plainview, Texas
2. Coleman National Bank, Coleman, Texas
3. First National Bank, Bishop, Texas (substitution)
4. First National Bank, Turkey, Texas
5. First National Bank, El Paso, Texas
6. First National Bank, Clint, Texas (substitution)

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Federal Reserve Bank of St. Louis

I trust you will find the information in the form desired.

Yours very truly,

1-CC44ad-4,
(
----F6der-ir7ffeserve Agent
P. S. These case histories contain no comments of Federal reserve
examiners, as none of the banks was examined by a Federal reserve
examiner during the period under review.

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Federal Reserve Bank of St. Louis

December 2, 1931.

mr. B. A. MainLoy, Governor,
2edura1 Reserve Bank,
Dallas, Texas.
'
-)o[Ir Governor McKinney:
During the neeting today with the Governors' Conferof the Federal Reserve Committee on Branch, Group and
Chain Bankik; a reest was made that each Governor be furnished with a copy of the confidential data subnitted
recently to the Sub-committee of the Committee on Rankine
and Currency of the United States Senate which is engaged in
a survey of the operation of the National and liederal Reserve
bankin6 systems.
A

copy Of this data is enclosed herewith and it is

requested that you also regard it as confidential.
iery truly yours,

(Signed) Chester Morrill
Chest,' r
$eere tary.

'/rkt

•

•
•

FEDERAL RESERVE BANK
OF DALLAS
C C WALS H
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

November 27) 1931

Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser,
Chairman, Committee on Branch,
Group and Chain Banking_
Gentlemen:
This will acknowledge receipt of letter from Ur. E. A.
Goldenweiser, Chairman, Committee on Branch, Group and Chain
Banking, dated November 23, 1931, having reference to a study
into the causes of bank failures which consisted in compiling
the case histories of 120 banks for several years prior to suspension, selected from suspended banks during 1921 to 1930.
It is noted that in view of the large number of suspensions during 1931, as well as the differences in location
and factors involved, the Committee feels that no study of suspensions would he adequate unless it covered the year 19311 and
we have received, attached to Mr. Goldenweiser's letter of November 23, a list of the banks selected from the Eleventh Federal
Reserve District with the request that we give the recent historic:J of these banks in accordance with the instructions.
You are advised that this matter has been turned over
to our Examination Department with the request that the infornation be completed in time to be forwarded to the Board by December
15, if possible. As soon as the data has been prepared, I will
send it forwerd promptly.

Yours very truly,

eeatezKeral Reserve Agent

November 2,

Mk. C. C. Walsh
Federal Reserve Acent
Federal Reserve Bank
Dallas, Texas
Dear Mk. Wish:
In the early part of this year the Committee in/tinted z;. at
the case
into the caums of bank failurs which consisted in compiling
Th38c 120
eon.
suspen
tc
vr,r,r1 years prior
histories of 120 lorlks
al
materi
the
and
930
banks were selected from suspensions during 1921-1
is now being analyzed.
ovIn viw of the large nuntor cf suspensions during, 1931,
it
ed,
involv
s
over, ae well as the dif:erencee in location and factor
it covered
is felt that no study of susentions v:.uld be adeuato unless
ed
select
been
this year. Therefore, 100 banks suspending in 1931 have
fatali
year's
in a manner rhich should rake them representative of this
list,
ed
the attach
ties. Those selected from your district are given on
histories of
recent
thL:
us
&Ivo
vculd
you
if
and we should appreciate it
information dethese tanks in accordance with the instructions. The
sired consists of four parts.
liank examiners,
First, the comments of the national cr
sion. The
as the case may e, from the beginning of 1920 till suspen
in the enned
explai
is
up
draw-,
be
form in which these comments should
t I, an
closed mimeographed instructions to which is attached Exhibi
interare
ts
co.:.on
these
on
retati
illustration. As an aid tic interp
ion
conait
the
way
general
a
in
g
spersed with oertai:- figures showin
are
data
oz.her
n
Certai
ation.
of the bank at the time of each examin
are
These
gs.
earnin
end
s
also called for, such as population figure
covered in the mimeographed instructions.
Second, the comments of Federal reserve examiners regarding
ce,
these banks duilng the same period, together with any corresponden
bank
reserve
l
Federa
memoranda or other material in the files of the
which will aid in understanding the condition 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

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Federal Reserve Bank of St. Louis

Mr. C. C. ,,alsh, d2

November 23, 1931

chro:lologically as in the ease of the comnents of the national and State
rr-rners.
1L1EA, a photos- at copy of each bankts bond !Ind other security

OTTFFee different dates: (1) at or just prior to auspe,
(2) approximately one yex prior to suspension; and (6) approxisac„
two ynlrs prior to suspension.
Fourth, datailed statistical data taken from the examiners'
raports ar71-717rded on R7Porm F* from 12O to the date of suspension..
A copy of this fora and omaente regarding its preparation are enclosed,
and Et supply of tha for.is is being forwarded to you under 74/n ease the history :.)f apy bank
the list is not ii4Etilfaujid
reason a substitution should be made of some other typical sus?cnded bank in your district.
fo.

In vie:; of thl ',.zrgont necessity of conpl,:ting his resort ct
date wc h02e you
hava this material corapiled and fora
us S
as pos5ib1a. Par:.s,ps
have it by the 11-f .
of Decolber.

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Federal Reserve Bank of St. Louis

Very truly yours,

3. A. Oolde%
Chairman, Oommittee on Branch,
Grcu,, and Chain .iankingo.

r•••••

Suspended Banks Selected for Case Studies
Dallas District
"rg

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Federal Reserve Bank of St. Louis

1. Plainview National Bank
2. (:oleman National Bank
3. First National Bunk in cAllen
4. Pirst National Bank
b. First National Bank
6. *City ()antral Bank & Trust CO.

Plainview, Texas
Coleman, Texas
McAllen, Texas
Turkey, Texas
El Paso, Texas
Sun kaltonio, Texas

This is a State bank and if its history is not sufficientcumplete for our purposes, please slbetitute a natiGnal
bank. ;'e suggest the First National Bank of Clint, Texas.

~1.

"fir
/93 .

A .

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Federal Reserve Bank of St. Louis

SepteLabor 29, 1931

Ur. C. C. Walsh
Federal Reserve Agent
?jrral Tlezerlre Bank
Dallas, Texas
Dear Ur.
Thank you for your letter of September 26th
with additional information regarding builc,ing ond loan
asociitior. i

Texa.
Very truly yours,

J. H. Raadle
Secretary, Oaamittee on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

Septomber 23, 1931

Mr. C. C. Walsh
Federal Reaortre AiLant
Federal Reserve Bank
Dallas, Texas
Dear Mr. Walsh:
We 2re in receipt of your letter o!-. Septeraber 24th
with the enclosure of find Laromition in response t) our
inquiry hbout affiliations in your district and acknowledge
it with thanks.
Very truly yours,

J. h. Riddle
Secrethry, Committee on Branch,
Group and Chain Banking

0•

FEDERAL RESERVE BANK
OF DALLAS
r<‘

C WALSH

September

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

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Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser,
Chairman, Committee on Branch,
Group and Chain Banking
Gentlemen:
Referring to your letter of July 16, I am enclosing a report on Form C covering the affiliations of
the National Bank of Commerce, Houston, Texas, with nonbanking institutions.
This completes the data covering all affiliations which we have been able to find in this district.

Yours very truly,

az&Z1-;
( Federal Reserve Agent

Enclosure

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FEDERAL RESERVE BANK

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OF DALLAS
C C WALSH
September 22, 1931

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Croup and
Chain Banking_
Gentlemen:
Supplementing my letter of September 8, I enclose an
addit.lonal list of banks in this district which we find to be
affiliated either with a non-banking institution or with another
bank; also schedules on Form C, containing detailed information
concerning each of such affiliations.
I am also enclosing suspension schedules covering the
following Texas State banks which closed during the last six
months of 1930:
First State Bank, Ben Franklin, Texas
Farmers State Bank, Blum, Texas
F. & M. State Bank, Conroe, Texas
Guaranty State Bank, Whitehouse, Texas
According to our records, we have now sent you suspension schedules covering all State bank suspensions which occurred
in Texas during the period January 1, 1921 to December 31, 1930.

Yours very truly,

1-Federal-Reserve Agent

Enclosures

VA
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september 22, 19:s1

Mr. C. C. ;sash
Federal .1 3esr7ve AAmt
Federal 7;e serve lank
Dallac, Tex,A3
Dear Mr. 7.alsh:
As you doubtless know, the Federal Reserve Coranitteeae ranch,
Group and Chain Banking expects to include in its rshort a dhapter on the
competition encountered by banks on the part of nonbahking institutions,
notably building and loan associations, savings and loan associations,
and similar societies conductd on the mutual or 000perative principle.
Several of the Federal reserve ban -? have been good enough to compile
and transmit to us much valuable information, which in the main will be
sufficient for our purposes. Re are anxious, however, to make ware that
to take account of any new developments of imthe report shall not
portance whicn may have occurred in recent months, particularly with respect to the manner in which building and loan associ, tions have metthe
conditions arising out of banking crises in various localities.
Since Al hope to complete this part of the report in a few
weeks, manifestly there will not be time for an extended inquiry; but
we shnll be glad to have any information you can furnish, without too
muab trouble, 'is to conditions in your district. We should like to
know, for example, to what extent the asseto of building and loan associations are "fro_en," whether More or less seriously than the real
estate loans of the banks; whether in general the associations have
been obliged to invoke the fall extent of their privileges under the
law in the matter of reluiring notice for payment of the withdrawal
value of their shares, or of their deposits, as the cse may oe, and
whether there has been in the past twelve months any oonsiderable
increase in building and loan failures, as compared with the years
1928 and 1929.
shall greatly appreciate a reply along the lines indicated
at ',Tour earliest convenience. .

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Federal Reserve Bank of St. Louis

7ery truly yours,

11!. A. GOldenaelser
Chairman, Committee on Branch,
Group and Chain Banking.
•

FEDERAL RESERVE BANK
OF DALLAS
C C WALS H

September 12, 1931

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Board
Washington, D. C.
Attention Mr. J. H. Riddle, Secretary
Committee on Branch, Group
and Chain Banking
Gentlemen:
In reply to your letter of September 10, I wired you
today that on September 8 we forwarded to Dr. Goldenweiser the
revised material which you requested of us covering banking affiliations in this district.
The material we sent you, according to our records,
covered all of the various banking affiliations in this district
except those involving nonmember state banks.
In perusing member bank examination reports, we found
a number of instances wherein a two-bank affiliation existed involving a member bank and a nonmember bank through interlocking
directorates. As we do not have access to examination reports
on nonmember banks, the only method by which it is possible for
us to obtain the desired information regarding this particular
type of affiliations is to apply to the State Banking Department
for it, which we have done, and we hope to be able to obtain it
and forward it to you within the next few days.

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Federal Reserve Bank of St. Louis

Yours very truly,

Federal Reserve Agent

4110

LEGRAM

•

FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)

RECEIVED AT WASHINGTON, D. C.

195gu 16
Dallas 1208p sept 12
Riddle
Washn
Answering letter tenth data on banking affiliations forwarded
Goldenweiser last Tuesday if not received please advise

0.04mmNidatvr.Werma...n.Vms

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Federal Reserve Bank of St. Louis

Walsh
133p

2-11901

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Federal Reserve Bank of St. Louis

September 11, 1931

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank
Dallas, Texas
Dear Mr. VAlsh:
Your letter of September 8th with its enclosure
of the material on bank affiliations in your district has
just been received and we thank you for sending it on to
us.

We note that the material is not quite complete and

that we are to expect within a short time the remaining
reports.
Very truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

September 10, 1931

Mr. C. C. Walsh
Federal nesorve Lgent
Federal Reserve Bank
Dallas, Texas
Dear Mr. Walsh:
In our letter of July 16th we forwarded to you the
material which we had compiled on banking affiliations in
your district, our request being that you correct and amplify
what we had done from your own records and return the oompleted data to us. 7)-e have received this information from
a majority of the reserve districts and are naturally anious
to receive the balanoe and oomplete this portion of our study
as soon as possible. Accordingly, we shal be obliged if you
will let UA know how soon we may expect the returns from your
district.
Very truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and Chaim Banking.

•
•
FEDERAL RESERVE BANK
OF DALLAS
C C WALSH

September 8, 1931

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser,
Chairman, Committee on Branch,
Group and Chain BankinEL
Gentlemen:
Please refer to your letter of July 16, in which you enclosed
certain material on bank affiliations in our district, and requested
that we make any necessary corrections and additions that might be indicated by information available to us.
We have made a careful investigation of the affiliations of
member banks in this district, and I am enclosing a list of the banks
which our investigation shows to be affiliated either with a non-banking
institution or with another bank; also, schedules on Form C containing
the desired details regarding each affiliation.
We have not quite completed our study of this subject, as there
are a few banks (perhaps half a dozen) which we are still checking up
and concerning which we have not yet received complete information.
WtOhought best, however, to forward you the data we have already corn*Ied,..and we expect to submit the remaining reports to you within a
(S/very.

Yours very truly,

(6141iU
e,----- FedeI

eserve Agent

RECEIVED
Enclosures

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Federal Reserve Bank of St. Louis

SEP 1 1 1321
DIVISRm OF RESEARCH
ANn STATISTICS.

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Federal Reserve Bank of St. Louis

August 29, 1931

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank
Dallas, Texas
Dear Mr. i,alsh:
Thank you for your letter of August 25th with
the enclosed oorreoted security indices for six banks
and oopies of the investment lists of fifty selected
national banks in your district on which yOu have
identified all securities to which ratings from published sources were not assigned.
Very truly yours,

C. B. Hammond
For the Committee on Branch,
Group and Chain Banking.

FEDERAL RESERVE BANK
OF DALLAS
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

August 25, 1931

Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Coldenweiser, Chairman
Committee on Branch, Group and
Chain Bankinz,
Gentlemen:
We refer to your letter of August 18, advising of the return, under
separate cover, of the lists of securities held by each of the fifty selected
national banks in the Eleventh Federal Reserve District which we prepared in
accordance with your letter of June 25.

assigned by
and that we
and that if
and we have
arbitrary.

We note the request of the Committee that we indicate the
us to each security for which we could find no published
identify each security classified as "not rated" or "not
adequate information concerning a particular security is
assigned an arbitrary rating, the rating should be noted

rating
rating
listed",
lacking
as being

I am handing you, herewith, lists of securities of 50 banks which
we prepared for the Board in response to its letter of June 25, 1931, on which
I have indicated the rating given each security as used in preparing the index
as requested in the Board's letter of July 16. Arbitrary ratings, securities
having no published ratings, and securities not listed are so indicated.
It so happened that in the interval between June 25 and July 16, we
received new examination reports on four of the banks included in the list of
banks accompanying the Board's letter of June 25, and in preparing the index
reouested in the Board's letter of July 16, the lists of securities appearing
in the new reports, which I am returning, were used instead of the lists which
had been previously furnished the Board.
I have also prepared new schedules of index on these four banks,
namely: F. & M. National Bank, Abilene; American National Bank, Beaumont;
Texas City National Bank, Texas City, and First National Bank, Normangee, covering the list furnished the Board.
In going over the securities owned by the City National Bank of Cleburne, and the Merchants National Bank of Port Arthur, we found it necessary to
make corrections and have accordingly prepared corrected schedules on these two
banks.
I am handing you these six new and corrected schedules, as made up
on Form S, and desire that you request a substitution of the same in place of
those sent in our letter of August 10.

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Federal Reserve Bank of St. Louis

Bdsrd - Washington
Page 2

If any additional information or explanation is desired, and you
will advise us of the nature of the same, we shall be pleased to supply it.

Yours very truly,

Federal Reserve Agent

CCW:1E
Enclosures

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Federal Reserve Bank of St. Louis

August 18, 1931

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank
Dallas, Texas
Dear Mr. Walsh:
We are returning under separate cover the lists of
securities held by each of fifty selected national banks in
your district which you prepared in accordance with our letter of June 25th. The Committee reduests 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 as "not rated" or "not listed." If
ade ,uate information concerning a particular security is
lacking and you have assigned an arbitrary rating, the
rating should be noted as being arbitrary.
Very truly yours,

B. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chaim Banking.

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Federal Reserve Bank of St. Louis

August 13, 1931

L;r. W. J. Evans
Assistant Federal Reserve Agent
Fqd4ra1
Ba-Xx
Dallas, Texas
Dear ;Ir. ;vans:
Thank you for your letter of August 10th with
the complcted copies of Form S showing the :uality index for fifty selected banks in your district.
Very truly yours,

C. B. Hammond
For the Comittse an Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

a•

6•

FEDERAL RESERVE BANK
OF DALLAS
.u7ust 10, 1931

Yoder .1 Reserve Board,
3.ashington, D. C.
-ttention Ur. E. A. Goldenweiser,
Chairman, Committee on
Branch, Group and Chain
Banking.
Gentlemen:
..7eeable with the request made in your letter
herewith
of July 1Gth,L7e Inve prepared and are enclosing
nationfifty
by
held
ities
7orms S coverinc -nalyses of secur
naexami
last
their
al banks in this district at the time of
tion.
Yours very truly,

ssista1 ,4e oral .,csorve .gent

IStc‘
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10,

FEDERAL RESERVE BANK

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451,4%
4

OF DALLAS
C.C.WALSH

July 20, 1931

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

Federal Reserve Board
)(7

Washington, D. C.
Gentlemen:

ATTENTION:

E. A. Goldenweiser, Chairman
Committee on Branch, Group and
Chain Banking

This will acknowledge receipt of letter of Mr. E. A.
Goldenweiser, Chairman, Committee on Branch, Group, and Chain
Banking, of July 16, 1931, enclosing for our examination certain
material on bank affiliations in the Eleventh Federal Reserve
District, which has been compiled on special form (Form C) for
use of the Federal Reserve Board's records on the subject, requesting certain information not included in former information
on the items referred to.
You are advised that the data requested will be prepared
immediately, and as soon as completed we will forward it to the
Board for the purposes desired.
Yours very truly,

(e6f%
CCWAK

Federal Reserve Agent

July 16, 1931

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank
Dallas, Texas
Dear Mr. Walsh:
Ws are sending you a descrintion of an index which has oeen
devised for the purpose of me aurin the quality of the security holdings of banks. The sonstruction is simple gad is fully explained in
the Rttaehed memerandue, The Committee desires to have this index
oomput9d for a representative list *thanks scattered throughout the
country in order to determine something of their investment policies.
On Juno Mb we sent you the names of bu banks in your
distriet with the rarest that you send us a list of the securities
held by 4,5..oh at the time of the last exaqination in order thRt we
mi!ht make an analysis of these securities. For each of these 50
lists of impurities we should like to have you prepare an index in
aeoordanee with the enelosed example and the secompanying instructions. If you feel llat the 5i) banks will.n0t be sufficiently
representative of your district, you might enlarge the list.
We are sending you under separate °over a supply of forms
for use in computing the index.

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Federal Reserve Bank of St. Louis

Ver. truly yours

R. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Banking

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank
Dallas* Texas
Dear ir. .alsh:' lb are enclosing for your examination certain material on bank
affiliations in your district which we have compiled on a special form (Fbrm
C) for use with the Federal Reserve Board's re:words on the subject. It
covers seonrities companies and other non-.banking affiliates as well as
affiliations between two banks. The Board's existing records on chains
and groups, whioh are based on reports furnished by the Reserve Banks in
compliance with the Board's letter, St. 6386. loveMber IS. 1929, do not
Jr:elude information on these two items.
Specifically, this compilation has been prepared to include the
following kinds of affiliates of banks:
(1) All nonm.banking affiliates of state and
national banks, including securities companies,
mortgage companies* investment trusts* insuranee
companies, holding companies, foreign banking cmpant.. and safe deposit companies. In aach CUSO
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
stookhotding interest, trusteed stock, direct ownership, or other amens. The commonest examples of this
are the affiliation of a trust company with LI :.ational
bank and of a savings bank with a commercial baJc.
The oompilation has been made principally from three general sources:du..
Moody's Manual of Banks, the directory of Security Dealers of North America,
and Rand NoNallyts Bankers' Directory. Our request 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 referonce where advisable to the organizations themselves* and retArn the revised
material to us as soon as possible.

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Federal Reserve Bank of St. Louis

Walth, 2

A memorandum is enclosed mhieh explains the terms used in the com.
pilatio
agizeuell other information an is neeessary to interpret and
7orreet it;:opo

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Federal Reserve Bank of St. Louis

Very truly :.ours,

E. A. Goldsousimer
Chairman, Gummifteesserunoh,
Group and Glob Maim&

)

•
•

FEDERAL RESERVE BANK
OF DALLAS
C.C.WALSH

July 132 1931

CHAIRMAN OF THE BOARD
?T./1
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

Mr. J. H. Riddle, Secretary
Coulmittee on Brunch, Group & Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
Please refer to my letter of June _4 in which I advised
that the State Banking Department estimated that it would be
sometime between July 1st and 15th before they would be able to
give us the data necessary to complete the suspension schedules
on four State banks which closed in Texas during the last half
of 1930. We wrote them again on July 10, as per copy of letter
attached, and received a reply from Deputy Commissioner Roberts,
a copy of which I am also enclosing.
You will note that Deputy Commissioner Roberts states
that he has not yet had time to tabulate the information re desire, but that he will do so just as soon as he is able to complete the distribution of the State Guaranty Fund, upon which
the Department has been working for the past two months.
Under the circumstances, there is, of course, nothing
we can do except to wait until such time as the Commissioner's
office is in a position to furnish us the desired information.

Yours very truly,
ttle-W cr,C
e era

Enclosures

eserve Agent

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Federal Reserve Bank of St. Louis

July 10, 1931

Mr. J. E. Roberts, Departmental Examiner
Department of Banking
Austin, Texas
Dear Mr. Roberts:
May I ask, please, whether you are now in a position
to furnish us the details of claims allowed and dividends paid
in connection with the following banks which suspended during
1930:
First State Bank, Ben Franklin, Texas
Farmers State Bank, Blum, Texas
F. & M. State Bank, Conroe, Texas
Guaranty State Bank, Whitehouse, Texas
I am enclosing the suspension schedules covering these
banks, and would appreciate your filling in the figures called
for on page 3, if they are now available. I believe, at the
time of Mr. Childers' last visit to Austin, you were of the
opinion that the claims against these banks woulekbe classified
by July 15th.
Again assuring you of our appreciation of this informaLion, and regretting the necessity of putting you t6 so much
trouble in regard to the matter, I am

Yours very truly,
(Signed)

W. J. Evans,
Assistant Federal Reserve Agent

WJE:MM
Enclosures

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Federal Reserve Bank of St. Louis

•
•

DEPARTMENT OF BANKING
AUSTIN, TEXAS

July 11, 1931

/Ir. W. J. Evans,
Assistant Federal Reserve Agent,
Federal Reserve Bank of Dallas,
Dallas, Texas
Dear Sir:
We are returning your letter of July
10th, and you are advised that the Liquidating Division
of this Department has been working for the past two
months on the distribution of the Guaranty Fund in compliance with order of the Court and the information sought
by you has not been completed. As soon as the Guaranty
Fund has been disposed of, these matters will receive prompt
attention.

Yours very truly,

(Signed)

J. E. Roberts,
Deputy Commissioner

JER/K
Enc.

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Federal Reserve Bank of St. Louis

July 6, 1921

Mr. M. J. Evans
Assistant Federal Reserve Agent
?ederal Reserve Bank
Dallas, Texas
:r. Evans:
We acknowledge with thanks receipt of your letter of July 2nd enclosing copies of the investment lists
of the fifty selected banks in your district.
Very truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

•

•
FEDERAL RESERVE BANK
OF DALLAS

July 2, 1931

Federel Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser,
Chairman, Committee on
Branch, Group and Chain
Banking.
Gentlemen:
As requested in your letter of June 25thi I am
enclosing a list of the securities held by fifty National
bf:nks in this district at the time of their last examination.

Yours ver

Ass

WJE:MM
Enclosures

uly,

edema Reserve Agent

••

FED ERAL RESERVE BANK
0 F DALLAS
C C.WALS H
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

June 29, 1931

Federal Reserve Board
Washington, D. C.
Gentlemen:

ATTENTION: Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Group, and
Chain Banking:

This will acknowledge receipt of the names of fifty
banks in the Eleventh Federal Reserve District sent us, attached to letter of Mr. E. A. Goldenweiser, Chairman, Committee
un Branch, Group and Chain Banking, under date of June 25, in
which he requests that we send a list of the bonds, securities,
etc., held by each of the banks named, at the time of the last
examination.
You are advised that this matter will be givenimediate
attention, and the information mailed promptly upon completion
of the same.
Very truly yours,

COVIA

1----rederal Reserve Agent

Mr. C. C. 4al5h
Federal heserve Agent
Federal Reserve Bank
Dallas, Texas
Dear Mr. Walsh:
We are enclosing her 'with the names of 50 banks 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 examination. 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 been
selected at random in order that they may be represent_tive.
Perhaps the investment list in each case, which usually appears on age 7 of the National bank examinerse report, can
photostatod at a minimum of time and cost.
In returning these lists, it would be of loch assistance if you could give the total loans and investments if sash
bank in order that we may group them according to size. The
items included in total loans and investments are sov forth
in articles 1 to 4 inclusive of the Board's Form 105a.
Ver), truly yours,

Snc.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

E. A. Goldenweiser
Chairman, Committee on Branch,
Grow? and Chain Banking .

a 00i.

Fifty Selected National Bank.:.
in Federal Reserve District No, IL

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31,
32.
33.
34.
35.
36.
37.
38.
39,
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

First N. B.
First N. B.
First N. B.
Far. & bier. R. B.
First N. B.
Austin N. B.
American N. B.
West Texas N. B.
First N. B.
City N. B.
First N. B.
City N. B.
First N. B.
Citizens N. B.
Liberty N. B.
First N. B.
El Paso N. B.
City N. B.
Frost N. B.
First N. B.
Graham N. B.
First N. B.
First I. B.
Second N. B.
First E. B.
Karnes County N. Be
Kosse N. B.
Laredo H. B.
First N. B.
First N. B.
First N. B.
Hall County N• B.
First N. B.
First N. B.
Llorris County r. B.
First N. B.
First H. B.
First N. B.
Merchants N. B.
First N. B.
First N. B.
First N. B.
First N. B.
Llerchants & Planters N. B.
First N. B.
First N. B.
Texas City N. B.
Commercial N. B.
Liberty N. B.
Whitesboro Y. B.

W Ruston,
Las Cruces,
Bennington,
Abilene,
Amherst,
Austin,
Beaumont,
Big Spring,
Breckenridge,
Bryan,
,Canyon,
,Cleburne,

Louisiana
New Mexico
Oklahoma
Texas

wCrosbyton,
Dawson,
Dodd City,
El Paso,
Floresville,
%/Frost,
Giddings,
Graham,
%/Hale Center,
Hereford,
Houston,
Iowa Park,
*Karnes City,
Kosse,
Laredo,.
‘‘Lockney,
.1:abank,
I.Latador,
.memphis,
I•Lercedes,
YLlineral Wells
Naples,
Normangee,
/ Palestine,
/ Perrin,
Port Arthur,
Reagan,
v Rock Springs,
Saint Jo,
v'Sqnger,
Sherman,
b Sterling City,
vTahoka,
Texas City,
Uvalde,
Waco,
Whitesboro,

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Federal Reserve Bank of St. Louis

June 10, 1931

J. 'vans
Mr.
Assistant ?ederal Reserve Agent
?ederal leserve Bank
Da119.s, Texas
7 van8:
Dear 1q... .
This will acknolledge with thanks your letter
of June 6th enclosing material on Form A-3 covering bank
changs in Texas for the year 1930.
7ery truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group ann Chain Banking.

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Federal Reserve Bank of St. Louis

June 9, 1931

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Rank
Dallas, Texas
Pear Mr. 77alsh:
We acknowledge with thanks the receint of your
letter of June 5th enclosing the data compiled from examination reports of tNenty suspended bqnks and five successful
bins in your district.
Very truly yours,

J. H. Riddle
Secretary, aumittee on
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK
OF DALLAS
June 6, 1931

Mr. J. H. Riddle, Secretary
Committee on Branch, Group & Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
Colonel Walsh has referred to me your letter of June
2, regarding schedules on Form A-3, covering changes in Texas
State banks for the year 1930. I am enclosing these schedules
herewith, as follows:
Decreases by consolidations
27
Decreases by liquidations
6
Increases by primary organizations . . . 4
We have exhausted our supply of Form A-2, but the following are the figures which should appear in the recapitulation for
the year 1930:
Number of State banks at the beginning of year, 699
Decreases by consolidations
27
Decreases by suspensions . .
17
Decreases by liquidations
Total decreases
50
Increases by conversions from National Charter,
Increases by reorganizations
Increases by primary organizations
Total increases
Net decreases
Number of State banks at end of year . . .

2
3
4
9

41
658

Schedules covering suspensions and reopenings have already
been forwarded to you, except in the case of four suspensions, for which
we have been unable to obtain the necessary data from the State Banking
Depart7ent, as advised in Colonel 17alsh's letter to you yesterday.
We presuMe you have obtained from the Comptroller's office the
with the two conversions from National charter.
connection
data in
Yours ve

tru

Assistan

edera

'YJE:111r.

Enclosures
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Federal Reserve Bank of St. Louis

Reserve Agent
A

FEDERAL RESERVE BANK
OF DALLAS
June 5, 1931

C.C_WALSH
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

Federal Reserve' Board
Washington, D. C.
Attention Mr. J. H. Riddle, Secretary
Committee on Branch, Group and
Chain Banking •
Gentlemen:
Referring to Dr. Goldenweiser's letter of March 21, 1931,
we are enclosing the data requested therein, which we have compiled
from examination reports of twenty suspended banks and five successful banks in this district.
We trust your purposes will be satisfactorily served by
these data, the compilation of which has required considerable time
owing to the limited size of our statistical force and the necessity
of their handling a number of other special projects concurrently.
For your convenience, we are enclosing a list of the
twenty-five banks under analysis, showing the identification numbers
assigned them.
The census figures shown in the enclosed excerpts from examination reports were obtained from the United States census reports
with the exception of the unincorporated towns, for which we were obliged to use census figures shown in bank directories. You will observe that in a few instances we were unable to obtain any census
figures whatever covering certain unincorporated towns for the year
1910, as our supply of bank directories does not include any 1910
edition. No doubt, you will be able to supply these missing figures
from records on file in your office.

Yours very truly,

*----Naeral Reserve Agent

Znclosures

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Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK
OF DALLAS

June 4, 193/

RMAN OF THE BOARD
FEDERAL F7ESERVE AGENT

Mr. J. H. Riddle, Secretary
Committee on Branch, Group & Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Riddle:
Referring to our previous correspondence relative to suspension
schedules for Texas covering the last half of 1930, I am enclosing schedules
covering two suspensions, as follows:
Sunset State Bank, Sunset, Texas
Farmers State Bank, Pottsboro, Texas
The Sunset State Bank, you will observe, was reopened on November 8,
1930, which, of course, closes the files on this case. The Farmers State Bank
cf Pottsboro is still in process of liquidation, and you will find on page 3
of the enclosed schedule ell of the information which is at present available
in regard to allowance a.nd payments of claims.
This leaves four suspensions which occurred during the last half of
1930, and for which you have not been furnished suspension schedules, as follows:
First Stete Bank, Ben Franklin
Farmers State Bank, Blum
State Bank, Conroe
Guaranty State Bank, Whitehouse
Regarding these four suspensions, we wrote to the Department of Banking on May
25th, reminding them that they had previously promised to complete these schedules sometime during the month of May and requesting thet the matter be given
prompt attention. Receiving no reply, we telephoned the Commissioner's office
on May 29th, and were advised by Deputy Commissioner Roberts that he would endeavor to complete these schedules end forwurd them to us that night.
On Monday, June 1st, we received your letter of May 26th in regard
to this matter and wired you that we had not yet received the schedules from
the State Banking Department and that we were sending a representative to Austin
to investigate. Our representative, Mr. Childers, returned from Austin last night
and reported that the State Banking Commissioner stated to him that he would be
unable to complete the classification of claims against the four banks listed
above until sometime between July 1st and 15th. He explained that subsequent
to our 'phone conversation with him lest week, he learned that the classification
of claims against these particular banks had not been completed by the Departnent's Liquidating Officer and that the latter would be unable to give the matter
his attention before July 1st on account of other and more pressing work that had

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Federal Reserve Bank of St. Louis

••

I.
Page 2

Mr. Riddle - Washington

arisen in the Department.
For several months past, the Department has been in litigation
with certain state banks in Texas in regard to a balance of $1,800,000 remaining in the Texas Guaranty Fund, and a judgment was recently obtained
against the Department by the plaintiff banks for this amount. The Commissioner stated to our representative that the distribution of this fund
involved an enormous mount of clerical work and that it could not possibly
be completed before the end of June. Under the circumstances, he felt that
the task of carrying out the court's verdict in regard to the distribution
of this $1,800,000 should take precedence over such routine matters as the
classification of claims of insolvent banks, and therefore he would not be
in a position to classify the claims against the banks at Ben Franklin, Blum,
Conroe and Whitehouse until the first of July. He thinks it will require
about one week to complete these classifications when once begun, which means
that he will not be in a position to complete our suspension schedules until
sometime between July 1st and 15th.
We regret very much that this delay has occurred, but are writing
you fully in regard to same in order that you may understand that we have done
and are doing all in our power to expedite the compilation of the data you desire.

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Federal Reserve Bank of St. Louis

Yours very truly,

ederal Reserve Agent

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Federal Reserve Bank of St. Louis

June 2, 1931

Mr. C. C. Walsh
Pedel-al Reserve Agent
Federal Na•serve Bank
!)allas, Texas
Dear Mr. ';,alsh:
Will you be good enough to let us know aeoximately
when we may expect the material which you are now compiling
from examination reports of twenty suspended banks and five
successfUl banks in your district, in accordance with Dr. Goldenweiser's lettcrs of Liarch 21 and Xarch 23, 1931?
:e are now in the process of tabulating and analyzing
the data which we have roceived from the other Federal reserve
banks and would greatly approciato anything you can do to expedite the collection of this material in your district.
7ory truly yours,

J. H. Riddle
Secretary, Caamittee on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

June 2, 1931

Ur. C. C. Walsh
Federal Reserve Agent
Federal Rese-ve Bank
Dallas, Texas
Dear nr. .alsh:
In your letter of January 9 regarding schedules on
Fern A-3 oovering changes in the state banks in Texas 1921 to
1929 inclusive, you said that it would probably be several
months bafere the data for the year 1960 would be ready. Inasmuch as all but three Or four states have now given us com
plete infornation we are desirous of getting what is to come
from the remaining few sttes as quickly as possible in order
that this portion of the Committee's work may be completed.
For this reason au shall be much obliged if you will see what
can be done to expedite the completion of the 1930 figures
for the state of Texas.
Very truly yours,

J. H. Riddle
Secretary, Committ,ee on Branch,
MrOup and Chain Banking

FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)

ran-;

RECEIVED AT WASHINGTON. D. C.

230gmr
Dallas 127p June 1
Riddle
Washn
Your letter 26 we phoned commissioner last Friday regarding
suspension schedules last half of 1930 and he promised to complete
and mail same to us that night but as we have not received them
we are sending representative to austin tonight to close matter up
if possible
Walsh
239p

0. as. soaaa

ttNT

rininin ortric•. in.

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Federal Reserve Bank of St. Louis

2-11901

May 26, 1931

Mr. C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank
Dallas, Texas
Dear 1,r.

alsh:

'ma have not yet received the suspension schedules for
Texts for the last half of 1930 and assume that you are tiving
diffic-lity in getting these from the State Banking Department.

•

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Federal Reserve Bank of St. Louis

We have no desire to press the Department to the point
ir:itation, but our tabulations on this project are being held
up on account of these few schedules from Texas. There were
probably not over Six or eight suspensions during that period.
We should greatly anpreciate it, therefore, if :,Tou could make
soifie special effort to secure for us the schedules for these
institutions.
Very truly yours,

J. H. :addle
Secretary, Committee on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

Mr. C. C. Walsh
Federal Reserve Agent
Federal Deserve Bank
Dallas, Texas
Dear Ir. 7alsh:
Along ribout 1905 the state of Texas, we understand,
prohibited branch banking. The Banking Co4missioner there induc(11 a bank with branches, the name of which we do not know,
to convert itself into a chain or group organization, to comply
with the letter and spirit of the new law, so far as actual
branch bank organization was concerned. The holding company
for the group, we understand, was the Continental Trust Mmpally or Continental Bank and Trust Company.
6ince this is one of the first instances, if not
the first, of a bank using an affiliate as a holding company
for the amnership and control of other banks, it is of special
e shall very much appciate it if
int-rest and si3nificance.
you can secure for us s much information about this event as
posEible.
Tery truly yours,

J. H. Riddle
Secretary, Caamitt-e on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

•

••

FEDERAL RESERVE BANK
OF DALLAS

April 28, 1931

Federal Reserve Board
Jashington, D. C.
Attention: Mr. I. H. Riddle, Secretary
Gomnittee on Branch, Group
and Chain Banking
Gentlemen:
I am in receipt of your letter of April
25 regarding the discrepancy between Tables I-e
and V-e in the case of Oklahoma for 1927. In
checking over our reports, I find that the error
was made in Table V-e. In making up the original
report one bank which should have been shown in
the group with loans and investments of ,:750,000
to 099,999 was erroneously included in the group
of banks with loans and investments of 8500,000
to ,749,999.
We have checked Tables T-e, II-e, and
III-e against Tables IV-e and V-e for all states
and all years and find them in agreement.
Yours very truly,

Ass stan

ederal Reserve Agent

Apr

44).

Mr. C. .
C Vialsh
Federal Reserve Agent
Federal Reserve Bank
Dallas, Texas
, Dear Mr. 4alsh:

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Federal Reserve Bank of St. Louis

In connection with making combinations for the earning'
project with rt)spect to Tables Is.e.
and 46e. ye find
that in the cases of partieUlar states the motors of banks In
respective profits grope do not agree when oomparing Tables I-041
and IVme. Also in some cases the numbers of banks in else
jprou,s do not agree in comparing Tables I-e and
With respect to the sheets sent from your district,
we find one eight discrepancy between Tables I.° and 7...e in
the ease of Oklahoma in 1927.
Please maks a comparison for all the various 'Able;
fOr each state for eneh year and send us the neeest.nry revisions
to make the reconcile. Inasmuch as Table Vs tor example, was
probably oompiled subsequent to Table I, we are in hopes that you
may be able to send us revised Table I which will accomplish the
reconciliation and that it will be unneoessary to disturb Table
Aich represents much the grenter volume of work.
Very truly yours,

J. B. Riddle,
Secretary, Cornittee
3ran
Group and Chain Banking

Form 148

TELEGRAM
FEDERAL RESERVE BOARD
LEASED WIRE SERVICE
WA SHIN

G-roN

2—UM

ero

April 16, 1931.

Walsh, Dallas
Suggest in answer to your wire of April 15th,First
National, Lo7ington, New Mexico, suspended Spetember 6, 1923,
and First rational, sort

umner,

Mexico, suspended January

18, 1924.

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Federal Reserve Bank of St. Louis

ROLDEMISER

fiELEGRAM

a•

FEDERAL RESERVE SYSTEM

.4
e

(LEASED WIRE SERVICE)

0/4/ -.',.?0
9.2f4b

RECEIVED AT WASHINGTON, D. C.

Dallas Apl 15 10-2arr

-..

-44s) `f4% ieY)
'
9,?.!
vi4/c91
(r/ 0
6
..
-..5.4

Goldenweiser
Tashn
Two banks springer newmex and lasvegas nmex listed your letter
eleventh are in kansascity district
Walsh
1142am

.•

••••113•1•1• 11%•••••• MINIM AM

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Federal Reserve Bank of St. Louis

14--11914

Su gest you forward substitutions

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Federal Reserve Bank of St. Louis

April 13, 1931.

Mr. 0. C. Walsh
Federal neserve Agent
Federal Reserve Bank
Dallas, Texas
My dear Mr. Walsh:
In the absence of Mr. Goldenweiser and

Riddle

I -fish to acknoilc.dge with thanks your letter of the 8th
with its enclr)sure of letters from various gentlemen you
had cormunicated with on the subject of building and loan
association conpetition, etc.
Very truly yours,

C. B. Ha:amond
For the Committee on 3ranch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

,april 11, 1951

Ar. (-;. C. ftl.sh
Federal eserve 1.gent
Federal deserve Jank
Dallas, TOX118
Dear

r. alsh:

The final answer to your lett;ors of April 1 and April
7 regarding r2aterial for study of 20 failed banks in your district has been delayed partly by Mr. Riddle's absence fro. flashL
and partly by the problem of making the records in the
Cootrolle la office available.
Itnow appears impracticable to get the 1920 records
and e have accordingly sire • dy advised you by telegraph to omit
the information for the ye.ir 1920 and earlier from your study.
In lieu of the 7 banks for which you had inadequate information we are substituting the following:
First i,ational Jank
City National jamk
Citizens i:ational jank
First ilational Jank
First Dational iank
National Bank of
Citizens National sank

Friseos Texas
Closed
a Paso,
Coulerce, "
_ex.
Springer,
Las Vegas, "
Carlsbad, "
Albuquerque ,"

12-61-23
5- 6-24
1-1-27
6- 1-25
5- 2-25
1- 2-24
2- 5-24

You will notice that all of these banks closed at a sufficiently
late date that you will havo several years record of their activity. 40 aro sorry that oircuratunces prevented our giving you an
earlier reply to your inquiry but trust that the inconvenience IS
now ended.
Very truly yours,

CBH:rf

4.4, Goldem;eiser
Chair.:an, Co_llittee on i)ranch,
Grou, :21(1 Chin 3ankinc

•

•
•

111

Form 148

TELEGRAM
FEDERAL RESERVE BOARD
LEASED WIRE SERVICE
WASH IN GTON

April 11, 1931

Isiah, Dallas
n lettGrs of Ar2ril 1st an

-ril 7th omit inforuvition for 1'221

and earlier in stuiy of twenty failed anti rite suooessful bnnice,
sendlniT substitute names PDC the se/en you firEt asked about.

S- a,w4•80

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Federal Reserve Bank of St. Louis

":,e are

FEDERAL RESERVE BANK

C C WA L S H

OF DALLAS/'.
otkisioiroptitsued4c?cli April 7, 1931

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

A.ab'l.) S7.4

Nrics.

Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser, Chairman,
Committee on Branch, Group and
Chain Banking

Gentlemen:
On
office, for
the project
analyze the

April 1st, I wrote you requesting that you obtain from the Comptroller's
our use, certain examination reports which we need in connection with
referred to in your letter of March 21st, wherein you requested us to
causes of 20 bank failures in this district.

The examination reports which we requested you to obtain from the Comptroller covered 7 of the banks listed in your letter of March 21st. I now find
that, in addition to these reports, it will be necessary for us to have the 1920
examination reports on all of the 20 banks which you selected for analysis, inasmuch as certain data called for on Form F can only be obtained from the confidential
seedon of the examination reports, and, as previously stated, this section was not
attached to any of the reports furnished us by the Comptroller of the Currency
prior to 1921. For the same renson, it will be necessary for us to borrow the
Comptroller's copies of 1920 reports of examination covering the 5 successful banks
in this district which we shall select for analysis, as requested in your letter of
March 23rd.
We will, therefore, appreciate your sending us from the Comptroller's
files, in addition to the reports previously requested, the 1920 examination reports (or confidential sections thereof) on the following banks:
Date closed
First National Bank
Exchange National Bank
First National Bank
Bogata National Bank
State National Bank
Farmers National Bank
Citizens National Bank
Exchange National Bank
First National Bank of
First National Bank
City National Bank
First National Bank
Alba National Bank

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Federal Reserve Bank of St. Louis

Clovis, New Mexico
Shreveport, Louisiana
LaGrange, Texas
Bogata,
Lamesa,
Hempstead,
ft
Lone Oak,
Denton,
Royse City,
Morgan,
Clarksville,"
Lorena)
Alba,

9- 2- 24
2- 14-30
4- 29-29
2- 9- 25
6- 2- 27
2- 5- 25
12-31-26
12-16-28
2- 7- 30
11-12-24
2- 13-25
1- 21-28
11-13-30

Bbard - Washington

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Federal Reserve Bank of St. Louis

40•
2

First National Bank,
Lar!esa National Bank,
Delta National Bank,
First National Bank,
. State National Bank,

Quanah, Texas
Lamesa,
Cooper,
"
Winnsboro, "
El Peso, "

Yours very truly,
te4%0
61—Emnerve Agent

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Federal Reserve Bank of St. Louis

April 7, 1931.

Ur.
O. :- n1sh
?pderal Reserve Agent
Federal Reserve 3ank
Dallas, Texas
Dear
We aoknowlodge with thanks your letter of Unrch 31st
enclrlsing schedulrs on throe Texas banks which suspended operations during the last half of 1930. The records of the
Division of Bonk Operations agree with your statement to the
spensions in Texas
effect thnt there -Imre six additional
dur'ng this period. Te shall be greatly obliged for anything
you can do to facilitate the early releipt of those additional
schedules.
Very truly yours,

C. B. Hammond
For the Committee on Branch,
Group and Chain Barking.

•
•

FEDERAL RESERVE BANK
OF DALLAS
April 1, 1931

C. C WALS H
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

4/c).11,9,1wk'o
44'
°6'7.4?„sr,ezocii,
liederal Reserve Board
Washington, J. C.
Attention Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and
Chain Banking

Gentlemen:

in connection with the project of analyzing examination
ing 20 national banks which suspended in this district during the
we find that prior to the year 1921 the examination reports which
us by the Comptroller's Department did not contain the examiners'
comments.

reports coverpast ten years,
were furnished
confidential

included in the list you sent us covering the 20 bank suspensions which
you wish us to analyze, there are 7 banks which suspended during the three-year
period ending December 31, 1923, and in order that we may have a complete history
of the developments which led to the closing of these institutions, we should
have the confidential comments of examiners in connection with examinations of
these banks made prior to 1921.
The following is a list of the banks referred to, showing the dates of
suspensions and the years for which we should have the additional information referred to above:
Date
Years for which
Closed:
data incagplete:
State National Bank of
Deming National Bank *
First National Bank
Citizens National Bank
National Bank of Cleburne
First National Bank
First National Bank

Carlsbad, N. M.
Deming, New Mexico
hope, New Mexico
Roswell, N. M.
Cleburne, Texas
Coleman, Texas
Crawford, Texas

3- 3- 22
12-31-23
9- 15-22
10-18-23
10-18-21
12-30-21
6- 30-21

1919-20
1919-20
1919-20
1919-20
1918-19-20
1918-19-20
1918-19-20

(*Succeeded by Yirst National Bank)
i find that the Chief National Bank Examiner of this district is unable
to supply us with the desired data, as it is his custom to destroy his copies of
examination reports after keeping them for a period of three years.
Under the circumstances, it will be necessary for us to either borrow
the Comptroller's copies of these reports, or to substitute, in lieu of the seven
banks listed above, other banks which suspended during later years.

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Federal Reserve Bank of St. Louis

- -

rd - aashington

-2

if you prefer that we adhere to the list of suspensions which you
originally sent us, kindly obtain for us, from the Comptroller's office, the
necessary examination reports (or the confidential schedules from same) for the
appropriate years prior to 1921, and we shall be glad to carry out the project
accordingly.

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Federal Reserve Bank of St. Louis

Yours very truly,

Federal Reserve Agent

FEDERAL RESERVE BANK
OF DALLAS
C C WA L S H

March 31, 1931

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

Federal Reserve Board
Washington, D. C.
Attention Mr. C. B. Hammond,
Committee on Branch, Group
and Chain Banking
Gentlemen:
Again referring to your letter of March 24th, I am
enclosing schedules covering three Texas state banks which
suspended during the last half of 1930, as follows:
Gulf Bank & Trust Company,
F. & A. State Bank,
First State Bank,

Fort Arthur, Texas
Lindale, Texas
Carbon, Texas

There were six other suspensions during the last
half of 1930, for which complete figures will not be available
until sometime during the month of May. I am advised by the
State Banking Commissioner that the claims against these six
blnice have not yet been classified by his Department, but that
the desired data will be available within the next sixty days.
We hope to be able to send you the remaining schedules
prior to May 31st.

Yours very truly,
/3
-eeg"a-6
Federal Reserve Agent

Enclosures

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Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK
OF DALLAS
March 30, 1931

C.C.WALS H
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

-47

,ePo
'
67'4

Federal Reservo Board
Tashington, D. C.
Attention Mr. E. A. Goldenweiser,
Chairman, Committee on Branch,
Group and Chain Banking
GentlemtI
en:
Receipt is acknowledged of your letter of March 27th
requesting a report on the competition which banks in this
trict are required to meet from corporations and organizations
other than banks.
I shall be pleased to make a study of the situation
and give you a report on it as early as practicable.

Yours very truly,
e
-G4(
1110deria1ROSe1ve Agent

FEDERAL RESERVE BANK
OF DALLAS
C.C.WALSH

March 28, 1931

CHAIRMAN OF THE SOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

Federal Reserve Board
Washington, D. C.
Attention Mr. C. B. Hammond,
Committee on Branch, Group
and Chain Banking
Gentlemen:
Receipt is acknowledged of your inquiry of March 24th
as to when you may expect schedules on—rei—
cas- banks which suspended during the last half of 1930.
We are today addressing an inquiry on this subject to
the State Commissioner of Banking, and will advise you promptly
upon receipt of his reply.

Yours very truly,

Federal Reserve Agent

klareh 27, 1931
mt. C. C. Welsh
Federal Reserve Agent
Federal Reserve Bank
Dellae, Teams
Dear ar. Walsh:
at the requeat of the Committee on eranch, Group and Chain Bani&.
in the eedaral .4eserve Bank of Cleveland recently made a study of the
competition which banks in Mohave to meet from organizations, Buell as
finance oorapanies, aeoeptanoe marporations, etc., which are not banks in
the proper sense of the term, but yet carry on banking !Unctions. Ohio
was chosen first for the reason that building and loan association oom.
petition with bean moo known to be especially severe in that state. The
pertinence of the sObjeet limo in the fact that apy intensifie:tion of
competition can be expeobod to contribute to the difficulties of the small
unit bank and to onmeurago greater banking concentration as manifested in
branch and group banking and in consolidation of small co:morns into larger
ones with more diversified functions. It is not only direct competition
between banks themselves that is significant, therefore, but competition
bet- eon banks and organisations not recognised as banks.
The facts in general as to the latter type of competition in Ohio
are indicated in the following quotation from the Cleveland Reserve Bank's
survey.

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Federal Reserve Bank of St. Louis

'Building and ben and savings and loan associations
appear to be the principal nomfabanking competitors of the
banks whether the oompotition be for deposits or for loans.
donsidOring only the competition for deposits the ohief
competitors of the banks appear to be the United States
Government through its postal savings system and tile investment houses through the sale of securities generally.
Other kinds of deposit oomplAition are noted but they
hardly deserve more than passing mention.
"4th respect to the competition for loans there are
five other agencies (in addition to the building and loan
and savings and loan associations) which compete with the
banks. Those five agencies are the finanso companies, the
insuranoo omppanies, the federal fIrn land banks and joint
stook land banks, the irv:estnent houses and the Shattel and
salary loan oompanies.n

liareh 27, 1961

-72
Mr. C. C. Neigh, ;

It is to be expected that simlar oanditions provail to a greater
or leas degree in other districts, and with that in mind the Committee is
making the request that you prepare for it a report upon the same subject
covering your district. It may well be that some of the oompetition fo
in Ohio is not found in your district and that, on the other hand, you
still other types of competition not found there. The report, we think,
should include a description of the ccaparative importanee of the different
types of nom-banking competition* statistiee of the growth of nonAnanking
competitory as sompared with banks, a sumary of the principal previsions
of law governing these non-banking organizations, and* if prao-Licable, soystate:lents froa bankers as to the reality and seriousness of the competiti
Please let us know if yo- 411 not undertake the study as described.

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Federal Reserve Bank of St. Louis

Very truly yours,

S. A. Goldenvviser
Chairmtn, Committee on Branca*
Group and Chain Banking

0•

••

FEDERAL RESERVE BANK
OF DALLAS
CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

March 26, 1931

Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser,
Chairman, Committee on Branch,
Group and Chain Banking
Gentlemen:
Receipt is acknowledged of your letter of March 23rd
requesting that we prepare analyses on Form F covering five selected banks in this district which have operated successfully
from 1920 to 1930 in territories where bank failures have been
numerous.
Your instructions will be carefully complied with.

Yours very truly,

L6,61/irex,e42
rireidera1 Rii-e-rve Agent

ilLJE:1211

•

arch 24, 1931.

lovernor Lynn T.). Talley
Federal :leserve 3ank
Dallas, Texas
Ly dear Governor Talley:
have read with muoh interest the oomments an4 suggestions in
your letter of ::arch 5th relative to cur pr posed study of the causes of
bank failures, and your letter of March 18th 11th reference to bank capitalisation. Your statement of some of the petioles which seamark the
average successful banker and your suggestions for raising the Maim=
capitalization requirements of banks are especially interesting. These
are qmestions which ve are vitally interested in and undoubtedly sea*
reforms must be effected along the lines you suggest.
Your suggestion that furtherstatistical compilPtions would probreveal
much that is new regarding the **uses of failures is doubtably not
less true in a largesmmasure. Those who have been reading examination reports for years and living with the problems of the bankers have, of course,
absorbed a rut fund of ',formation and have very definite ideas as to the
causes of failures. You sill agree with me, however, that Aany people,
even among those who have inflame in the shaping of policies and legislation have not had the opportunity of studying the problem at such close
range. It is the Committee's function, in part, to assemble and analyse
the available facts in such a may tkvt these people can get a oorreot
picture of the tituation. It will not be sufficient for us to express
opinions based on the facts, the feats themselves must be Presented. ;,-e
believe that the available mnterial his not yet been ade',uately presented,
'Ind, therefore, e have worked out this p:-oject for collect in - certain
data from the examinatiou rOpOrtS.
4 also note your suegestion regarding the calling of a conference
as the first step toward working out a ten?Able plan for legislative reforms.
Thus Oar the :lommittee has devoted itself entirely to Pact finding and has
postponed the rmation of remedial measures until this phase of the work is
more swirly completed. Doubtless avrkv of the needed reforms will be slow in
developing and as stated in your letter corrective levs may be hastened by
mobilising the two banking systems and massing publio opinion behind their
efforts. The Committee feels that the public is still not entirely clear
as to the ftotors involved and that A better organized body of data is

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Federal Reserve Bank of St. Louis

,
e.

lorernor

i-•

?. Talley #2

;.-Arch 24, 1931.

essential as a background for mobilising and directir:- effortt, of this kind.
In fact it has not yet been decided as to how far the functions of the Committee sIolld extend beyond collecting and presenting factuol
material.
1FAltaps you will give us your own views 66 tl hol far the lommitte
e should
go in expressing opinions and suggesting remedies.

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Federal Reserve Bank of St. Louis

Very truly yours,

IT. A. Goldenweiser
Chairman, Comaittee on drench,
Group and 'Amin awaking.

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Federal Reserve Bank of St. Louis

March 24, 1961

14r. C. C. Walsh
Federal Reserve Agent
Federal Reserve Hank
Dallas, TOXAS
Dear .1r. ialsh:
In the absence of Mr. Riddle, I am writing to inwire wher schedules on Texas banks which suspended during
the last half of 1930 will be available to us. We do not
wish to hurry you unduly, but we have about reaohed the
point where additional schedules aro essential to the procroes of our work bore. Any means!, therefore, which you can e
take to facilitate '„heir coupletion will be greatly appreciated.
Very truly yours,

Hammond
for the Committee on branch,
Group and Chain banking

FEDERAL RESERVE BANK
OF DALLAS
C . WA LS H

March 24, 1931

CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT

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Federal Reserve Bank of St. Louis

Federal Reserve Board
Washington, D. C.
Attention Mr. E. A. Goldenweiser,
Chairman, Committee on Branch,
Group and Chain Banking
Gentlemen:
Receipt is acknowledged of your letter of
March 21, 1931, requesting us to tabulate certain data pertaining to the history of twenty selected banks which have
suspended in this district, as per list enclosed in your
letter.
We shall begin at once the compilation of
this material and endeavor to complete it at the earliest
practicable date.

Yours very truly,

Federal Reserve Agent

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Mk. C. C. Walsh
Federal hosel.,e Agent
Federal Reserve Bank
Dallas, lolaLi
Dear Mk.
4
reference ',;c) our letr of 'Larch 20th regarding
the analysis of twenty suspended 5anks in your district, we
should like to be able to make a comparison between these
suspended banks and a small numb,.,r of successful banks which
continued in operation.
z;uggest, therefore, ye, select five sucoe23ful
banks in your district which are operating in those tern for tLese
tortes where :L.Imerous failures have occurred
five banks prepare Form F covering the period 1920 to 1930.
The same instructions apply in this aase as in the preparation of Form F for suspended institutions.
Very truly yours,

E. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Banking

March 21, 1931.

Mr. C. C. 'Alsh
Federal eserve Agent
Federal Reserve 3ank
Dallas, Texas
Dear Mr. .alsh:
The Committee on Branch, Group and Chain Banking has been engaged
time
in working out a program for collecting definite information
sane
for
as to the causes of bank failures. It is obvious that such a study is an
essential part of the Committee's lork and is necessary in order to properl
assess the various forces back of the changes -7hich are occurring in our
banking structure.
One line of approach which has now been agreed upon is to study
the history of a limited number of suspended institutions in greater detail
than is possible for all saspensionE. The principal source of information
Is, of course, the examination reports. Twenty suspended banks in your
district have been selected at random, without regard to location, size,
etc., in the hope that the, may be fairly representative of suspensions
generally in that area. These twenty banks are snown on the attached
list. The information desired consists of comments of the examiners
and certain statistical data. The form in which the comments of examiners should be drarn up is shown in the attached ,;xhibits 12/1 and 12/2,
accompanied lith instructions. As an aid to interpretation these comments
are interspersed with certain figures showing in a general way the condition of the bank at the time of each examination. Certain other data are
also called for, such as population figures and earnings. These are
covered in the mimeographed instructions.
In addition to the examiners' comments and accompanying data, as
outlined above, the detailed statistical data in the examiners' reports
should be taken off on Form F. A copy of this fora and comments regarding
its preparation nre enclosed, nnd a supply of the forms is being forwarded
to you under separate cover.
This information regarding the history of each hank prior to suspension should be supplemented, if possible, by any facts which may be collected regarding the cc:munity in which it is located. These should include

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Federal Reserve Bank of St. Louis

Larch 21, 1931.

Ur. O. C. Walsh 42

changes in local industries, road developments and any other factors which
may have affected the bank's business. It might prove very profitable in
a few cases to make a brief economic survey of the community, but the Committee will leave it entirely to your discretion as to whether such surveys
are feasible.
Before p:oceeding with this study, the Committee, as you know,
submitted these proposals in tentative form to the governors of four of
the Reserve banks, including Governor Talley, in order to get their views
regarding the project and the method of procedure. A number of valuable
comments were received as to the causes of failures, and a few suggestions
as to minor changes regarding the information we proposed to collect. One
governor suggested thnt the collection of additional statistical material
would probably not uncover any new information; that is, information not
already known to banking officials, supervisors, etc. There is doubtless
much truth in the assertion, but we find variations in the views of those
most familiar with the situation. At any rate it will not be sufficient for
the '7,omi:dttee to express views on the subject. The Committee's function
as we see it is to put in printed form the Pacts organized in such a way
that others may understand what trAs been going on in banking fields and
something of the causes of failures. To do this it is essential to devise
methods for organizing the material which in large part is already familiar
to many officials of Reserve banks and others. Te hope the material we are
now nsking for will help to serve this 7urpose.
Very truly yours,

E. A. Goldenweiser
Chairman, Committee on Branch,
Group and Chain Nanking.

Enc.

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Federal Reserve Bank of St. Louis

F7D77,L RE:77WT7 3117. OF DALLAS.
Suspended Banks to be analyzed
1.
9
:5.
4.
5.
6.
7.
B.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

State rational of
First National Bank
First National Bank
Citizens National Bank
First National Bank
Exchange National Bank
First National Bank
First :t tonal 3ank
Bogata NatiorAl Bank
State 1",aional Bank
Panmnrs NrItional Lank
Citizens National 3ank
Fxohnnge Nni'ynnl Bank
First National Bank of P.oyse
First NAtional Bank
National Bank of
First National Bank
City National Jank
First National Bark
Alba National ,'Junk

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Federal Reserve Bank of St. Louis

Carlsbad, Few Viexico
Clovis, New 1:exlco
Hope, JAW 1!.exico
:loswEll. Kew 1:exlco
Deming, New Mexico
Shreveport, Louisiana
Coleman, Texas
La Grange, Texas
Bogota, Texas
Lame sa, Texas
Hempstead, Te3uis
Lone Oak, Texas
Denton, Texas
Royse City, Texas
Crawford, Gexos
Cleburne, Texas
llorgan, TeIRS
Clarksville, Texas
Lorena,.Texas
Alba, Texas

v>,A

5-4
FEDERAL RESERVE BANK

st")
,
,
PA1
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4

OF DALLAS
1
.
Z5,4tt5,

March 18, 1931

Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.
Dear Mr. Goldenweisers
In my letter to you of March 5th I expresced the thought that
there is already available a sufficient supply of information regarding
the causes of bank failures to form the basis of a preliminary or introductory program of needed legislative reforms. Our banking system has
arrfved at its present status through a process of evolution. Its defects End ills, like its elements of strength, have been gradually developing over a long period of years, and while it would be a wonderful achievement if some genius could devise a program of new legislation that would
cure all of our banking ills at one fell swoop, common sense tells us that
we cannot cure in one day or in one year a diseased condition that has been
many years in the making.
The point I wish to stress is the importance of singling out some
of the more glaring weaknesses of our present banking set-up, and then concentrating corrective efforts upon them singly and progressively until all
of them have been reached and remedied.
An excellent starting point, in my opinion, would be the revamping of our federal and state laws regarding bank capitalization. Statistics
of bank suspensions during the past decade afford a great deal of food for
thought in connection with the question of whether or not the minimum capital
requirements of our present laws are too low. I have observed from statistics
published in the Board's annual report for the year 1929 that during the nineyear period ending that year 5,642 banks in the United States closed their
doors,end that, of this total, 3,514 banks had a capital of only $25,000 or
less.
In the light of these facts, it would be a natural but serious error to draw the inference that the small capitalization of these $25,000 banks
was, per se, the fundamental cause of their failure. Such a conclusion would
wholly fail to explain the survival of numerous small banks that have been
able to operate successfully and profitably, despite their small capital End
despite recurring disturbances in local, national or world-wide economic conditions. On the other hand, when we stop to consider that during the past
decade two out of every three banks which have failed were $25,000 banks, it
would be an equally egregrious mistake to assume from the experience of the
surviving small banks that our present laws governing bank capitalization are
sound end are not in need of revision.

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A searching analysis of the high mortality rate that is found among

N:40

•
•

•
•
- 2-

banks in the $25,000 capital group inevitably leads to two general conclusions:
That the mistakes which have been made by state government
(1)
officials in granting charters for new banks in communities
which were unable to support them have been preponderantly
made in the field occupied by the $25,000 banks.
That the $25,000 state banks have been, and will continue
(2)
to be, the class of banks most vulnerable to the stresses and
strains of recurring economic disturbances.
It will be noted that in both of these conclusions, the state banking
system, as distinguished from the national banking system, is alluded to as the
field in which the smallest sized banks present the gravest elements of weakness
and therefore the greatest opportunities for reforms. This distinction is made
because the statistics of bank failures show that in the national system the
heaviest mortality rate is not to be found in the group of national banks having a capital of $25,000, but in the group having a capital of from $50,000 to
$100,000. I am not committed to the thought that the need for higher capitalization requirements is confined to the state banking system, but I do insist thd
it is more imperatively needed there.
Back of this need lie, first, the present loose and diverse policies
of the forty-eight state governments in granting bank charters in small communities. While I believe that in recent years state banking authorities have shown
a tendency toward greater conservatism in granting charters, there is undoubtedly
still room for much improvement, as is attested by the record of state bank
failures for the past two years. my thought that higher capital requirements
for state banks would afford an effective means for combatting the evils of unsound policies in granting charters is based largely on the fact that in many
states the Banking Commissioners, in their efforts to pursue a conservative or
restrictive policy with reference to chartering new banks, are handicapped or
over-powered by political influences, and would welcome a nation-wide program
of state legislation which would erect in all states a higher capitalization
requirement as an automatic barrier against the organization of small banks in
communities which have an inadequate volume of potential banking resources.
The fact that state banking commissioners are already thinking along these lines
is evidenced by the following excerpt taken from the Annual Report of Hon. L. A.
Tame, State Bank Examiner (Commissioner) of New Mexico, for the year 1930:
'I desire to renew the legislative recommendations included in
the Department's Fifteenth Annual Report, with special emphasis on
the desirability of increasing the capital stock requirements of
state banks to $50,000. The increased capital requirements, in my
opinion, will be an effective deterrent to the organization of new
banks."
Incidentally, the Commissioner might have added that it would also
serve to provide the small banks with a decent margin of real, working capital,
something which the average small bank doesn't have now when its entire capital
is usually tied up in banking house and equipment.

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•

•
•
- 3 -

Back of the need for a revision of capitalization limits lies
also the lack of diversified banking opportunities in the communities
pioneered by the average small bank. As a rule the banking support afforded
by these communities comes only or mainly from a single industry, whether it
be agriculture, livestock, mining, a small manufacturing enterprise, or some
other activity. Naturally the banks in these communities succumb more quickly
to effects of reverses suffered by a particular industry than do banks in communities where the volume and diversification of industrial activities create
at once the opportunity to profitably employ a larger investment of bank capital and the means to protect it from the hazards of credit concentration.
It is true that certain_ROXpanaged small banks continue to succeed
for a time in communities where the available banking resources are barely
sufficient to sustain a bank of minimum capitalization, and in some instances
these little institutions are able to withstand serious crises in the form of
local crop failures and business depressions, capable management remaining
superior to even such calamitous conditions, provided they are temporary conditions. But the history of country banking shows that even these banks, as
a class, cannot hope to enjoy a position of permanence and security. They are
constantly menaced by the gradual erosion of small trading centers, due to
such economic changes as the development of good roads, the improvement in
communications, the growth of installment buying and of the chain store movement. These influences have brought about a serious shrinkage in both the
deposits and assets of small town banks, many of which are being forced out
of business, not because of managerial weaknesses, but because of the disintegration of their patronage through a shifting of resources and deposits
from small to large centers of trade.
To this class of banks, which are perishing from atrophy, so to
speak, must be added the large army of small banks heretofore referred to,
which were organized in communities where not even the minimum capitalization
investment was justified in the first instance. These banks find that the
volume of loans which may be safely extended in the community is so limited
that the acquisition of the total amount would not produce a sufficient return to more than pay operating expenses, leaving no margin for reserves
against contingencies or for a return on the investment. The consequence is
that in reaching for volume in order to make a return, fundamentals of credit
are either not recognized or are disregarded, and suicidal policies are pursued.
It will be seen from this summary of the situation that the general
collapse in that part of the banking structure represented by the small banks
is traceable, to a large degree, (1) to the establishment of banks in communities where the investment of banking capital was never warranted, and (2) to
the failure of communities which, though at one time able to support a bank,
have lost their power to do so through the shifting of trade and population
to other communities.
It may reasonably be assumed that a substantial increase in the minimum amount of capital required for the organization of a bank would aid materially

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Federal Reserve Bank of St. Louis

- 4-

in reducing the number of failures among small banks in the future, in that
it would tend to confine the organization of new banks to communities which
offer safe and profitable investment opportunities for bank capital in substantial amounts. Mile this would not improve the situation with respect
to the small banks which are now operating in communities where they cannot
long survive, it would at least tend to prevent repetitions of these unfortunate situations.
As a companion piece of legislation that should accompany the enactment of laws increasing capitalization requirements, there is also needed,
in my opinion, an amendment to national and state banking laws which would
require directors of commercial banks to acquire a larger stock interest in
the banks which they direct than is required under the present statutes.
Human nature is such that the degree of interest which a bank director takes
in his duties as a director is in many cases largely in direct proportion to
the extent of his financial interest in the bank. This being true, the indifference of some directors to their duties is not surprising when we consider
the fact that they are permitted to qualify for their office by owning only
$500.00 of the bank's capital stock. Not only should this minimum requirement be substantially increased, but it should be so fixed as to bear a
definite relation or ratio to the total amount of the bank's capital, in order
that directors of large banks would be required to own the same proportionate
stock interest as the directors of smaller institutions. These changes in
statutory requirements concerning the stock holdings of directors would not
only tend to stimulate many directors to take their managerial duties more
seriously for the purpose of protecting their investment, but would incidentally transfer to them a larger assessment liability, which would still further
sharpen their sense of personal responsibility for the proper conduct of the
bank's affairs.
The program I have outlined above, which has for its objectives (a)
a greater concentration of bank capital, particularly in the state banking
field, and (b) the assumption by bank directors of an increased share of financial responsibility for their managerial mistakes, naturally gives rise to
the question: How can these objectives be attained?
Here a great many difficulties at once present themselves. And yet
I am convinced that they are not insuperable. Indeed the logic of the disastrous record of small independent banks in the United States and the logic
of the banking experience of other nations points inexorably to the probability
that the weeding out process which is now going on among the $25,000 banks in
the form of suspensions and consolidations will, in the course of time, be accelerated by legislative prohibitions against new accretions to this group of
banks, even though no agency undertakes to launch a national campaign in behalf of such legislation.
In view of this probability there can be little doubt that corrective
laws along these lines can be hastened by enlisting in its behalf the mobilized
leadership of the two banking systems - national and state - and massing public
opinion behind their efforts through a well directed progran of publicity.

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Since the greatest need for reforming capitalization laws clearly
lies in the state banking system, the first step in carrying out a corrective
program would be to convince the responsible leaders of that system, if possible, of the necessity of increasing the capital requirerents of state banks.
I am frank to admit that, in view of the present competitive relations and
jealousies between the two systems, the leaders of the state banking system
would doubtless view with disfavor and suspicion any proposal from federal
banking authorities involving the tightening up of state banking laws governing the chartering of state banks. Yet it is possible that their opposition
might be overcome by convincing them - as eventually they will be convinced that the present situation is tending inevitably toward an imperative public
demand for a stronger and sounder country banking system, such as can be provided, according to all the evidence afforded by past banking experience, by
some form of branch banking.
If, as is apparently the case, there is a steadily increasing
public demand for a new system of banking which will safely serve the needs
of communities too small to support an independent bank, it seems inevitable
that this demand will shortly express itself in the form of congressional
legislation authorizing national banks, under certain conditions, to engage
in branch banking in every state in the Union. The apparent imminence of
this eventuality should have a potent influence upon the attitude of state
bankers toward legislative reforms needed to strengthen the state banking
system and fortify it for the new and rigorous competition which apparently
it will soon be called upon to meet if branch banking privileges are extended
to national banks throughout the Nation.
I have no brief to present here in behalf of branch banking. If
small communities which lack the necessary credit base to support an investment of independent banking capital continue to insist upon having local
banking facilities, it is not necessary to arya for branch banking as the
only answer to that demand. No other answer is being offered.
The thoughts I have expressed in this letter suggest, in turn,
other thoughts on the subject of bank capitalization, but I shall not further
prolong the discussion in the form of correspondence. If your committee decides to hold a conference in Washington with the governors of some of the
Western and Southern banks, and desires me to attend, I shall endeavor to do
so, if possible, as I believe that a verbal exchange of views would be helpful
to all concerned as the quickest means of formulating a plan of procedure.

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Federal Reserve Bank of St. Louis

Yours

ry truly,

overnor

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Federal Reserve Bank of St. Louis

arch 14. 1931.

d. J. 2vans
Atist4nt ?e6Ara1 Reserve Ageut
?e•Jrt.1^.. 7;.es3:te Bark
Texas
Dear Mr. Evans:
jr, --0.(.4pt is a,31.Lowledged of your letter of
Ear7.11 llth enclos;.ng Tables 1-0, 11-6, .111-e,
aLd V-e for the

ate of Toxas for the yr.a.e

'Ter

truly yours,

J. H. :Riddle
6eoretary, C.:olikaittee on -Tray,
Group and .lhain Bar:king.

••

41•

FEDERAL RESERVE BANK
OF DALLAS

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4544.
March 11, 1931

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Federal Reserve Bank of St. Louis

Federal Reserve Board
Washington, D. C.
Attention: Mr. E. A. Goldenweiser
Chairman, Committee on
Branch, Group and Chain
Banking
Gentlemen:
I am enclosing Tables I-e to V-e, inclusive, on the State of Texas, for the year
1930.
Yours very t

Assista

MHR-r
Enclosures

Federal Reserve Agent

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Federal Reserve Bank of St. Louis

March 7, 1931.

Mr.
J. vans
•ssistant Federal Deserve Agent
-: 171 Teserve Bark
Fede .
Dallas, Texas
Dear :Ir. rvans:
Receint is Icknovledged of your letter of
March 4th enclosing tables 1-e, II-e,

IV-e,

and V-e co7ering the analysis of operating ratios of
national banks in Louisiana and Oklahoma for the year
1930.
Very truly yours,

J. H. 7iddle
Secretary, Committee on Branch,
Group and Chain Banking.

OELEGRAM

1•

FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)

RECEIVED AT WASHINGTON. D.C.

265gy

TA%
Dallas 45p Mar 6

Goldenweiser

Was'.ington

Letter

referred

Was

mailed

Talley

545p

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Federal Reserve Bank of St. Louis
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yesterday

1.0
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411
TELEGRAM

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FEDERAL RESERVE BOARD
LEASED WIRE SERVICE
WASHINGTON

2—Q454

ere

I.:nrch 6, 1931.

Talley, Dallas
We are trying to expedite our study on onuses of O,Ink
failures and /
- onder if you could ad/ise us when you will be able
to write is ?urther regarding our letter of January 24th.

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Federal Reserve Bank of St. Louis

GILD:177.ISER

•

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FEDERAL RESERVE BANK
OF DALLAS
March W,1931
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Mr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and Chain Banking
Federal Reserve Board
Washington, D. C.

•••• .p
-

Dear Mr. Goldenweiser:
Pressure of other matters has prevented an earlier reply to
your request for my views and suggestions concerning the plans under
consideration by your committee for a more exhaustive study of the causes
of bank failures.
Your committee is to be commended for recognizing the need of
a systematic, well organized and far-reaching investigation of this question. The avalanche of bank failures which occurred in this country during 1930, climaxing an appalling record of mortalities during the past
decade, has focussed public attention upon the structural and administrative weaknesses of our banking system, and created a most favorable opportunity for the enactment of remedial legislation, provided a program of
needed legislation can be devised which will not only reach the fundamental
causes of bank failures but will command the united support of the country's
leading economists, banking authorities, and lawmakers.
I concur in your view that it will not be sufficient for any
fact-finding body to merely point out that banks fail because of weak or
dishonest management, and local or general economic disturbances. It is
necessary to show the relative part played by each of these destructive
factors, in order that an adequate and convincing program of correction
may be formulated, looking to fundamental changes in the structure and regulation of the banking business.
The statistical approach to the study of causes of bank failures
is necessarily a primary step in this undertaking. Yet candor compels me to
say that in my opinion the effectiveness of any form of statistical analysis
of the problem we are here discussing is limited to the one task of measuring
the destructive effects of each of the principal causes of bank failures, in
terms of the total number of failures due to each type of causes, and their
ratio to the total number of failures that have occurred. Beyond this point,
I do not believe compilations of statistical data have any practical value
as a means of diagnosing our banking ills or of discovering the proper cure
for them.
One weakness of the type of research illustrated by the study of
"case histories" conducted by the Minneapolis bank is forcefully brought out
by Mr. Powell's admission that the statistical devices used in his study were
effective in measuring the weakness of a bank's condition but were not effective in tracing such weakness to particular flaws in managelent.

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Federal Reserve Bank of St. Louis

•
•

Another serious weakness which is clearly shown in the Minneapolis
experiment is the fact that after expending much time and laborious effort in
analyzing the histories of a number of successful and unsuccessful banks, the
three major conclusions which Ir. Powell was able to draw from the data thus
compiled were, without exception, facts which had long been a matter of common knowledge to bankers and supervisory authorities, namely: (a) the desirability of carrying secondary reserves and well diversified assets, (b) the
desirability of scrutinizing a borrower's credit standing, and (c) the desirability of building up a bank's earning power.
It is obvious, I think, that any type of research work that is predestined to lead to such trite aphorisms as those quoted above cannot possibly
be expected to throw any new or useful light on the problem of bank failures,
except to the extent that it emphasizes the importance of the human equation
as a factor in the success or failure of our banks.
A third defect in the "case history" method of analyzing the problem of bank failures is the well-known element of danger that always attends
the drawing of important conclusions from "sample statistics" as distinE;uished
from mass statistics. No matter how painstakingly and carefully the sampling
is done, the arbitrary selection of "cases" and of their symptoms is always
vulnerable to errors of over-emphasis or under-emphasis, as you are well aware.
I trust you will pardon the frankness of my comments in expressing
my reactions to the suggested plan of combing data from records or histories
of a small group of selected banks. I simply fear that a survey of that
character will not disclose any important facts that are not already available for use in formulating an appropriate program of remedial legislation,
and would therefore not justify the time and effort expended in that type of
investigation.
Referring to Mr. Powell's conclusions regarding secondary reserves,
diversified assets, analysis of credit risks, and the importance of a bank's
earning power, your committee will agree, I am sure, that these conclusions,
in addition to being platitudinous, are strikingly barren of any tangible
basis for legislative correction of the evils they point out.
After carefully considering the problem that confronts your committee, I su-gest that in considering the advisability of adopting any particular method of making a further statistical study of bank failures and
their causes, two things should be constantly borne in mind:

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(1)
That banking is more of an art than a science, due to the
predominant part played by human skill in the technique and
execution of its operations, and hence it is probable that
any post-mortem analysis of bank failures will bring to light
no useful information unless it reveals facts which the investigator can use in framing such remedial legislation as
will eliminate some of the risks of the present system of
selecting bank officers, whose efficiency so largely depends
upon the quality of their mental equipment.

•
•

•
•
3

(2)
In addition to the desirability of using factual data to
focus attention on the part played by humnn judgment in bank
failures, I think the committee should also bear in mind the
fact that the appropriate legal remedies or preventives for
the conditions which cause bank failures are not necessarily or even probably - to be discovered in hitherto undiscovered
or new fields of information.
As a matter of fact, I am convinced that one reason why our country
has made so little progress in reducing its shocking rate of bank failures is
not so much because of a dearth of remedial ideas on the part of its bankers
and economists, but because of their lack of perseverance and unanimity in
pressing their program of corrective legislation to a successful conclusion.
Isolated efforts have been made at sporadic intervals to bring
about such legal reforms as laws giving supervisory authorities the power to
remove incompetent bank officers from office, lams raising the minimum requirements as to bank capitalization, and laws prescribing stricter tests
for persons seeking new bank charters or official positions in banks. There
has been too great a tendency on the part of the advocates of these reforms
to become discouraged by certain practical and political obstacles that have
heretofore obstructed legislation along these lines. In my opinion, an
enormous mass of statistical data, supported by authoritative opinion, is
already available to our legislative bodies to prove that each one of these
reforms would make an important reduction in our rate of bank failures. It
is, of course, too much to expect that any system of laws or regulations will
ever eliminate failures completely.
Summing up my views in regard to the proposed investigation by
your committe, I should say that there is already available, from the annual
reports of the Comptroller of Currency and from the material regarding state
bank failures recently compiled by your committee, a sufficiently large mass
of statistics as to the causes of bank failures to convince the public and
its law-making renresentatives that incompetent and dishonest management of
banks are the major, evils toward which corrective legislation should be aimed.
Statistics of capitalization and population in connection with failed banks
are also available in sufficient volume to indicate the type of legislation
that is needed to provide banking units of greater structural strength.
In addition to the apparent need for higher standards of banking
personnel and capitalization, the present trend of thought among those who
are interested in strengthening our banking system points to the need of a
general overhauling and tightening up of bank examination methods, with particular reference to provisions needed to insure earlier detection and correction of dangerous trends in the condition and management of banks. Here, however, the fundamental weakness of the situation lies largely in the limitations
of the legal powers of the supervisory authorities to enforce correction of
these dangerous trends after they are discovered. It is a well known fact
that bank examiners and supervising officials generally are often able to
foresee but not prevent the failure of a bank, due to the incompetence of a
managing officer whom they are powerless to remove from office, and about
whose inefficiency (as in the case of Mark Twain's famous remark about the

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Federal Reserve Bank of St. Louis

•
•

•
•
4

weather) a great leal is said but nothing is ever done.
As I see it, the whole subject of bank failures is so complex
various
theories as to corrective measures have so many ramificathe
and
appear to be desirable, as the first step toward workthat
it
would
tions
ing out a tangible plan for legislative reforms, to hold a conference in
Washington, such as you suggest in your letter, to be attended by representatives of the Board, officers of the reserve banks, and perhaps by
representatives of the Comptroller's Department and of the National Association of State Bank Supervisors. Out of the views exchanged at such a conference it would doubtless be possible for your committee to crystallize
a well defined plan of action, either in regard to the use of statistical
material already compiled or in regard to the lines along which a further
investigation should be made. As a matter of fact, the discussions at
such a conference might perhaps lead to a general agreement among those
present as to the specific changes in existing laws and regulations that
appear to be needed most, and in this way a definite program of remedial
measures might be arrived at without the necessity of adding to the present
supply of statistical material.
I note your suggestion regarding the valuable light that can be
shed upon the problem of bank failures by bankers who have operated successful banks in communities where other banks have been unable to survive
crises in economic conditions. I quite agree with you on this point. In
our contacts with successful and unsuccessful member banks located in the
same community, we have seen instance after instance wherein one bank has
succumbed to what its officers denominated "conditions", while at the same
time its competitor across the street was able to go through exactly the
same conditions with its resources, liquidity, soundness, earning power
and general usefulness all entirely intact. Our dealings with both types
of banks have naturally familiarized us with the characteristic differences
between their respective policies and practices. In this district, the
following are some of the policies which earmark the average successful
banker in the smaller communities where bank failures are most common.
1.

Loans

He surveys the bank's circle of constituents and soon
(a)
arrives at a definite knowledge of that segment of the
community that is entitled to borrow funds from the bank
and the amount it is entitled to borrow. After loaning
the total amount that can safely be loaned, he steadfastly
resists all temptations to increase his loans, regardless
of the difficulty of keeping his surplus funds profitably
employed.
He does not loan money to farmers solely upon the se(b)
curity of crop prospects.
He does not subscribe to the idea that it is a bank's
(c)
duty to take over from the landowner the primary burden of
financial responsibility for agricultural production.

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Federal Reserve Bank of St. Louis

•
•

•
•
- 5 -

He takes the position that loaning the bank's funds
(d)
is not a matter of compulsion or necessity, but a matter
of discretion; and that it is at least as much the duty
of the community to take care of the bank as it is the
duty of the bank to take care of the community.

(e)

He refuses to admit that it is impossible for agricultural borrowers to carry balances against their loans,
and he sees no logical reason for any line of demarcation
between borrowers and depositors.

He is not susceptible to the fear that a rigidly con(f)
servative loan policy will drive deposits away; he finds
from experience that it has exactly the opposite effect.
He concerns himself less with the volume of paper pro(g)
fits derived from interest charged on his loans than with
his ability to collect the loans at maturity.
His desire to increase the volume of his business is
(h)
always secondary to a desire to maintain a safe ratio between loans and deposits.
Although he makes advances to farmers to finance the
(1)
cost of seed, feed, fertilizer and labor required for
their current operations, he sees no more reason for making loans to finance the mere living expenses of a farmer
than for making loans to finance the living ex,)enses of a
merchant, manufacturer or laborer.
He is not taken in by the specious argument that country
(j)
banks must take risks that a city bank would not take; he
recognizes no fundamental difference between the underlying
principles of city banking and those of country banking.
2.

Collections

In making a loan he is not content with merely knowing
(a)
the borrower's past history and present financial condition;
he makes it a point to ascertain definitely the probable
ability of the borrower to meet the obligation at maturity.
(b)
After instilling in the borrower's mini, at the time
the loan is made, a keen sense of consciousness of his obligation to pay the loan at a given date, the banker does
not permit this consciousness of the terms of the loan to
become dulled by repeated renewals, but accustoms his borrowers to regular periods of complete liquidation, at least
once a year. In this way, he safeguards his bank against
permitting loans, which were good and collectible at the
time they were made, to gradually degenerate and become
frozen. He convinces his board of directors of the soundness of his policy, and has the courage to obtain their

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Federal Reserve Bank of St. Louis

cooperation and support in the form of periodical liquidations of their own lines of credit.
3.

Public Funds
He realizes that public funds are a public trust, and
that those public deposits which are subject to heavy and
unexpected withdrawals are, for all practical purposes,
equivalent to borrowed money. He, therefore, sets up a
liberal cash reserve against them and invests the remainder
in high-grade readily marketable securities, instead of in
local loans.

Use of Federal Reserve Credit
If his bank is a member bank, he regards the loan facilities of the Federal Reserve bank strictly as a resevoir
of adjustment credit to be used only for seasonal, temporary
or emergency purposes. He refrains from borrowing funds from
the reserve bank for the purpose of reloaning them at a profit or of supplying any capital deficiency of his community.
He realizes that if he yields to the temptation to indulge
in an excessive use of Federal Reserve credit his bank's
membership in the System will be detrimental to his bank,
rather than beneficial.

I have given you my views somewhat at length, and yet I have by
no means given them to you in full, for the subject under discussion is of
such dimensions that I have only attempted to touch the high spots of it in
this letter, and even some of these high spots have been treated much more
briefly than their importance deserves. As a matter of fact, there is one
aspect of the situation, namely: the present laws governing the minimum
capitalization requirements of banks, upon which I should like to submit
my views to your committee more at length. However, rather than delay the
transmission of my views on the general aspects of the project upon which
you are working, I am forwarding them to you in their present form, and will
write you a supplementary letter within the next few days with particular
reference to the relation of bank capitalization to the banking ills of our
time.

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Federal Reserve Bank of St. Louis

Yours ver

truly,

overnor

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Federal Reserve Bank of St. Louis

••

d•

FEDERAL RESERVE BANK
OF DALLAS

Federal Reserve Board
Jashington, D. C.
Attention: L. E. L. Goldenweiser
Chairman, Comnittee on
Branch, Group and Chain
Banking
Gentlemen:
I an enclosing Tables le to 5e, inclusive,
coverinc, the analysis of operating ratios
of national banks in Louisiana and Oklahoma for
the year 1930.
Yours very truly,

Assist

IER-r
Enclosures

Federal Reserve Lgent

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Federal Reserve Bank of St. Louis

February 28, 1931

Mr. C. C. Isiah,
reJoral Reserve Agent,
Poderal Eeservo FanY of Dellz;.s,
Daras, Texas
De, r

r. Ralsh:

Ir connection with thq eirraings project of this
Comitteo, •e are anxious to be iu/erred athe existence of statistics concerning the incone accounts of st-te
btu ks. Our best inforT-.. .tion at preart is thet
s';xte
b-nYIrz del.art-eAtc that hv., collect,)! statistics cov:rinc:
te
accc-;:rts cf et tt- b* kw are very exce:4- iona1.
in:'ortart exosptio- of white we know is that of the Farz's d:,ar!:.mo, t, the reports of which have contained date ar
nually for tl'e thirty years of the century in which we are
.
in'Lerestel. For the state be-im of Kansas, informAt'
fUrnie%ed rhie..- will allow for the computation of t.
nue.' rate of grose and 'et earniTgs or invested copitsl,
t1.-: rate of expe litres for interest on deposits, salaries
and wrz-s, other taper, and lossoa. In other worts,
thrt La available over a long inniol of tine a rather full
e-lve/ irl-:e ae-o”nt of all the state hr
of K nEits.
c
ge should bo glad if you will .
t:-Ts states -Trhso cf—x1.27.111 lie 1,ith..!.n your district and doscribe to us rhat materiel, if any, existe in each with resi•oet to item of conso'idated income aelounts for all or
part of the ette Irulks. Please tell us at the sane tire
in what ac'nrces such material may be fond.
Very truly yours,

J. H. Riddle
Secretary, Committee on Brar
Group and Chain 3an1dng

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Federal Reserve Bank of St. Louis

February 45, 1931.

Mr. W. J. Evans,
Assistant Federal Reserve Agent,
Federal Reserve Bank of Dallas,
Dallas, Texas,
Dear Mr. Evans:
We nave your letter of February 25th enclosing the
analysis of bank earnings blanks for the years 1926-1929 for
each national bank in your district which suspended payments
during 1930.
'Tory truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

W. J. T.:vans,
Assistant Federal Reserve Agent,
FeLieral Reserve Bank of Dallas,
Balla, Texas.
Dear Lr. Evans:
7ie have your letter of February 19th enclosing Tables I-e, II-e,

IV-e and 7-0 for the statos

of Arizona and Ewa Uexico for the year 1930.

Very truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and :nein Banking.

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Federal Reserve Bank of St. Louis

a•

6•

FEDERAL RESERVE BANK
OF DALLAS

054
.,

February 20, 1931

.'94C• 0
0
ti‘4
46
4

et$5,41
v
-c% 0
tf'
)1.14k

Federal Reserve Board
Washington, D. C.

44,

_Attention: :Tr. J. H. Riddle, Secretary
Gonmittee on Branch, Group
and Chain Banking
Gentlemen:
In accordance with your letter of February 16,
I am forwarding you, under separate cover, the analysis
of bank ewrnings blanks for each of the years 1926 to
1929, inclusive, for each of the national banks in this
district which suspended payments during 1930.
The Pecan Gap National Bank, Pecan Gap, Texas,
converted from a state bank to a national bank in December, 1926, and, therefore, the figures on this bank
were computed for 1929 only.
Yours very truly,

Assist

t Federal Reserve Agent

k-tve.0
28,,...
FEB 24 1.931
-411V6
11001,

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Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK
OF DALLAS

February 19, 1931

Federal Reserve 3oard
',/ashington, D. C.
Attention: :Ir. E. A. Goldenweiser
Chairman, Committee on
Branch, Group and Chain
Banking
Gentlemen:
I am enclosing Tables 1-e to 5-e, inclusive, on the states of Arizona and New :exico
for the year 1930.
Yburs very trul

1.1.9S

Enclosures

eral Reserve Agent

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Federal Reserve Bank of St. Louis

February 16, 1931.

Mr.

c. o.

Dear

Walsh,
?ederal 7ieserve Agent,
Federal r/eserve Sank of
Dallas, Texas.
r.

alsh:

have in mind Jiaking some analysis of the
earnings' experience of failed baoks prior to the date
of suspension. In connection with this project, please
forward us the Analysis of Sank Earnings blanks for each
of the years 19--.6-1929 for each of the national b&t
,k8 in
your district, which suspended payments during the year
1930. It may be that you will wish to retain the originals for your files, sending us copies. Our plan comprehends working out here various groupings of the barks involved, some 160 for all twelve districts together.
Very truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.

FEDERAL RESERVE BANK
OF DALLAS
February 6, 1931.

Dr. E. A. Goldenweiser, Chairman
Committee on Branch, Group and Chain Banking,
Federal Reserve Board,
7ashington, D. C.
My dear Dr. Goldenweiser:
This letter of course is merely an acknowledgment of _your
letter of January 24, Although I have read your letter I have not in any
sense studied it, but at that have made a number of notes of points which
I recall out of our experience here which the reading of your letter suggested. I am sure that you fully appreciate that it will take some little
time for me to formulate and reduce to writing a discussion of that part
of the general subject under discussion by your Committee that is specifically touched upon in your letter.
I want to say, however, that I think your reasoning is
entirely correct and that the responsibility which comes to the System
and which is now specifically delegated to your Committee, requires a
much greater searching inquiry and profound treatment than the glib and
casual utterances generally that have appeared in print and have been
heard in oral discussion. I am up to this time committed to the prepared
statement of the Comptroller of the Currency, Mr. Pole, which opened the
hearings of the Banking and Currency Committee of the 7ouse of Representatives on Group, Chain and Branch Banking, as constituting the most profound
study and indicating the most searching inquiry based upon reliable data,
of anything that has yet been contributed. At the same time I am convinced
that your Committee, with all of the aid and cooperation that everyone in
the System can furnish, must go much more deeply into the subject than even
Comptroller Pole's statement reveals.
The time element I fully appreciate is a matter of growing
importance and therefore I shall undertake to get actively into the subject and concentrate on it as much as possible in order that you may have
our contribution at the earliest possible moment.

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Federal Reserve Bank of St. Louis

`Tours very truly,

,
Governor

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Federal Reserve Bank of St. Louis

February 5, 1931.

Mr. W. J. Evans
Assistant Federal Reserve Agent
Federal Reserve Bank of Dallas,
Dallas, Texas.
Dear Mr. Evans:
Receipt is acknowledged of your letter of
February 2nd enclosing form 3-8 classifying active
state banks by size of the community in which located
for the state of Texas.
Very truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

February 3, 1931.

Ir.

J. Evans,
.Assistant Federal Reserve Agent,
Federal Reserve sank of Dallas,
Dallas, Texas.

Dear Mr. Evans:
Receipt is acknowledged of your letter of
January 28th regarding th

roper population figums to

be used in classifying banks according to table II-e for
the year 1930.

I suggest that you

1166

the 1930 census

figures which you say are now available for the towns
and cities in your state.
Very truly yours,

J. H. Riddle
Seoretary, Committee on 3ranch,
Group and Chain Banking.

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Federal Reserve Bank of St. Louis

W•

FEDERAL RESERVE BANK
OF DALLAS

IP
A‘
43.4
)

2ebruary 2, 1931%6_ 1;01
't

sio3.
-Yek_
Irigi

Federal Reserve Board
Washington, D. C.
Attention: Mr. E. A. Goldenweiser
Chairman, Committee on
Branch, Group and Chain
Banking
Gentlemen:
I am enclosing statement, Form B-8 for the
state of Texas, number of active state banks, classified by size of the community in which located.
Yours very truly,

Assis

Enclosures

Federal Reserve Agent

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Federal Reserve Bank of St. Louis

February 2, 1931.

Mr. W. J. Evans,
Assistant Federal Reserve ,l_gent,
Federal Reserve Bank of Dallas,
Dallas, Texas.
Dear Li*. Evans:
Receipt is :)cknoAeciged of your letter of january 29th enclosing form B-9 classifying active private
banks by size of communities in which located.
Very truly yours,

J. H. Riddle
Secretary, Committee on Branch,
Group and Chain Banking.

Full text of Records of the Federal Reserve System, Record Group 82 : Committee on Branch, Group & Chain Banking: Federal Reserve Bank of Dallas (Feb. 1931-1933), Box 1801, Folder 3

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