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BJOPCCTQ GROUPS iMD CHAINS

Material prepared for the information of the
Federal Reserve System hy the
Federal Reserve Committee on
Branch, Group, and Chain Banking

Members of the Committee

E. A. Goldenweiser, Director, Division of Research and Statistics,
Federal Reserve Board, Chairman
Ira Clerk, Depaty Governor, Federal Reserve Bank of San Francisco
Um J* Fleming, Deputy Governor, Federal Reserve Bank of Cleveland
L. R. Rounds, Deputy Governor, Federal Reserve Bank of New York
E. Lm Smead, Chief, Division of Bank Operations, Federal Reserve
Board

J. H. Riddle, Executive Secretary and Director of Research

The Committee was appointed February 2d, 1930* "°7 the
Federal Reserve Board




1
1

• , .to assemble and digest information on
"branch banking as practiced in the United States,
group and chain hanking systems as developed in
the United States and elsewhere, the unit banking
system of the country, and the effect of ownership
of bank stocks by investment trusts and holding
corporations*11

QENERAL LETTER OF TRANSMITTAL
(To be inserted in Volume I)
To the Federal Reserve Board:
The Federal Reserve Committee on Branch, Group, and Chain
Banking was appointed on February 26, 1930, by the Federal Reserve
Board
". • • to assemble and digest information on branch banking as practiced in the United States, group and chain
banking systems as developed in the United States and elsewhere, the unit banking system of the country, and the effect of Ofwnership of bank stocks by investment trusts and
holding corporations."
Under the terms of its reference the Committee has prepared
and is submitting reports on the following topics:

(l) Branch Bank-

ing in the United States; (2) Branch Banking jln California; (3) Branch
Banking in England; (k) Branch Banking in Canada; (5) Banking Groups
and Chains; (6) Changes in the Mumber and Size of Banks in the United
States,, 183^1931; (7) Bank Suspensions in .the United States, 1892~
1911? (8) 225 Bank Suspensions. Case Histories from Examiners1 Reports; (9) Banking Profits. 1890-1911; (10) The Dual Banking System
in the United States*
The appointment of the Committee was prompted by the banking difficulties during the preceding ten years, which had resulted
in a large number of bank suspensions, and by the growing trend towards
concentration through branches, chains, and groups. When the Committee
began its work, speculative activity in the securities market and in
other fields had recently culminated in a collapse of security prices,




~ 2 -

but the extent and scope of the decline in economic activity that
had begun in the summer of 1929 was not then clearly defined*

The

decade just concluded had witnessed extraordinary activity in construction and rapid expansion of industrial plants, particularly
the rapid growth of the automobile industry which has had profound
effects on many phases of the country's life. Installment selling
had developed on a large scale and had stimulated buying by the consuming public*
The decade was characterized by an abundance of credit, to
which an inflow of gold from abroad greatly contributed, and by an
extraordinarily large volume of security flotations, both domestic
and foreign*

It witnessed speculation in real estate, in securities,

and in business enterprise*

Throughout the period, however, commodity

prices after a precipitous decline in 1920 and 1921 remained relatively stable around a level somewhat higher than the low point reached
early in 1922*
Broadly speaking, the decide was one in which industrial
and city populations were prosperous, while agriculture was going
through a difficult adjustment.
While the Committee was conducting its investigation, there
developed an economic depression of unprecedented depth and duration
which has affected every part of the world*

This subjected the banks

of the country to new destructive forces* The impact of the depression
on the banking system was severe by the end of 1930 and became more




-3 -

serious in 1931, the last year covered by the organized material accumulated by the Committee. Its studies of bank earnings and expenses
cover the five year period I926-I93O; its studies of failures are carried through 1931, but do not include the year 1932 during which the
establishment of remedial agencies, such as the Reconstruction Finance
Corporation, introduced entirely new elements into the situation.
Developments during 1932 are reflected in the study only in a general way and in particular cases where -Information was available and
appeared to be essential for completeness.
The Committee's investigations were organized and directed
by J. H. Riddle, the Executive Secretary and Director of Research*

The

various reports were written uader his supervision, and the major part
of the editorial work was done by him. Mr. G. W. Blattner, of the
Board's Division of Research and Statistics, prepared Banking Profits»
1890-1931 and collaborated in two other reports: Branch Banking ip.
England and Banking groups and Chains. He also assisted in the editing of other reports and was frequently consulted as to methods and
procedure in other research projects.
Other members of the research staff participated in one or
more projects. Mr. Guy Greer prepared Branch Banking in Canada and
Branch Banking in California. He also collaborated in the preparation offfheDual Banking System in the United States. Mr. Oliver S.
Powell, of the Federal Reserve Bank of Minneapolis, prepared 225
Bank Suspensions, Case Histories from Examiners' Reports. Mr. Clarence




-1* -

Hammond prepared Branch Banking in the United States, and collaborated in the preparation of Changes in the Number and Size of Banks
M

J M United States, 183^-1931»

Mr. Clark Warburton collaborated

in the preparation of Bank Suspensions in the United States, 18921931, Changes in the Number and Size of Banks in jbhe United States,
183^-1931* and The Dual Banking System in the United States. Mr.
Richard Garlock collaborated in the preparation of Bank Suspensions
in the United States, 1892-1931; Mr. Cyril B. Upham in Banking groups
and Chains; Mr. Jett Lauck in The Dual Banking System in the United
States; and Mrs. Louise

Sissman in Branch Banking in England. Mr, J. E.

Horbett, of the Federal Reserve Board's Division of Bank Operations,
helped in the preparation of much of the statistical data used in
some of the reports and has participated in the planning and execution of several of the statistical projects. The Committee is indebted
to Mr. Carl E. Parry, Assistant Director of the Division of Research
and Statistics of the Federal Reserve Board, for having read most of
the reports and for many valuable suggestions. The Committee is also
indebted to the counsel of the Federal Reserve Board for the preparation of digests of various laws and to members of the Board1s staff
for criticisms and suggestions*
The Committee expresses its appreciation to the various
Federal reserve banks, the Comptroller of the Currency, and the
various State banking departments for the assistance they have
rendered in this investigation.

Some of the projects entailed

the collection of a vast amount of statistical and other factual




- 5-

data, and much of these were supplied by the Federal reserve banks,
or through them by the State banking departments. Without this
assistance some of the projects could not have been carried out
successfully.
To the various public officials, bankers, economists,
and others in this country, Canada, and England, who have supplied information, given the benefit of their counsel, or ren-




dered other assistance, the Committee expresses its thanks*

Respectfully,

E. A. Goldenweiser, Chairman
Ira Clerk
M. J. Fleming
L. R. Rounds
E. L. Smead

LETTER OF TRANSMITTAL

To the Federal Reserve Board:
The Committee on Branch, Group, and Chain Banking transmits herewith a history and statistical analysis of group and chain
hanking in the United States. The statistical series in this volume in most instances end with the year 1931-




Respectfully,

E. A. Goldenweiser
Chairman




CONTENTS
Pag
Banking Concentration Through Groups and Chains
Chain Banking
Group Banking
Distinctive Features of Group Banking
Diversity of Groups and Their Activities
Sources of Information
Replies to Questionnaire

1
1
2
5
b
9
15

Earlier History of Group and Chain Banking
Obstacles to Growth of Group and Chain Banking
An Early Group Scheme
Legal Basis for Holding Companies
Contemporary Comment (1902-190S) on Early Examples of
Group and Chain Banking
Pyramid or Promotion Chains
Record of Rise of Chains and Groups
Early Groups
Statistics in 1925

17
IS
19
22
23
2k
27
29
33

Statistical Analysis of Qroup and Chain Banking
December ]2Lt 1911
Geographic Distribution
Leading Groups
Banks in Chains
All Groups and Chains
Number of Towns Served by Group and Chain Systems
Intrastate Group Banking
Interstate or Regional Group Banking
Hat ion-wide Group Banking
Group and Chain Systems Classified by Number of Banks
Size of Banks in Groups and Chains
Size of Towns in Which Group and Chain Banks Operate

37
37
3?
40
kl
U5
1+7
1+g
k$
$0
53
59

ractors Associated with the Group Development during
1927-1930
Promotional and Speculative Profits
Larger Business Units in Industry
Competitive Self-defense and Regional Independence
The Position of the Small Country Bank
Preparation for Branch Banking
A Substitute for Branch Banking
Branch Banking among Groups

6l
62
67
69
71
72
73
77




CONTENTS (Cont'd)
Page
The Bank Holding Company: Ma.ior Systems
Western Grain States
Northwest Bancorporation and First Bank Stock
Corporation
Pacific Coast States
Transamerica Corporation
Marine Bancorporation
Anglo National Corporation
Miscellaneous Groups
New England States
First National Bank of Boston
The Shawraut National Bank
Other Groups
Middle Atlantic States
Marine Midland Corporation
Group Banking in New York City
North Central States
Wisconsin Bankshares Corporation
Guardian Detroit Union Group, Inc.
Other Groups
Southern Mountain and Southeastern States
Southwestern and Rocky Mountain States
Exchange National Bank of Tulsa
First Security Corporation of Ogden, Utah
The Bank Holding Company: Organization and Management
Types of Bank Holding Companies
Organization of Holding Companies
The Shareholder and His Liability
Miscellaneous Institutions Associated with Groups
Dealing in Securities
Trust Operations
Extent of Holding Company Direction
Group Auditing
Local Personnel
The Holding Company and the Correspondent Relationship
The Holding Company and the Federal Reserve System
Attitude of Group Management Toward Supervisory
Authorities

SO
80
SO
Zk
8k
86
89
90
90
91
91
93
93
93
96
97
98
100
100
101
103
103
103
106
107
110
112
Il4
115
lib
116
119
11§
120
121
123




CONTENTS (Cont'd)
Page
The 3ank Holding Company; Operating Policies
Lending Policies
Rates Charged on Loans
The Effect on the Bank Borrower
Absentee Credit Decisions
Larger Lending Capacity
Uniforaity in Investments
Profits and Costs
Gross Income
Losses on Loans and Investments
Interest on Deposits
Wages and Other Costs
Seduction of Non-earning Assets
High Cost Factors
Elements of Strength and Weakness
Elements of Strength
Elements of Weakness and Unsolved Problems
Suspensions among Group and Chain Banks; 1921-1931
Group and Chain Suspensions, I921-I931
Geographic Distribution
Suspensions 1930-1931
Suspensions by Size Groups
Disposition of Suspended Banks
Some Leading Cases of Group and Chain Failures
Prior to 1932
The Witham-Manley System
BancoKentucky-Caldwell-A. B. Banks
Minor Chain Syspensions
Federal Regulation
Existing Federal Law
National Banks as Holding Companies
Clayton Act
Attitude of Federal Supervisory Authorities
Federal Reserve Board
Comptroller of the Currency
Action Proposed by Members of Congress
Beedy Bill
McFadden Bills
Goldsborough Bill
Strong Bill
Glass Bill
Section 17 of S. UUl2 (April 18, 1932)
Federal Reserve Board and Glass Bill
Federal Reserve Members in Groups nnd Chains

12k
125
126
12S
129
131
131
132
13*5
134
136
136
137
138
138
139
140
1^3
1U5
1^7
150
152
156
160
l62
170
173
ISO
ISO
ISO
182
1SU
1SU
1S6
1S7
1SS
1SS
188
189
I89
190
19U




CONIENTS (Cont'd)
Page
State Regulation
Banks As Holding Companies
Holding of Bank Stocks by Other Corporations
West Virginia
New Jersey
Missouri
Wisconsin
Indiana
Oregon
Arkansas
Ineffectiveness of State Regulation

201
202
20U
205
206
206
207
207
207
207
20S

Summary
Group Banking
The Problem of Groups
Chain Banking

210
210
212
213

Appendix

215

A

i

B

lvi

C

cii

D

CHAPTER I
BANKING CONCENTRATION THROUGH GROUPS AND CHAINS

Public policy in the United States has been opposed to centralisation of the control of banking resources. With banking corporations
limited to one office, as has been the tendency since the passage of the
National BaJik Act in I863, concentration built on branch offices covering
a wide territory has been barred*
through other instrumentalities*

Concentration, however, has proceeded
Banking offices having separate corporate

charters have been in many cases identically owned and controlled*

In re-

cent years such arrangements in the banking structure of this country have
come to be referred to as group and chain banking*
While students of banking ever since the Civil War have realized
that communities of interest existed in chains of banks, systematic effort
to measure the extent of banking concentration represented by chain and
group banking has been undertaken only in recent years*

The amount of

concentration existing in America through chain and group banking as
shown by official tabulations is smaller, however, than might have been
expected*

In other fields of American business—public utilities, rail-

roads, and various industries—concentration of control has developed
much further than in the banking business*




Chain Banking
The characteristic form of chain banking is ownership of stock

2

in a number of hanks by one individual, or one family, or by a small
group of persons, such as the officers of a particular bank. The interrelationship may be tenuous, such as an interlocking of directorates,
with no real attempt to control, ownership being a matter of investment
only, or it may be a majority or complete ownership of stock, with the
purpose of control of operations. The usually accepted distinction
between chain banking and group banking, as more recently developed,
is that of personal ownership of stock as opposed to corporate ownership. Several of the present group bank organizations had their origin
in chains. Groups and chains, however, merge into one another, in a
manner that makes absolute distinctions difficult to establish.
According to the organized statistics of the Federal Eeserve
Board there were approximately

personal chain bank systems ex-

istent in the country at the end of 1931, each having three or more
banks. They included 90S individual banks and most of them were small
chains of small banks. The aggregate loans and investments of all
these banks were about $927,000,000.

Group Banking
The movement toward group banking cannot be fully understood

(1) A listing of each of these appears in the appendix, Table II # In
compiling these statistics mutual savings and private banks were
excluded.




- 3-

without background knov/ledge concerning unit banking, branch banking,
and chain banking. Perhaps the most valid concept is that expressed by
John Pole, former Comptroller of the Currency, which is based primarily
on corporate ownership of stock as contrasted with personal ownership,
characteristic of chain banking.

Group banking, in his opinion, refers

to "the ownership and some element of operating control of several banks
through the medium of a bank holding company."'1)
Some persons make a distinction between minority interest, majority control, and complete ownership of bank stock as a basis for determination of whether a particular arrangement constitutes group banking
or not#

Mr. Prank W. Blair, chairman of the board of the Guardian Detroit

Union Group, made this distinction in an address on April 2S, 1930, before
tae Reserve City Bankers Association in Memphis, Tennessee.
Perhaps as good a statement defining the group bank concept as
any is that of Lyman E. Wakefield, vice president of the First Bank Stock
Corporation of Minneapolis.

In his testimony before the House Banking and

Currency Committee on April l6, 1930> ^e said:

"Essentially group banking

is the control through majority stock ownership of a number of banks through
a holding company, patterned corporately after the modern investment trust,

^1) United States Congress, 71st, 2nd Session, House Committee on Banking
and Currency, Hearings on Branch, Chain, and Group Banking, under H.
Res. lUl, February 25, 1930, p. 26.




^

k-

but operated as a central management institution."

Mr. Wakefield filed

a statement with the committee outlining the operations of the First Bank
Stock Corporation, which contained the following statement on group bank-

"Group banking is the name that has come into common
usage for this step in the evolution of the American banking
system, which has developed extensively in the Northwest,
prompted by a need to meet a definite change in economic conditions. Group banking is not simply chain banking under
another name. Chains of banks under common ownership or common control, usually of a single individual, have existed for
generations, the majority stockholder or stockholders simply
exercising that natural right to supervise the operations of
all the corporations in which their holdings represented controlling interests. Chain management generally reflected a
single dominant individual. Group banking, on the other hand,
is the association of a number of corporately independent institutions within a single holding company for mutual advantages,
the group being built around one or more large banks of a territorial nature and its management resting in the hands of the
banking interests of the territory served."
Ihe years 1927-1929 witnessed a rapid growth of "group banking-,11
The designation of the new development was brought into use partly to
escape the odium that had come to be attached in the public mind to much
of the so-called "chain banking" of an earlier day'j and partly to characterize and distinguish an essentially new type of banking structure—the
management holding corporation, not itself engaged in banking, but owning
the stock of banks, and directing, or at least coordinating, their operations.
From the incorporation of the Marine Baacorporation of Seattle,
Washington, on September 10, 1927, until the end of 1931 the group bank-,
ing movement developed in every section of the country and in nearly
every city of any considerable si*a.




- 5Distinctive Features of Group Banking. - The "banking groups which
have taken shape in the past half decade have followed no standard pattern.
Their structure and organization are exceedingly diverse.

Certain features

more or less common to them all, although not necessarily found in each of
them, are (l) a holding company which owns the stock of a number of individual banks; (2) some centralized unification or direction of the loans,
investments, trust functions, and operating methods and policies of the
banks in the group; (3) an exchange of stock, whereby the shareholders of
the banks in the group surrender their "bank stock for shares in the holding
company; and (U) announcement to the public of the existence of the group
and of the names of the banks belonging to it.
The holding company may be a subsidiary of one of the banks in the
group, usually regarded as the head of or motivating force in the group, owning in its turn the stock of other banks; or it may be, so far as its corporate structure is concerned, the head of the whole group, owning a controlling share of all of the banks which are associated together.
It is perhaps only natural that a corporate organization device
widely used in other fields, particularly in the financial structure of
public utilities, should have found its way into banking.

Investment

trusts had acquired substantial holdings of bank stocks, and relationships
of more or less involved and intricate character had sprung up between the
various trusts and financial institutions with which some of them were
affiliated and allied.

The bank merger or consolidation movement, pro-

nounced in some of the larger cities, could be approximated in the rural
areas only by a device like a holding company.

Where branch banking

was permitted, especially in the State of California, the holding company
served the purpose of a temporary repository for the shares of




- 6banks to be later absorbed into a branch bank organization.
Diversity of Groups and Their Activities. - Many variations in
structure, in the degree of centralization of operations and control, and
in the unification of the units are found among the group "bank organizations.

In some the holding company is dominant, in some one bank, in others

a small group of banks. The investment trust, the investment company affiliated with a bank, and the trust company affiliate are all used as means of
control.

The banks which comprise the group organizations are both national

and State, members of the Federal Reserve System and nonmenbers, banks with
branches and banks without, city banks and country banks, banks with millions
of dollars of resources and banks with only a few thousand.
Business units, other than commercial banks and trust companies
which are included in or affiliated witii the group bank organizations, are
equally diverse, although they are not accounted for in the statistics. They
include private banking houses, mutual savings banks, investment houses, investment trusts, insurance companies, realty firms, safe deposit companies,
building and loan associations, industrial banks, joint stock land banks, and
other types of business enterprise.
Statistics indicate that there were at the end of 1931t 97 groups
in the country controlling 978 banks. Table 1 presents a list of 3U of the
leading examples of group banking. All those having 6 or more banks and
$25,000,000 or more of loans and investments are included. A list of the
63 other groups appears in the Appendix, Table I«
Table 2 gives a list of leading chains.




For comparative purposes

Table 1 - Leading Groups,(^

December 31, 1931
; Number
Number
T o t a l T o t a l l o a n s , Number of S t a t e s i of towns
number and i n v e s t of
i n which i n which
operoperof
ments (000 branches
ating
•banks (2) omitted)
a t i n g l)

Name of group and location of head office

New England
Financial Institutions,Inc., Augusta, Me.
First National Bank of Boston, Boston, Mass.
National Shawmut Bank, Boston, Mass.
Vforeester County Bank & Trust Company, Worcester, Mass.
Hartford Connecticut Trust Company, Hartford, Conn.

12
20

6
7
9

r addle Atlantic
First Trust & Deposit Company, Syracu.se, N. Y.
Marine Midland Group Inc., Buffalo, N. Y«
Union Trust Company & Melbank Corp., Pittsburgh, Pa.

15
19
26

31
36

97,1^5
1+1+1,553
522,763

13
55

1
I
1

7
IS

1

12

5

6
6
7

1
1
1

15
19
16

1
-L.

8
23
26
3

11

1
1
1
1
1
1
1

62,602
3^,932
^5,672

15
5
S

1
2
1

15
17
5

9^,723
57,136
50,log
30,838

8
11

1
2
1
1

6
6
3
6

513,572
333,769
231,391+
183,602
596,290
25,273
61,306

188

17
6
7
7
6
9

27
1+6

10
10

s

11

Southern Mountain
American National Bank, Nashville, Tenn.
Hamilton National Associates Inc., Chattanooga, Tenn.
First National Bank Trustees, Louisville, Ky.




i

79,871
1+80,1+3!+
11+2,1+17
69,326
32,3^7

I
I

North Central
Detroit Bankers Inc., Detroit, Mich.
Guardian Detroit Union Group Inc., Detroit, Mich.
Wisconsin Bankshares Corporation, Milwaukee, Wis.
Central Republic Bank & Trust Company, Chicago, 111.
First National Bank, Chicago, 111.
National Republic Bancorporation, Chicago, 111.
Banc Ohio Corporation, Columbus, Ohio

Southeastern
First National Bank of Atlanta, Atlanta, Ga.
Citizens and Southern National Bank, Savannah, Ga.
First National Bank, Birmingham, Ala.
Atlantic National Bank, Jacksonville, Fla.

$

IS

1

75
6

1
2

9

Table 1 - Leading Groups/ 1 ' December 31, 1931 (Continued)
Number
Number
T o t a l 1 T o t a l l o a n s Number of S t a t e s of towns
number and i n v e s t i n which i n which
of
ments (000
of
operoper"branches
ating
banks(2) omitted)
a t i n g 3)

Name of group and l o c a t i o n of head o f f i c e

Southwestern
Commercial N a t i o n a l Bank, Shreveport, La.
Exchange n a t i o n a l Bank, T u l s a , Okla.

P a c i f i c Coast
Marine B a n c o r p o r a t i o n , S e a t t l e , Wash.
Old N a t i o n a l C o r p o r a t i o n , Spokane, Wash.
F i r s t N a t i o n a l Bank, S e a t t l e , Wash.
U. S. N a t i o n a l C o r p o r a t i o n , P o r t l a n d , Ore.
Anglo N a t i o n a l C o r p o r a t i o n , San F r a n c i s c o , C a l i f .
T r a n s a m e r i c a C o r p o r a t i o n , San F r a n c i s c o , C a l i f .
T o t a l (3*+ groups)

26,35^
43,026

3

312,182
316,213
71,59^

3
3

6

Western Grain
F i r s t Bank S t o c k C o r p o r a t i o n , Minneapolis, Minn.
Northwest B a n c o r p o r a t i o n , Minneapolis, Minn.
Comaerce T r u s t Company, Kansas C i t y , Mo.
Rocky Mountain
F i r s t S e c u r i t y Corporation,Ogden, Utah

$

27

33,052

-

7
21
10U
127

•

2
3
5
S
1

,
,
:

!
OQ

j
10
22
6
11

1
i

11

1

91
115
1
26

3

67^

|

32,352
29,21+7
69,12S
71,909
160,151+
S77.652

1+07

$6,300,936

1
2
1
2
2
2

29s

2
1

(1) Those with six or more banks and $25,000,000 or more loans and investments. For details for all
groups by class of bank see Appendix, Tables I and III.
(2) Does not include mutual savings or private banks,
(3/ Number of different towns in which head office of a constituent bank is located.
( 0 Officials of leading interest also own a small proportion of the stock in several small banks in
*
the vicinity of. Detroit.




1

5
17

s
19
1
7
16

1

7

I

~ 9Table 2 - Leading Chains/ 1 ) December 31, 1931
Number
Number
of
of
i ber
investtowns
States
I of ments (000 in v/hich in which
(banks omitted) p i r a t i n g operating)

(Total

Total

J num- loans and
Name of chain and location of head office

North Central
C. W. McPhail, Central Lake, Mich.
A. E. Sleeper, Bad Axe, Mich,
John Clay, Chicago, 111.

I
j 9
j 13
J 9

$ 2,12s
4,250

l
1

6,1+96

4

9
13
9

l4,l46
1,473
6,533

1
l
l

9
7

1,261
1,155
4,254
3,409
1,502

l
l
2
2
1

9
S
17

46,316
4,536
3,661
s I 2,131
19 ! 12,496
2,656
3
j 10 j 14,454
j S
2,60s

4

47

l
1
2

IS

3

IS

i1

Southeastern
Exchange National Bank, Tampa, Fla.
First National Bank, Clanton, Ala*
Capital National Bank, Jackson, Miss,

I 12
j 9
i 3

Southwestern
R. C. and D. R. Couch, Haskell, Texas
j 9
M. C. Parrish and Associates, Austin, Texas
j 9
I. H. Nakdimen, Fort Smith, Ark.
j S
Thurmond Brothers, Oklahoma City, Okla.
j 17
R. A, Vose and Associates, Oklahoma City, O d a 1
i..
Western Grain
Otto Bremer et al, St. Paul, Minn.
Isaac Hazlett et al, Minneapolis, Minn.
C. H. Klein, Ohaska, Minn.
J. Lamport Company, St. Paul, Minn.
James F. Toy, Sioux City, Iowa
C. A. McCloud and Associates, York, Nebr.
J. M. Kemper et al, Kansas City, Mo»
J. H. Collingwood and Family, Topeka, Kans.

|
j 51
t 17
s i

Rocky Mountain
j
M. D., J. H. and R. C. Thatcher, Pueblo, Colo, j
21,417
J. E. Cosgriff, Salt Lake City, Utah
j 9 1 13,079
George Wingfield, Reno, Nevada
J 13
19,279

s

s
s

1

7

3

10

l

7

l

3

6
9

1

10

Those with 8 or more banks• Does not include mutual savings or private banks.
For details for all chains by class of bank see Appendix, Tables II and IV.
(2) Number of different towns in which head office of a constituent bank is located.
Sources of Information
The first broad attempt to bring together facts with respect to
the extent of chain and group banking was made by the Federal Reserve Board
as of June 30, 1929*

The Federal reserve banks were instructed to report

all cases in which there was a community of control or ownership of three




- 10 -

or more banks, Where the community of interest related to two banks only,
the casec were not asked for. Three hundred and twenty-one group and chain
systems including 1,921 banks were reported as of that date.
The instructions to the reserve banks were:

"It is requested

that in general only those systems be included in which any person, group
of persons, partnership* association or corporation has actual or potential
control over the operations or policies of three or more banking units each
working on its own capital and under its own personnel."

The statistics

were compiled from existing records and knowledge. Ho attempt has ever been
made to circularize all the banks in the country with the view of further
perfecting this body of data.
The data have been collected every half year subsequently, so that
figures are available as of June 30 and December 31 i n
1929t 1930»

an

ea

eh of the years

& 1931^1^ Those who have worked with the figures have come to

believe that they represent within a reasonable margin of error the extent
of banking concentration growing out of a community of interest in three or
more banks. Between the first and latest tabulations of the movement there
were shifts in one direction or the other. At the end of 1931 the tabulation showed 273 systems comprising 1,886 banks. The Committee also made
an effort to find out the number of cases in which two banks only were
affiliated.

The best indications are that as of June 3°t 19311 some 796

additional banks in the country representing 398 affiliations were

(1) A tabulation appears in the Appendix, Tables V, VI, VII, and VIII,
which gives details for each of these dates.




- 11 -

involved in relationships of this type.
The largest part of the two-bank relationships represents cases of
what might be called one bank operating under two charters. Trust companies
and State and national banks app'oar in such relationships* Q,uit6 often the two
affiliated banks operate under the same roof and with the same officials.
The purpose is not to tap business by geographically dispersed outlets but
to operate in a variety of lines permitted by the two charters.

The location

by States and other particulars concerning such banks appear in the appendix,
Table n i l .
Group and chain systems, each comprised of three of more banks,
according to the records of the Federal Reserve Board, may be divided into
three -oarts.

Table 3 - Group and Chain Systems, December 31, 1931
Number
of
banks'1'
34 - Leading groups'2)
63 - Other groups
176 - Chains

Loans and
investments

Average
loans and
investments
per bank

674
304
908

$6,300,936,000
2,414,843,000
926,733,000

$9,348,570
7,943,562
1,020,631

Does not include mutual savings and private banks.
Those with 6 or more banks and $25,000,000 or more loans
and investments.

Many of the 63 "other groups" and of the chains are very different
in character and in degree of centralized control from the 34 listed as
representing the leading examples of the group movement.

The group develop-

ment is, therefore, better measured for most purposes by the figures for




~ 12 -

the 3 + leading groups.
*
For example, the Chase National Bank was included in the miscellaneous group in the figures as of June 30, 19311 tut does not appear as of
December 31, 1931* ^or some years the .American Express Trust Company in
New York City had been controlled by Chase National Bank interests. According to newspaper reports, the Chase interests in the early part of 1931
assumed control of the Canal Bank and Trust Company of New Orleans in order
to protect commitments. Thus, a three-bank relationship came into existence
and the loans and investments of the group and chain movement were swelled
by nearly $2,000,000,000•

In the ensuing six months the American Express

Trust Company was merged with the Chase, and the group disappeared from
the statistics as of December 31, 1931#
others, often cwie

Three-bankrelationships,and

into being for a variety of fortuitous reasons and

are not intended to operate over a wide territory in lieu of branch banking, as is the case with respect to many of the 3 + loading groups.
*
Another example may be cited, that of the Central Hanover Bank
and Trust Company of New York, which is included among "other groups," contributing with its two other associated banks more than a half billion dollars
in loans and investments.

The Central Hanover owns 35 per cent of the out-

standing stock of two Florida banks. Fifteen per cent of the stock of these
two banks is owned by the City Bank Farmers Trust Company. However, this
trust company and the National City Bank, which dominates it, are not included among miscellaneous groups.
Among "other groups," an important element is these three-bank
groups, which account for 69 banks and $1,096,3*+31°00 loans and investments




- 13 -

(see Table 15).

Among these are many metropolitan institutions of large

size which are in no sense part of the modern group movement, as exemplified
by important units in the list of thirty-four.

For example, the Central

Hanover group contributes about a half billion of loans and investments, and
the Peoples Trust Company of Pittsburgh group supplies $167,000,000 in loans
and investments.
Not only is the aggregate figure of loans and investments in the
movement somewhat decaptive for the reasons outlined above, but as Table 4
shows, among the leading groups nearly two-thirds of all the loans and investments are furnished by the 34 key banks around which the leading groups
are formed.

These banks are large because they are metropolitan banks with

large commercial accounts.

Their size is derived from this fact and not

because they are associated with smaller banking outlets, whose business
comes from customers operating on a smaller scale.
Public interest in the group and chain bank movement was attracted
by the rapid rise of group organizations during 1927-1929,

Chains have been

in existence for a long time in this country without attracting a great deal
of attention.
banks.

This is also true with respect to groups composed of a few

Groups of this class as well as chains have been formed and operate

in a variety of forms. It is, therefore, difficult to make generalized
observations applicable to all these forms. Among the leading groups, there
is more homogeneity.

Some of the chapters immediately following deal with

the causes of the rise of the leading groups, their methods of management
and operation, and their effects and consequences from the point of view
of the problem of the banking structure in this country.




- lUTrJble h ~ Loans and Investments of Leading Groups and of Largest Baric
in Each, Deceriber 31, 1931
__
(In thousands of dollars)
Loans and Loans and inNa:ie of group and location of head office
investments vestments of
largest bank
of group
.
(1)
New England
29,302
Financial Institutions, Inc., Augusta, Me.
79,271
1+80,1+31+
357,026
First National Bank of Boston, Boston, Mass.
National Shawmut Bank, Boston, Mass.
132,227
ll+2,l+17
Worcester County Ban.1; & Trust Company, Worcester, Mass.
63,326
36,1+80
38,31*7
Hartford Connecticut Trust Conpany, Hartford, Conn.
27,531
Middle Atlantic
First Trust and Deposit Company, Syracuse, N. Y.
si,295
97,1^5
Marine Midland Group, Inc., Buffalo, N. Y.
^1,553
198,082
Union Trust Company & Melbank Corporation, Pittsburgh, Pa] 522,763
198,063
North Cantral
Detroit Bankers, Inc., Detroit, Mich.
l+5l+,66s
513,572
Guardian Detroit Union Group, Inc., Detroit, Mich.
152,337
333,769
Wisconsin Bankshares Corporation, Milwaukee, Wis.
131+, 056
231,39^
Central Republic Bank & Trust Conpany, Chicago, 111.
183,602
153,370
596,290
First National Bank, Chicago, Illinois
1+02,1+37
National Republic Bancorporation, Chicago, 111.
7,21+3
25,273
61,306
BancOhio Corporation, Columbus, Ohio
38,609
Southern Mountain
American National Bank, Nashville, Tenn.
62,602
^,259
Hamilton National Associates, Inc., Chattanooga, Tenn.
3^,932
19,^70
First National Bank Trustees, Louisville, Ky.
^5,672
21.957
Southeastern
First National Bank of Atlanta, Atlanta, Ga.
63,61+0
9^,723
Citizens and Southern National Bank, Savannah, Ga.
^7,530
57,136
First National Bank, Birmingham, Ala.
1+7,1+06
50,108
Atlantic National Bank, Jacksonville, Fla.
30,838
21,926
Southwestern
: Commercial National Bank, Shreveport, La.
26.35*
15.713
Exchange National Bank, Tulsa, Okla.
US,026
33,607
Western Grain
First Bank Stock Corporation, Minneapolis, Minn.
312,182
89,588
Northwest Bancorporation, Minneapolis, Minn.
316,213
70,395
Commerce Trust Co., Kansas City, Mo.
65,31+1+
71,53*
Rocky Mountain
First Security Corporation, Ogden, Utah
5,615
33.052
Pacific Coast
:
Marine Bancorporation, Seattle, Wash.
23,900
32,352
'Old National Corporation, Spokane, Wash.
18,01+7
29,21+7
First National Bank, Seattle, Wash.
69,12s
66,371
U. S. National Corporation, Portland, Ore.
63,390
71.909
Anglo National Corporation, San Francisco, Calif.
160,151+
133,981+
Transamerica Corporation, San Francisco, Calif.
877.652
785.222
Total (3H. groups)
6,300,936
5
4, Ql+1,290
( l ) The l a r g e s t bank i n each group was s e l e c t e d on the b a s i s of the s i z e cf loans
and investments.




- 15 Many of the observations with respect to leading groups apply to
the less formal groups and the chains as well*

For example, Table 2 shows

that there are a considerable number of chains which control upwards of a
dozen banks, one controlling 51, another 19*

It is more than likely that

the degree of centralized control in some chains is more analogous to that
in branch systems than is the case with respect to some of the less formal
groups.
Replies to Questionnaire* - The Committee sent a questionnaire
to leading groups and about thirty returns were received*

The replies form

a body of valuable information on the modem group movement and represent
the most important source of material developed in the following chapters*
The answers were returned in 1930 8n& 193 It and. consequently do not record
such changes as may have taken place since that time, under the stress of
acute business depression, in the condition and practices of the reporting
groups or in the opinions of their representatives*
The questionnaire was divided into five major parts:

(l) organi-

zation and history, (2) economic background, (3) management and supervision,
(k) policies and operations, (5) public relations* Each of these subjects
was developed by a series of questions*

In the first division, information

was requested with respect to the incorporation, capitalization, and subsidiaries of the holding company and how subsidiaries were acquired*
Under the second division, an attempt was made to bring out some
of the motives impelling the organization*

The degree of head office con-

trol and of local autonozqy among member banks was developed in the third
division*




The fourth was intended to elicit information with respect to

- 16 -

portfolio mangement, the control of costs, and the effect of the
group on correspondent relationships and on the Federal reserve system.

Hie fifth division was concerned with the attitude of the group

to governmental regulation and the local attitude towards the group
itself. As the Committee was given permission by eight of the
groups to publish their responses to the questionnaire,

the replies

made by them to a number of the more important questions appear in the
appendix as case studies.
By way of establishing a background for analysis of the
modern holding company and its operations in the banking field, and
for describing the activities of recent years, the following chapter
presents a review of earlier developments. The historical review
will be followed by an analysis of the organized statistics of chain
and group banking as of December 31? 1931 •




CHAPTER II

EARLIER HISTORY OP GROUP AND CHAICT BAffKITO

There have always been individuals who have invested in stocks
of more than one bank with a resultant cross interest sometimes amounting
to an interlocking directorate and sometimes to virtual control of several
institutions by one person, one family, or one group of persons. There
has been little attempt to restrict the individual ownership of bank stocks,
and, theoretically at least, in most jurisdictions all the shares of all
the banks (except qualifying shares of directors) could be held by one
person.

There appear to have been no efforts on the part of State law-

makers to limit interlocking directorates, and Federal legislation along
that line came only relatively recently.

However, there have been pro-

hibitions in some States, and limitations in others, on banks purchasing
stock in other banks, and this fact retarded and made difficult the direct
operation of a group of banks by a dominant banking institution.

The legis-

lative history and status in this connection will be brought out in a subsequent chapter.
A review of financial literature indicates that around the end
of the last century writers began to take account of community of interest
between two or more separately incorporated banks. Most of the cases noted
in those days would be classified as chains, although early in this century
citations appeared of corporations controlling strings of banks.

It was

not, however, until recent years that a survey of the situation was made.




- 17 -

- IS Obstacles to Growth of Group and Chain Banking
It is apparent that many believed the spirit of the National Bank
Act expressed a public policy to localize the control of banking institutions, setting its face against the centralization of control in the hands
of a few* This point of view was well expressed in an opinion of the Solicitor General of the United States rendered in 1911. He said:^1'
"The banks created by the national banking act were, and
were designed to be, local institutions and independent of
each other, but under national control and supervision* Nationalization without centralization was the keynote of the law*
This is demonstrated by the structure of the banks provided for*"
He based this opinion in part upon the provisions of the act:
(1) requiring a national bank to conduct its business in a single place;
(2) fixing capital requirements small enough to extend the facilities of
national banking to the smallest communities; (3) requiring that threefourths of directors must be residents of the State; (U) providing that
natural persons only could participate in the organization of a national
bank.
In the years following the passage of the National Bank Act
industrial development in this country was rapid and about ISSO a period of
feverish concentration among industrial companies began*

The last two

decades of the century witnessed the rapid rise of pools and trusts in
almost every part of the country and in practically all industries.(3)

(1) Commercial and Financial Chronicle. November H, 1911, p. 1232; November
25, 1911, p* 1^33* United States Congress, 72nd, 1st Session, Senate
Document No* 92, May 10, 1932, p. 3.
(2) Ibid., pp. 3-5*
(3) Trusts, Pools, and Corporations, edited by William Z. Ripley, revised
edition, p* xi*




~ 19 -

Despite this general tendency, the spirit of the local unit hank, it would
seem, was widely accepted and little was attempted during this period " y
b
way of "building concentration on institutions incorporated under State
statutes which perhaps did not contain the same implications as the National
Bank Act,
An Early Group Scheme. ~ The attitude of "bankers towards proposed
schemes of concentrating hanking resources is exemplified by an interesting
case in the early nineties. Mr. P. W. Hayes, Vice President of the Preston
National Bank of Detroit, wrote in the Banking Law Journal for July 15, 1892,
"A Plan for Bank Consolidation.,f

He proposed the formation of a management

holding company for hanks, in some respects not unlike many in existence
today.

Among other things he said:(l)

"The chain of banks thus established should be operated
under a supervising central management located in Chicago or
New York.
"It is not my idea that the several banks should be simply
branches, but that each bank should be an entirely separate
organization, for the reason that local stockholders and directors
would thereby be incited to greater exertion, for they would receive their pro rata of the profit resulting from individual effort, whereas in the case of branch banks, the profits of good
management in one branch may be offset by the losses of other
branches."
Although the plan resulted in nothing concrete so far as the
record shows, it was submitted for criticism to leading bankers all over
the country. Many of the replies were brought together in a booklet and
give some indication of factors which discouraged the development of group

) "A Plan for Bank Consolidation," by P. W. Hayes, Banking Law Journal,

July 15, 1892, pp. 56, 57.




- 20 -

and chain "banking at a time when trusts and pools were common in other
fields.(1)
The president of the national Exchange Bank of Baltimore, Maryland,
feared a group system as suggested would he opposed ,rby other banks uniting
their forces against it, calling it a trust, etc.
"(2)
The cashier of the
Southern Banking and Trust Company, Atlanta, G-eorgia, spoke of "the bad odor
in which trusts are held by the people of this section. «(3) The president
of the First National Bank in Hartford, Connecticut, said:

"'Syndicate1 is

a name which is not in favor among the larger classes upon whom banks depend
for profit-

Again, from the cashier of the Deseret

national Bank in

Salt Lake City, Utah, is the statement "that the organization could be made
a powerful one, hut think it likely, on that account, to be antagonized by
the other banks as well as by the element in Congress opposed to National
Banks."(5)
Bankers, thus, seamed to think that group banking would be actively
opposed by the anti-trust spirit of the day. Bankers were content to let
others take the lead in testing the possibilities of concentration through
various manipulations of the corporate form.

It is probably true in any case

that as banks were under Government supervision and bound by many special
laws, bankers were reluctant to undertake any unusual deviations. Changes
would be more apparent among banks than in any other type of business.
( i ) An Argument in Favor of the Organization of a Financial Corporation and
Union of Banks. Together with Plans of Consolidation (1392).
(2) Ibid., p. Sk.
(3) Ibid., p. 81.
(*0 Ibid., p. gg.

(5) Ibid., p. 96.




- 21

One of the bankers in commenting upon the proposal pointed out
that:^1'
"The question may be asked, why do business men form
combinations? Not because they prefer to do business that
way, but because their profits have been so reduced by competition that it becomes a necessity.
"The banking business has not yet reached the point
where there is no profit, and will not as long as people
have money to deposit for safe-keeping, and their less
fortunate fellow-men have not the necessary capital on
which to do business •"
Pacts brought out in other studies made by the Committee may
usefully be recalled in considering the statement of this banker. In the
earlier years of this century banking was a profitable and, therefore,
attractive field of enterprise. More recent years have witnessed a substantial narrowing in the margin of bank profit per unit of business, and
this may have given an important part of the impetus to the modern group
movement.
Possibly, the American system of correspondent banking represented some vested interests that resisted concentration through chains and
groups. The large city banks, which possessed the resources and prestige.to
lead such a movement, felt perhaps that they were getting the profitable
country business under correspondent relationships without the risk which
might accompany actual management of smaller banking outlets. Metropolitan
bankers, moreover, may have felt that any attempt to buy into coimtry banks
might be resented by the country bank correspondents who would sever their
relationships. The thousands of accounts of snail country banks controlled
by some of the great metropolitan banks were a part of their business which
they did not wish to sacrifice.

(1) Ibid., p. 1+5.




- 22 Legal Basis for Holding Companies, - Most of the factors named in
the preceding paragraphs served to obstruct chain banking as well as groups,
but there Y a another factor which ooartainly operated against the rise of
/s
the modem bank holding company.

Before 1SS9 the laws of no State provided

for a corporation to be chartered for the special purpose of owning stocks
in other companies, and most court decisions were contrary to such activity.
Hew Jersey was the first to make definite provision for pure holding com**
panies.

A student of such matters has summarized the situation:^1'

" . . . Until about 18"J0 i n England, and twenty years later in
our own country, the weight of legal authority had been adverse
to the holding of the stock of one corporation by another. Railroads for a generation had, by special provision of law, controlled subsidiary companies in this way. But the passage of a
new corporation act by New Jersey in 1SS9 first legalized the
practice under general statutes. Vast possibilities were involved in this fundamental change in American corporation law.
Companies could hereafter be organized as well to serve the ends
of bankers and promoters as those of industrial efficiency. The
New Jersey type of corporation need have no operating duties
whatsoever, other than to hold the shares of other concerns,
elect officers, receive dividends from constituent companies and
turn them over to their own stock or bond holders. It was necessary merely to maintain a nominal connection with the chartering
state by renting desk room, displaying a sign, going through the
form of an annual meeting and rendering meager annual reports.
Many American commonwealths, notably Delaware, Maine, West Virginia and North Dakota, promptly followed the example of New Jersey, profiting greatly thereby from the resultant fees. Only two
states seem to have wholly resisted the temptation to authorize
the holding company by the amendment of their industrial codes."
Thus, it was not until 1SS9 that the principle of one corporation's
being primarily in the business of owning stock in others came into our law.
Until this principle became established, the possibility of the modern holding company for banks did not exist.
These factors outlined in previous paragraphs operating against
the establishment of groups and chains justify the belief that there was

Trusts, Fools, and Corporations, edited by William Z. Ripley, revised
edition, pp. xix, xx.




- 23 -

little of such banking activity in the nineteenth century.

It is possible,

however, that the situation was more apparent than real. The recording of
chains and groups in all parts of the country with the turn of the century
suggests their prior existence in covert form. Probably secrecy had been
encouraged by a fear of public opposition.
Contemporary Comment (1902-1908) on Early Examples of
GrouTD and Chain Banking
Balanced against these obstructing factors implicit in law and
custom, there were other factors which encouraged banking concentration
and caused it to take the form of groups and chains*

These will be covered

more fully in a subsequent chapter, which will analyze the cause of the rise
cf the modern group bank holding company*

Only those factors will be men-

tioned here which were mfetfred to 'by writers around the beginning of the
century. One of these factors was the lack of branch "banking powers both
among national and State "banks. That chain banking was regarded as a substitute for branch banking, resorted to in the absence of branch banking
permission, is evidenced by contemporary discussions of branch banking at
bankersf conventions.
One such statement in 1902 pointed out that "In the Northwest the
branch banking question is apparently solving itself, and 'lines1 or 'chains1
of banks controlled by one or two men are becoming common and the number of
banks so controlled, greater.f* The observer quoted also referred to the
development of "this style of branch banking.
Other studies of this Committee trace the effort made by certain
persons to extend the principle of branch
(1) "Branch Banking in North Dakota," Commercial West, November, 1902, p. 23.




~2U-

bankLng in the national banking system.

In the meantime bankers were ex-

perimenting with the idea of achieving the same results with separately
incorporated banking offices. In 1902 the late A. Barton Hepburn pointed
out t h a t : ^
"The prohibition against the establishment of branches
and the desirability of close affiliation are developing
rapidly a system of joint ownership in banks . . • Such institutions, owned by strong people and in the hands of conservative managers, could certainly render the public great
service."
An economist writing at the same time said:v ' "To an -unknown,
though probably considerable extent, a process of federation has also been
going on through the efforts of coteries of individuals to acquire stock
in groups of banks—it being forbidden to the institutions themselves to
be holders of each other's stock." He was of the opinion that "it could
make no progress outside the great cities."
Pyramid or Promotion Chains. - Others have observed that chains
developed at this time in many cases were dominated by men with promotional
instincts, who controlled many banks with small initial investments of
their own. Horace White, writing in Sound Currency for June, 1902, referred to this development: (3)
"• • • Scarcely a day passes that we do not read of some existing
bank passing under the control of a larger one. During the past
six months there has been much quiet absorption of snail banks in
New York City by large ones, but latterly the process has been
extended to banks outside of the city and outside of the State.
Not only so, but some of the large banks in cities far distant
from each other have been exchanging shares through the persons of
men who own controlling interests in each. • ."
The affiliations between large and small banks, Mr. White wrote,

(1) A. Barton Hepburn, "Branch Banks and the Currency Problem," Sound
Currency. March, 1902t p. 36.
(2) H* Parker Willis, "Demand for Centralized Banking," Sound Currency,
March, 1902, p. 13.
(3) Horace White, "Branch Banking: Its Economies and Advantages," Sound
Currency, June, 1902, p. 56.




- 25 -

was supposedly "accomplished b y individuals connected with the large bank,
buying the shares of the small one, and borrowing from t h e former the money
which pays for them, the shares being pledged as collateral security for
the l o a n . " ^ 1 )
That the Heinze-Morse chain, which was conspicuous in the banking difficulties of 1907, w a s only one of several similar developments is
evidenced ^oy the Re-port of the New York Special Commission on Banks in
It s a i d : ( 2 )

1907.

"A method of a certain class of promoters, well illustrated
b y the recent developments in certain embarrassed financial institutions, is to b u y stock of a bank or trust company, and b y
using that as collateral, borrow money with which to b u y stock
of another banking institution. B y repeating this process a n d
^oy claiming the indulgence due a stockholder in the matter of
extending credit in other directions, it is possible for adroit
and unscrupulous m e n to acquire the nominal ownership of a very
considerable amount of stock in a number of institutions, b y the
investment of a comparatively small amount of capital. The
object of such a procedure is to obtain a standing with such i n stitutions, which will enable the promoters to utilise their
credit and obtain funds to carry on their various enterprises."
Noyes in Forty Years of American Finance refers to the Heinze
operations as having b e e n in progress for half a dozen years prior to 1907*
A number of banking institutions of "second rank" were brought u p , h e wrote,
b y a "speculating financier" and a type of "chain banking" developed as a
characteristic incident of the era of speculation, "watched b y conservative
financiers with m u c h uneasiness."(3)
H. M. P.

Sckardt, in A Rational Banking System. (M) tells of a

dispatch from Omaha, Nebraska, to the N e w York Evening Post, in the issue

U ) Ibid., p. 57.
(2) Report of the New York Special Commission on Banks, 1907, pp. &*9*
(3) Alexander Dana H o y e s , Forty Years of American Finance, p . 3^5.
( - H . M . P. Eckardt, A Rational Banking System, p p . I9U-I.95.
*0




- 26 -

of April 25, 1902, describing how bank chains were built up in the West.
After describing how towns sprang up along the right of way of new railway
lines, he explained that among the first institutions in the new towns were
banks.

,n

The next step in the development of these banks, 1 " the Omaha corre-

spondent declared,

,f,

has been their combination into chains. The farm mort-

gages given by the farmers who move on the new lands which they wish to improve, and borrow money for the purpose, have to be sold; hence the president
goes to a large Western city and starts an investment company which makes a
specialty of selling farm loans. He leaves the bank in charge of a cashier,
who is usually a young man anxious to make a showing. The president establishes other banks of this sort until he has a string reaching across several
counties.1"

Reference is made to one banker who was president of 20 banks

of this sort and who

,
f

'lived in luxury without visiting them oftener than

enough to keep in touch with their management.1"
This author also refers to a person associated with a tank in
Oklahoma Gity who was making arrangements to start a string of fifteen banks
throughout the .State*'**-' Ee mentioned the purchase by the National City
Bank of New York of a controlling interest in the Exchange National Bank of
Spokane, and a large block of the stock of the Tracers1 National Bank of the
same city. Eiese last transactions referred to as "apparently being part of
a preparatory plan of the Standard Oil interests to make large investments
on the Pacific Coast,
..(2)

but these holdings were subsequently disposed of*
Another author, reviewing the situation in the Northwest, is disposed to emphasize other motives: (3)
(1) Ibid.. p. 195.
(2) Ibid., v. 196.
(3) Mildred Lucille Hartsough, The Twin Cities As a Metropolitan Market.
pp. 1^5-1^6.




- 27 -

l
J

. . • The practice seems to have spread rapidly, and, though
it aroused considerable comment, it did not apparently give
rise to much opposition. Indeed, there would not have been
much cause for it, for the individuals responsible were men
of capital who were furnishing banking facilities where they
had not existed before, and who had no more ulterior motive
than the making of additional profits by the furnishing of
these services. Investments of additional capital were made
by a diffusion of banking establishments in agricultural communities, because that procedure offered more profits, as well
as more benefits, than the building up of a large institution
in any one center. There was no apparent motive of concentration of control, such as may have been influential in later
developments. It is worthy of notice, as bearing out this
point, that the earliest instances of community of interest
were all in North Dakota, a purely agricultural district
which was just being settled, where banking facilities were
scantily distributed and where the capital with which to increase them was mostly in the hands of a few men."

Record of Rise of Chains and Groups
The early rise of chains and groups was not made the subject of
an enumeration, but the evidence of their existence consists of bits of
fragmentary information and comments gathered from a variety of sources.
The first citation relates to the middle eighties. Mildred L. Hartsough
in The Twin Cities As a Metropolitan Market speaks of instances of chains
beginning to appear in the Northwest about IS90.

The first instance of

chain banking of which she found record in the region was the case of
Mr. David H- Beecher who established one bank in North Dakota in 1SS4, and
another in lSgy.C1) Miss Hartsough seems to feel that the practice of buying into other banks spread rapidly in the Northwest, but it was probably
after the turn of the century.
The Witham organization in the Southeast, more or less a cross between a chain and a group, was one of the best known of the earlier systems.
Starting in 1896 under Mr. W S. Witham, it cperated a string of banks ultimately located in

(1) Ibid., p. IU5.




- 28 -

Georgia, Florida, Hew York, and Hew Jersey. Before its failure in 1926 it
controlled nearly 200 banks, many of which were located in small comnranities.
The record of this system is reviewed in some detail in the chapter on suspensions (Chapter VIII).
By 1900 close communities of interest between two or more banks
were becoming a familiar thing.

It was said that: (1)

"About the year 1900 there was some open talk of combinations being favored between the larger banks in Hew York
City and some of the large trust companies in that and other
cities."
In 1903 the following observation was made: (2)
". . . A glance through a bank directory of any Western State
shows the names of several men frequently repeated as presidents or vice-presidents of a number of banks. In each case
the man, or interests represented by him, probably controls
the banks of which he is an officer. The banks so connected
are called a chain. . ."
This author refers to the largest system of banks in Kansas as being made up
of IS institutions, and with deposits of $3,500,000 and controlled by interests connected with the largest bank in Kansas City, Missouri. (3)
Tor the most part, what interbank control there was down to 1900,
and even later in most sections, was largely individual or personal in
character, but in the years following 1900 non-banking companies were organized to acquire bank stock and centralize to some degree bank operations,
but these were infrequent and the number of banks in each chain remained
relatively few. The territory covered by a particular system was, for the
most part, not extensive, in many cases being confined to a county or area
of similar size.
t 1 ' Charles A. Lindbergh, Banking and Currency and the Money Trust, p. SI.
(2)
Thornton Cook, "Branch Banking for the West and South," Quarterly Journal
of Economics. 1903-19C&, Vol. IS, p. 107.
(3) Ibid.



- 29 ~

Early Groups. ~ One of the earliest recorded instances of a
forerunner of the modern group "banking movement is the case of the
Old National Bank of Spokane, Washington, and the Union Securities
Company.

This company was organized in 1909, more than a controlling

interest being held by the stockholders of the Old National Bank, and
it began to acquire stockholdings in banks. About this time also a
trust company in Texas with branches, following the adoption of a
branch bank prohibitory law, although perhaps not because of it, converted into a group bank system, making use of the trust company as
a holding company for the stock of the separately incorporated institutions into which the former branches were converted.(1>

Another

example is the Atlantic Trust Company of Jacksonville, Florida, incorporated in 1908, for the purpose of acquiring a bank building.

Later

it began to purchase bank stock.
According to information recently made public, the stockholders of one of the largest of the country's banks, the National
City Bank of Hew York, also chartered a subsidiary, known as the
National City Company, to carry on activities not possible under the
charter of the bank.

In the three weeks subsequent to its organization

on July 5» 19H> it had acqiiired among its various investments stock in
(1) H. H. Preston, "The Trend to Chain Banking,rt American Bankers
Association Journal« April, 1923, pp. 7&WI&2.*




- 30 ~

l6 banks and trust companies, 9 °$ which were national banks. The
following table indicates the relative strength of the company's
holdings in these national banks at that date, ( i ) although information with respect to the trust companies was not published.

Table 5 - National City Company's Eoldings of National Bank Stock in 1911

Company's
holdings

Name and location of bank

Second National Bank of New York
Pletcher American National Bank of Indianapolis
American National Bank of Indianapolis (2)
1
Fourth Street National Bank of Philadelphia
National Shawmut Bank of Boston
Riggs National Bank of Washington
National Butchers and Drovers Bank of New York
Lincoln National Bank of New York
National Bank of Commerce of New York

10
167
250
500
1,000
2,2U0
3,000
U.32U
9,200

lotal
number of
shares of
capital
stock of
hank
10,000
20,000
30,000
35,000
10,000
3,000
10,000
250,000

(2) No such bank shown in the American Bank Reporter.
The degree of control over the banks that was represented
by these holdings was small in some of the cases, as the tabulation
shows, although in one it was complete and in two others appreciable.
Shortly after the date to which this tabulation relates, the National
City Company is said to have divested itself of all its holdings of
bank stock.
The Morris Plan system of industrial banks, originated by Mr.
Morris, bears some analogy to a group system.

The first of its banks

was opened in Norfolk, Virginia, in

(1) United States Congress, 72nd, 1st Session, Senate Document No. 92,
May 10, 1932, p. ik.




- 31 ~

1910, and later others were started in different cities* As each hank was
organized, Mr- Morris took some stock, hut in order to widen the scope of
his activities, he organized the fidelity Corporation of .America on July 15,
1912, designed to hold stock in the "banks and to "be active in organizing
them.'*' While the Morris Plan hanks are not commercial banks, hut so-called
rt

industrial" or small loan institutions, the development was not unlike its

successors- in the commercial group "banking field.
In 1909 the commissioner of "banking of Wisconsin found that group
"banking was becoming an important factor in that region
,(2)
"A new feature in "banking has manifested itself of late
which, if permitted to go on unhindered, will eventually result
in a monopoly control of the banking business. I refer to the
so-called holding companies which are increasing with alarming
rapidity in various parts of the country. One of these companies with headquarters in Minneapolis, Minnesota, own (sic.)
a controlling interest in more than 50 banks in Minnesota, Iowa,
Wisconsin and the Dakotas. In Wisconsin, eight or ten banks
are now controlled by this one company; two other companies have
recently been organized at Minneapolis, Minnesota, for the purpose of getting control of banks either "by buying up a majority
interest in banks now in existence or by organizing new banks."
In 19OS the national Monetary Commission deemed this banking movement to have attained such proportions as to merit a query about it in a
circular letter which invited suggestions for changes in the national banking laws. Out of S5 letters published over SO per cent, from all parts of
the country, contained opinions on this phase of banking, thus indicating
that it was not unknown to the authors of the letters. (3)
CD Louis !?. Robinson, "The Morris Plan," .American Economic Review, June,
1931, p. 222.
(2) Fifteenth Annual Report of the Commissioner of BaaMng of Wisconsin,

1909, p. xi.
(3) Administrative Features of National Banking Laws and European Fiscal
and Postal Savings Systems, national Monetary Commission, Vol. 19,
pp. 5-180.




- 32 Iii July, 1911, the Government became interested in the development
of the affiliation movement so far as national banks were concerned, and
made an investigation.

It was found that about 300 national banks had at

that time formed affiliations with other banks.(!) Both the President of the
United States and the Secretary of the Treasury felt the movement to be of
such importance as to merit special legislation.

In his annual report for

1911,' 2 ' Secretary McVeagh asked for legislation denying:
" . . . with great precision to any bank included within its provisions, whether national or state, the right to own stock in
any other independent bank. . . There is no immediate danger to
be apprehended from such holdings; but now is the time to protect for the future the independence and individuality of the
banks; and to forestall in their case the general tendency to
the formation of undue combinations and trusts. The -prohibition
should be so explicit that its spirit as well as its letter
could be enforced. . ."
In a special message to Congress President Taft incorporated a
request for the assuring of "the individuality and the independence of each
bank. "(3) The suggested legislation was never enacted and both group and
chain banking continued to grow.

The so-called Money Trust Investigation

in 1913 found marked evidence of chain banking through interlocldlng directors.
The complexity and extent of the connections between the financial organiza*
tions, especially in the large cities, of the country were brought out by
witnesses.

It appeared, for example, that the Guaranty Trust Company of

New York had 63 directors interlocking 19 other banks and trust companies

UT77 Laurence

Laughlin, Banking Reform, p. 205.
(2) Annual Report of the Secretary of the Treasury, 1911, vp. 3, 4.
^3/ "Special Message to the Senate and House on the Financial Condition of the
Treasury, Heeded Banking and Currency Refoim and Departmental Questions,
December 21, 1911," A Compilation of the Messages and Papers of the
Presidents, prepared under the direction of the Joint Committee on
Printing, of the House and Senate, Vol. X, p. S06^.




with the trust company; the Bankers1 Trust Company had 59 directors common
with 19 other banks and trust companies; and the National City Bank had
32 directors in common with lo banks and trust companies in Chicago, Pittsburgh, Washington, and New York. (1)
By I916 it was claimed that Minneapolis alone was the headquarters
for chains operating over 300 banks.vw

Six years later the Federal Reserve

Board spoke of the "considerable development" of groups and chains, the
largest of which included "some 175 small banks.
Statistics in 1925. - All these scattered instances serve to indicate that group and chain banking appeared in all parts of the country at
least as early as the "beginning of the century, and became increasingly important subsequently. Unfortunately no statistics are available before 1925
showing the strength of the movement. In that year, some data were collected
under the supervision of H. Parker Willis in a Report of an Inquiry into
Contemporary Banking in the United States. These figures are admitted to
be probably an underestimate, but they give some idea of the scope of the
tendency at that time.

It is not clear whether a chain or group was

defined to consist of two or more banks or some larger number. At any rate
as shown in Table 6, adapted from the table in the report, more than 130
chains and groups were accounted for with more than 900 banks.
(1) United States Congress, 62nd, 2nd and 3 r & Sessions, House Subcommittee
on Banking and Currency, Investigation of Financial and Monetary Conditions in the United States under H. Res. U29 and 50U, Exhibit I3U-C,
PP- 5-7(2) Mildred Lucille Hartsough, The Twin Cities As a Metropolitan Market,
P. 1^7.
(3) Annual Re-port of the Federal Reserve Board, 1922, p. 6.
Re-port of an Inquiry into Contemporary Banking in the United States,
compiled under H. Parker Willis, Vol. VI, Ch. XIV, p. 9.




- 3UTable 6 - Banking Chains and Affiliations in the United
States Daring the Year 1925U)
State
Arkansas
Arizona
California
Colorado
Florida
Georgia
Idaho
Illinois
Iowa
Massachusetts
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
North Dakota
Oklahoma
Oregon
Pennsylvania
South Dakota
Texas
Utah
Washington
Wisconsin
Wyoming
Total

Number
of chains

Number
of banks

2

2U
15
66

4
20
(2)
1
2
IS

(2)

5^
163
73

3

18

s

i5
+

(3)
5

2
1

(2)
103
17

6
(2)

2
l
2
2
10
(2)

6
6
2
1
2

9

(2)
11

9
26

s

35
(2)

>5
»

22
16

6
2S
52

16
2
1

69

13U

933

Ik
g

(*) Report of an Inquiry into Contemporary
"Banking in the United States, compiled
under H. Parker Willis, Vol, VI, Chap,
XIV, p. 9.
(2)
Exact number not reported.
(3) One reported for an earlier date.
The first tabulation which approximated completeness was that of
the Federal Reserve Board for June 30, 1929, the result of which was given
in the first chapter with more details in the Appendix, Table V, and the




- 35 -

Board has tabulated the situation at half yearly periods subsequently as
shown in Table 7.

It is true that the Board did some canvassing in 1922,

I926, and again in 192S. The results obtained, however, were not believed
to be complete enough to warrant publication.

Table 7 - lumber and Loans and Investments of Banks in Chains and Groups
June 30, 1929-December 31, I93I

Date

J-une 30,
December
June 30,
December
June 30,
December

1929
31, 1929
1930
31, 1930
1931
31. 1931

Number of
chain and
group systems

Number of
banks

Loans and
investments
(millions
of dollars)

321
332
325
316
305
273

1,921
2,165
2,229
2,154
2.071
1,SS6

$ 9,768
12,093
12,766
11,856
13,355
9,643

Appendix Tables VIII and IX show the numbers of groups and
chains by geographic divisions and by States.
As the table indicates, a large part of the organization of groups
and chains was over by the time the first record was made.

The first record

showed 321 chains and groups with 1,921 banks. One year later 2,229 tanks
were reported as belonging to chains and groups.

Since that date, the

numbers of systems and member banks included have been diminishing at
the same time that the number of all banks was decreasing owing to failures and consolidations.
Sable S serves to show that most of the leading bank holding
companies were incorporated at comparatively recent dates.




- 36-

Tahle g - Chronology of the Appearance of Some of Leading Names
in Bank Holding Company yield
Name
Marine Bancorporation
Citizens and Southern
Holding Company
Old Colony Trust Associates
United States National
Corporation
Shawmut Association
First Security Corporation
of Ogden
Pacific Bancorporation
Transarnerica Corporation
Anglo National Corporation




Date of
Incorporation

Date of
incorporation

Name

Jan. 2k9 1929
April 1, 1929
May 9, 1929
1929
Sept.
1§29
Sept. 23, 1929

Sept. 10, 1927 Northwest Bancorporation
First Bank Stock Corporation
April 9, 192S Guardian Detroit union G-roup
Financial Institutions, Inc.
May Ik, 192S
BancOliio Corporation
Marine Midland Corporation
May 8, 1922
Wisconsin Bankshares CorpoMay 21, 192S
ration
Detroit Bankers Company
June 15, 192S
Hamilton Natlonal Associates
July 7, 192S
Oct. 11, 192S Southwest Bankshares Corporation
Dec. k, 192S

Dec, 10, 1929
Jan. S, I93O
Jan. 20, 1930
Feh. 6, 1930
i
1

CHAPITER III
STATISTICAL ANALYSIS OF GROUP AND CHAIN BANKING
DECEMBER J l . ^ J i

Banks belonging to groups and chains are found in practically
every section of the country and among all sizes of banks. Only a few
States, located in the East, such as Virginia, Maryland, Delaware, New
Hampshire, and Vermont, are without any group or chain "banks• The great
majority of chain banks, however, are located in the agricultural States
of the Middle West where "branch hanking is prohibited.

Many of the banks

in groups are also located in the agricultural regions, but a large proportion of them is found in and around the large cities, especially those
located in the Northeastern and North Central States.

Charts 1 and 2,

outline maps of the United States, show the location of banks in groups
and chains respectively.

Geographic Distribution
Leading Groups« - Seven of the 3U leading groups have their
head offices in the North Central States, as indicated in Table 1. The
Pacific Coast States have 6 of the leading groups; New England, 5; a &d
the Southeastern States, k.

The Middle Atlantic, Southern Mountain, and

Western Grain divisions each have 3> Southwestern, 2; and Rocky Mountain,
1#

However, from the point of view of the number of banks the Western

Grain States are the most important as they account for the 2 groups which
have the greatest number of banks, the Northwest Bancorporation and the
First Bank Stock Corporation. Moreover, as Table 9 shows, the number of




- 37 -




- Jg -

CHART 1

Where many banks in a large city belong to groups, a congregation of dots representing both downtown and suburban
banks appears on the map f as for example in the Chicago
and Minneapolis areas.




- 39 -

CHART 2

Where many banks in a large city belong to chains, a congregation of dots representing both downtown and suburban
banks appears on the map, as for example in the Chicago
and Minneapolis areas*

- Uo banks belonging to leading groups is largest in these States. Of the 67^
banks belonging to leading groups 195 are located there. The next largest
number, I32, appears in the North Central States, and the smallest number,
27t in the Southwestern States.
As Table 10 shows, the amount of loans and investments controlled
by leading groups is largest in the North Central States, amounting to
$1,961,^53,000. These States include the two Detroit organizations and the
Wisconsin Bankshares Corporation. Owing to the size of the Transamerica Corporation, the Pacific Coast States rank second in terms of loans and investments. And even the Middle Atlantic States contributed more loans and investments than the Western Grain States, which are represented by the largest
number of banks.
Banks in Chains. - The Western Grain States have many banking
chains. Of the 90S banks belonging to chains, UOS are situated there. The
organized statistics as of December 31* 19311 account for 22 chains in the
United States which have 8 or more "banks. As Table 2 shows, 8 of those are
located in the Western Grain States on the basis of the location of their
head office, and most of their banks are located in these States. The largest
chain in the country both with respect to number of banks and total loans
and investments as of December 31» 1931 > v/as
Paul.

t]lat c f

Mr. Otto Bremer of St.

This chain comprised 51 banks with over $H6,000,000 of loans and in-

vestments. Prom the point of view of number of banks, it is exceeded in the
whole United States by only two groups, the Northwest Bancorporation and the
First Bank Stock Corporation.
The North Central and Southwestern States also account for a large
number of banks in chain systems.




On the other hand, there are practically

- Ill ~
no banks belonging to chains reported in the Southern Mountain and Hew England
States and but few in the Pacific Coast States.
All Groups and Chains. - With respect to the 1,886 banks in all
chains and groups the Western Grain States also have the largest representation with 629.
respect.

No other geographical division is a near conpetitor in this

The large number in the Western Grain States reflects largely the

existence of kOZ chain banks.
Table 9 - Nunber of Group and Chain Banks l>y States and by Geographic
Divisions Compared with All Commercial Banks, December 31, 1931
Number of banks
_J Group and
chain banks
Leading Other
Total
commercial groups groups Chains groups and
per 100
chains active ban3':s

;
State' by
geographic
division
Hew England
Maine
Hew Hampshire
Vermont
Massachusetts
Hhode Island
Connecticut
Middle Atlantic
New York
Hew Jersey
Delaware
Pennsylvania
Maryland
Dist. of Col.
Horth Central
Michigan
Wisconsin
Illinois
Indiana
Ohio
Southern Mountain
West Virginia
Virginia
Kentucky
Tennessee




All

625
SI

66
81
229
25
1*3

54

;

17

1
+

12

3

-

—

••
«
—

33
~

9
60
3^

k
3
7

k

—
-

38
^9

52
23
21

.

—

26

17

-

~
-

M75

132

5S9
S69

ho

1,29*

2S

651
772

-

9

11

-

1.505

35

3

218
392

—

U97
39S

6

—
-

29

3

2,S26

S3*
^

16
+

1,266

187
38

~

53

X0>+

75
15

12.0

is.5
«
.
—

—

in
3

1

17.9
12.0
11.2

16

7.9

222.

u.k

95
70

15.^

M

—

ih

57

—
-

M

-

-

13

107

252

~
~

55

95

29

S2

1
+

6.0
1

16.1

9.^

55
9

h

-

11

i.h

1
l

39

~
—

—
r

2.6
0.5

23

d

l
0

32

1 1»2
i

2.0

- k2 ~

Table 9 - Number of Group and Chain Banks by States and by Greographic Divisions
Compared with All Commercial Banks, December 31, 1931 (Continued)
Numb sr of banks

State by
geographic
division

All
commercial

Southeastern
itforth Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Southwestern
Louisiana
Texas
Arkansas
Oklahoma
Western Grain
Minnesota
North Dakota
South Dakota
Iowa
Nebraska
Missouri
Kansas

1,389
283
114
321
167
256
22s
!

!

Leading j Other
groups groups

35

i
1

0
-

276

~

524

19
195
104

886,
246

408
142
40

5

263
935
633
992
i

38
34

~
r
0
-

923

l

-

63

15

89

30

-

22
2

15

12
8
14
16
%

5
7
6

792
157

:

122

!

Pacific Coast
Washington
Oregon
California




s

60
9
75

26
10

M78

78
233
50
32
8S

-

-

875
286

73

199
390
19,167

36
14
23
674

11
23

46

16

:

95

1

9.6
0.4
5.3
7.5
29.4

S.4
10.1

221

10.5

19
99

9-5
9.0
3-3

si

17.9

629
256
S3
53
61
53
27
96

12.9
2S.9
33.7
20.2
6.5
8.4
2.7
10.4

167
42
4^
16
16

:

21.1
26.8
36.9
20.5

6.9
10.0
18.8
23.9
50.0

\
!

6

5
6

12

21

16

16

Us

9

32

19
50

5

—
-

0

152 !
\

~

Rocky Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Nevada

UNITED STATES

6
36

24

18

42

27
5

1
r

6
25
13

- 1

133

-

21
5
5

9
r

2,102
200
1,102

62

u

2
18
:

Chains

•50
1

-

1 Group and
Total
chain banlcs
groups and
per 100
•
chains
active banks
J

27

148

23

14

12
13

~

13

73
26
49

16.9
25.5
13.1
12.6

304

90S

1,886

Q.8

-^ 3 -

Although the Western Grain States show the largest number of chain
and group banks, "both the Rocky Mountain and Pacific Coast States surpass
them as to the proportion of active commercial "banks included in groups and
chains.

These two divisions have respectively 21.1 and l6«9 per cent of

their banks in groups and chains against 12.9 per cent in thetfestern Grain
States. The Rocky Mountain area is, of course,, a sparsely settled country
b
of few hanks and the Pacific Coast situation is heavily weighted " y California,
where "banks are fewer in number " y reason of state-wide "branch "banking, privib
legea.

Only 2.6 per cent of all active commercial banks are included in

groups and chains in the Southern Mountain States.

Table 10 - Loans and Investments of Group and Chain Banks by State
Compared with All Commei*cial Bankst December 31> 193^

State by
geographic
division

Loans and investment
Total
Leading
Other
Chainp groups and
groups
groups
(000
chains
(000
(000
omitte ^)
(000
omitted)
omitted)
omitted)

All
commercial
(000
omitted)
$ 3,05S,527 $
284,510
96,665
137,361
1,648,682
336,728
554,581

Middle Atlantic
New York
New Jersey
Delaware
Pennsylvania
Maryland
Dist. of Col.

17,367,662
10,336,64s
1,78^,027
134,032
4,317,614
546,254
249,087




7,410,744
I,4s9,si4
782,060
2,712,360
563,844
1,862,666

810,395 $
79,371

512,349 $
10,258

8,229 $1,030,973
90,129

33.7

692,177

7,456
139,201
55,434

8,229

707,862
139,201
93,781

42.9
4i.3
16.9

1,121,461 1,388,636 263,^
538,698
60, £•22
928,695
219,901 I63 ,Q
949

Hew England
Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut

North Centx'al
Michigan
Wisconsin
Illinois
Indiana
Ohio

Eatio of
group and
chain to
all commercial

2,773.689
1,527,615
3S3.250

16.0
l4.S
21.5

39,421!

862,224

20.0

43,454 133. 362 2,138,269

28.9
61.3
35.3
31.3
6.9
3.3

3S,3^7

582,763

1,9.61,453
855,971
239,011
805,165
61,306

24o,o4o

57,7
851
4,324
39,130

913,720
275,362
848,251
35,130
61,306

31.7

- Ill* -

Table 10 - Loans and Investments of Group and Chain Banks by State
Compared with'All Commercial Ban'cs, December 3l« 1931 (Continued)
Loans and investments
Total
E a t i o of
Leading
Other 1
groups and group and
Chains
groups
groups
ain
(000
(000
1 (000 1 c h ~.—^ s 1 c h a i n to
/
(000
a l l comomitted) omitted)
omitted)
omitted)
mercial

All
commercial
(000
omitted)

S t a t e by
geographic
division

152,845
1.494
45.672
105,679

10.6
.6
11.3
32.4

62,595
3,112
2,924

60,355!
3,757
34.9S6
4,209
17,403

399,156
2,908
35,755
154,318!
12S,4i9
57.4291
20,3271

35.3
1.2
31.7
57.2
71.5
27.7
16.8

73.75S
22,933:
4,164;
—
46,66l

96,169
20,917
75.252
_
-

83,081
30,361
19,110
11,120
22,490

253,008
74,211
98,526
11,120
69.151

16.5
20.9
12.6
10.4
24.0

2,970,0^5
709,373
74,182
88,210
546,624
245,493
996,103
310,060

615,794
407,837
32,219
32.985
35,730
34,807
7L594
622

44,259

32,795
-

24o,424
81,501
14,952
7,217
28,171
20,060
31.755
56,768

900,477
496,19 s
48,317
40,202
67,359
54,867
136,144
57.390

30.3
69.9
65.1
45.6
12.3
22.3
13.7
IS.5

698,130
109,134
60,331
47,305
226,110
30,839
56,590
133,936
33,S25

95,699
58,881
17,027
1,67s
_
18,113
-

13,62s
13,628
_
_
_
-

105,796
4,667
3,469
11,964
22,564
1,240
i4,l45
26,479
21,268

3,567,942
331*050
211,137
3,025,755

1,246,365
137,SSO
107,853
1,000,632

502,207
29,000
14,767
45s,44o

30,4oo
15,882
14,512

Southern Mountain $ 1,439,194 $
West V i r g i n i a
254,111
Virginia
454,731
Kentucky
403,775
Tennessee
326,577

139,088 $
45,672
93,4i6

i
12,263

Southeastern
North C a r o l i n a
South C a r o l i n a
Georgia
Florida
Alabama
Mississippi

1,130,690
2H0,l429
112,854
269,733
179,622
207,177
120,875

236,923
5,4i6
150,561
30,83s
50,10s
-

101,873
2,908
30,339

Southwestern
Louisiana
Texas
Arkansas
Oklahoma

1.531t765
355,416
781,289
106,670
288,390

Western Grain
Minnesota
North Dakota
South Dakota
Iowa
Nebraska
Missouri
Kansas
Rocky Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Nevada
P a c i f i c Coast
Washington
Oregon
California
UNITED STATES




12,263 $

6,s6o
1,146
-

3,45s

1,494 $
1,494
-

;

215,123
63,548
34,124
13,642
22,564
1,240
i4,l45
44,592
21,268

30.8
58.2
56.6
2S.3
10.0
4.0
25.0
33.3
62.3

1,778,972
182,762
122,620
1,473,590

49.9
55.2
58.1
4S.7

$39,174,699 !$6,300,936 i$2,4i4,s43 1926,733 |$9,642,512

24.6

:

!
1
!
1
1

- U5.
The preceding paragraphs have brought out the areas in which group
and chain banking have seen their greatest development.

The treatment in this

connection made use of the conventional geographic groupings of States,

A

later section will group the States from the point of view of the provisions
of their statutes bearing upon the right of banks to operate branch offices.
That section will show that groups and chains have shown their greatest development in those States where branches have been wholly prohibited or largely restricted.

Number of Towns Served by Group and Chain Systems
Three of the leading groups operate in one town only, as Table 11
shows.

Fourteen of them operate in fifteen or more towns; one operates in

115 towns; and one, in 91»

Table 11 - Group and Chain Systems by the Number of Towns
in Which Their Banks Operate f U ) December 31, 1931
Total
Leading groups Other 1groups 1
Chains
Number of towns Number | Number Number 1 Number Number Number Number Number
in which banks
of
of
of
of
of
of
of
of
operate
systems "banks systems ; "banks systems banks systems banks

1
2

1
.5
6
7

8

9

10
11
13

l
2

22
8
16

-

-

2

13

3
1

i

I

2
1

19
11
-

-

2
2
2
1

16
17
18
15
23
26

'dL

3S
20
Ui

1
2

73

^7

-

Slk

63

-

_l

34

56
56

10U
12I

1

Total

23

_
_
-

27

-

91
115

%

7
16
15
7
5
2
1
5
3
l
l

1

30
26
1U

J

*3

28
10
11
—
_
-

8
11

53

h5
ik
17
10
6
5
2

29
37
166
18U

75

106

73

11
23

_

-

1

13

1
1
l

17
17
19

.
-

..
.
-

1

51

IS
28
70
52
21
2k
15
13
9
3
l
l
2
3

—
-

-

3
2
2
1
2
1
1
1

30^ j 176

908

273

Ik
101
23S
2lU
114
156
123

H?

33
11
13
60

55

l\
27

73
51

io4
127
1,886

(1) This represents the number of towns in which there is located the head
office of a constituent bank of the groups




- Ub -

There is thus a wider geographical dispersion among the leading groups than
among the miscellaneous ones and among chainse

The number of towns served

by some of the leading groups through the instrument of the separate i icorporation of banking offices is commensurate with some of the leading statewide branch banking systems in the branch banking States. Among miscellaneous
groupsy 3S out of 63 operate in three towns or less, and among chains, 72 out
of 176 operate in three towns or less.




Table 12 - Loans and Investments of Group and Chain Systems
by the Number of Towns in Which. Their Banks Operate! 1)
December 31> 1931
Loans and investments i n thousands of d o l l a r s
Leading
Other
Total
Chains
groups
groups

Number of towns |
i n which "banks
operate
1
2
3
4
5
b

7
8
9
10
11
13
15
16
17
18
19
23
26
47
91
115
Total

$

737,012
25,273
233,710
72,026
394,44o
1,067,779
545,924
61,306
159,747
742,917
82,958
480,434
470,800
333,769
264,446
312,182
316,21,3

$6,300,936

$

83,834
516,582
1,536,337
S3,l6l
44,94o
27,688
9,325
66,997
28,811
11,035
6,133
_
—
—
-

$ 64,29b
85,291
192,143
214,159
70,921
33,399
59,393
26,955
24,331
34,333
4,250
4 , 5 " ;6
3»^B
12,4s 6
~
—
46,33 6
—

$

$2,4i4,843

$926,73 3

$9,642,512

885,142
627,146
1,962,190
297,320
137,887
506,027
1,136,502
639,376
114,448
45,368
6,133
4,250
159,747
747,453
86,367
492,930
470,800
333.769
264,446
46,316
312,182
316,213

(1) This r e p r e s s n t s t h e numb*3r of towns :m which the sre i s locate
the head off ice of a cons3 t i t u e n t ban!c of the grc )UPc

- U7-

Intrastate Group Banking
Most of the group hanking corporations limit t|heir hank stci.
acquisitions to institutions within a single State or ev^n,smaller ar ^
X
A°
Twenty-three out of the thirty-four leading groups confine their activities
to one State, as Table 13 shows0

Perhaps the test known) of these, both be-

o
cause of its national advertising, and because one unit l f the group is a
New York City bank, is the Marine Midland Corporation
Table 13 - Group and Chain Systems by the Numbeh: of States
in Which Their Banks Operate, December 31>| 1931
Leading groups Other groups
Chains
Total
Number of s t a t e s ]
Number Number Number Number Number N|umber| Namber Number
i n which banks
of
of
of
of
of
of
of
of
operate
systems banks systems banks systems banks systems banks
1
2

23

1
1
7

2

7

303
32

53
s
2

242
50
12

47
9

1,187
302
106
60

2
1

5
2

104

g

642
160
46
60

137
32

io4

213

121

Total

3*

674

127

63

304

176

90S

273

1,886

Tat>le l4 - Loans and Investments of Group and Chain Sy btems " y the Number
b
of States in Which Their Banks Operate, Decembe * 3l» 1931
Number of states Loans and investments in thousands of dollars
in which "banks
Leading
Other
Chains
Total
operate
groups
groups




1
2

$4,33^,079
1,257,384
81,078

5
6
7

$1,771,^30
606,657
36,756

$704,79k
97,901
71, 227
c
812
52,

312,182

8
Total

$6,810,302

1,961,942
189,061
52,812
312,182

316,213
$6,300,936

$2,414,843

$926,733

$9,642,512

~ Hs Some of the better known organizations, operating throughout an entire State
or a major portion of it, are the Wisconsin Bankshares Corporation of Milwaukee, the Guardian Detroit Union Group of Detroit, Financial Institutions,
Inc., of Augusta, Maine, BancOhio Corporation of Columbus, the First National
and National Shawmut both of Boston, and Detroit Bankers Company, Inc., of
Detroit.

It should be stated that the last company named does not regard

itself as engaged in group banking outside of Detroit, if at all.

In its

annual report to stockholders, dated January 12, 1931, it states that "The
units of.the Detroit Bankers Company are all located within Metropolitan
Detroit."

Interests associated with one of its principal Detroit banks, the

First National Bank, are minority stockholders in several up-state Michigan
banks.

Interstate or Regional group Banking
The Northwest Bancorporation of Minneapolis covers the widest geographical area of any group bank organization of the management type. On
December 31, 1931, it had 127 individual banks in eight States stretching
from Wisconsin to Washington.

Second with respect to area covered is the

First Bank Stock Corporation, also of Minneapolis, which, on December 31*
1931, had 10U banks in five States.

It should be remarked that this group

has no units in the State of Wisconsin, but does have in the northern peninsula of Michigan, where the Northwest Bancorporation is not represented.
While the other group banking organizations are more restricted geographically, a number of them have banks in more than one State. The First
Security Corporation of Ogden, Utah, operates in the inter-mountain country,
having units in Utah, Idaho, and Wyoming.

The Southwest Bankshares Cor-

poration of Tulsa, Oklahoma, dominated by the Exchange National Bank,




-Ug-

operates hanks in Oklahoma, Kansas, and Texas, A number of the Southern
banking groups cross State lines also. Only k of the 3 + leading groups
*
operate in more than 2 States, 7 operating in 2 States, This tabulation
also indicates that among the miscellaneous groups and among chains the
crossing of State lines is less than among leading groups.
Nation-wide Group Banking, - None of the group banking organizations which are in operation today can be said to be engaged in group
banking on a nation-wide scale. One company, at lea^t, had plans which
contemplated activity that extensive in its scope. The American Financial Holding Corporation (the name of which was subsequently changed to
the American Financial Corporation of New York) was incorporated January
9t 192S, in Delaware. Poor1 s Bank, Government and Municipal Volume for
1931 indicates that the corporation was organized "to investigate group
banking and to establish a program for a group banking system through the
acquisition of securities of financial institutions. The corporation,
through a management board, will extend its cooperation to each bank acquired,"
The . American Financial Corporation of New York is referred to
as a "super-holding company" by Charles B, Cheney in the Minneapolis
Journal for July 29, 1929• According to the plan as charted by this concern in its prospectus, and described by Mr. Cheney, "six great regional
holding companies are to acquire control of banks, each in its own territory, and manage them, with the parent company over them all. One regional
company is to cover New England, another New York, a third Pennsylvania, and




~ 50 -

the others are to be southern, central, and western in scope." Apparently
the paper plans of this organization were never carried out.
Perhaps the most widely advertised and best known of the companies which hold stocks of banks widely scattered is Ttansamerica Corporation. While it is true that this corporation owns stock in a number of
banks in New York, California, and Oregon, as well as in foreign countries,
its activities perhaps are more typically those of an investment trust,
rather than of a group banking institution of the management type. The
corporate holding company form of organization was utilized in the early
stages both in New York and in California for the purpose of acquiring
banks which were later merged into some one of the principal banks of the
system.

In addition to the Transamerica Bank Holding Company, this or-

ganization included a mortgage holding company, an insurance holding company, a public utilities holding company, an investment securities company,
and a service company.
Details by specific groups and chains with respect to the number
of States and towns in which operating appear in the appendix, Tables I-I^j.
Group and Chain Systems Classified by Number of Banks
The largest of the group organizations from the point of view of
the number of banks, the Northwest Bancorporation, included 127 banks as of
the end of 1931-

The

next

largest, the First Bank Stock Corporation, had

IOM* banlcs. A third organization accounted for U6 banks, while there were 5
others each with 21 to 30 "banks. These 8 leading groups accounted for more
than $1,885,000,000 of loans and investments.




- 51 -

imong the 63 miscellaneous groups, ^9 k&i f i v ^ banks or less,
which had $2,2^3,000,000 in loans and investments.

It has been pointed

out earlier that many of the groups in this class center around very
large metropolitan banks, and that it is the large holdings of loans
and investments by the latter that account for the larger part of the
loans and investments of the banks in these 63 miscellaneous groups.
imong the 176 chains, 127 were composed of five banks or less.
One chain was reported of 51 banks, a larger number than that of any
leading group with the exception of the two mentioned in a preceding
paragraph.




These details are shown in Table 15»

Table 15 - Group and Chain Systems " y Number of Banks, December 31, 1931
b
Number
Number of systems
ITumber of "banks
of
"banks
Reading Other :
:Leading Other
Chains T o t a l
in
Chains T o t a l
groups 1 groups
system 1 groups groups
3
k
5
6
7
g
10
n-15
15-20
21-30
46
51
104
127

—
5
4
1
3
3
5
5
5
1
1
_i

Total i

3*

0




s

12
1
3
3
3
3
1
—
—

63

52
53
lb
17
10
8
6
1
3
3
1
..
176 ;

81
67
28
23
17
12
12
7
9
8
5
l
1
1
l
273

i

69
56

— 1
30 !
28
8
27
30
60
91
123
46
104
121
j

60

6
21
24
27
30
11
~
"
—
—

30^

67^ !
1 1

-

1

nk

2i+3
268
i4o
138
119
96
108
70
109
11*1+
123
46
51
io4
127

212
80
102
70
64
54
10
3S
53
51
—
908

]joans

and i n v e s t m e n t s
i n1 tnousancls 01 d o l l a r s

i

Leading
groups

$ 372,919
247,539
25,273
522,757
812,244
1,187,883
1,179,675
1,026,857
231,394
312,182
T)-6,217

j
;

Other
groups

Chains

Total

1$1,096,343 $247,376 $1,343,719
922,333 240,917 ; 1,163,250
229,600 110,972
3^,572
65,768
16,572
461,265
37,013
356,406
71,254
44,762
27,332
97,367
659,902
25,592
51,559
14,454
854,650
27,952
1,232,291
32,275
6,133
2 0 , 4 4 i 1,200,116
—
—
1,026,857
23L394
46,316
46,316
312,182
—
—
316,213

1,886: $6,300,936 $ 2 , 4 i 4 , s 4 3 $926,733 $9,642,512
II..I.M

.1

.

53 t

Size of Banks in Groups and Chains
Other studies of the Committee based on statistics of failures for
1921-1931 and statistics of earnings for 1926-1930 have brought out the fact
that banks of less than $500,000 of loans and investments have experienced a
larger proportion of suspensions and less satisfactory earnings than larger
banks.

Leading groups have accumulated a small number op banks in this

class; only a little more than one-fourth of their banks) are of this size,
as shown in Table 16 and Chart 3 • imong miscellaneous groups and chains the
proportion is higher so that for the total chain and group movement nearly
half of the banks are in this class (Table 16 and Chart

h).

Table 16 - Number of Group and Chain Banks by Size of I|oans and Investments
December 31» !93!
Chains
Leading grout) s Other groups
Total
Number Per cent Number [Per cent Number Per cent
Number Ber flsnt
Size group
of
of
of
of
of
of
of
loans and investments
of
total
total
banks
total banks
banks
total
banks
Under $150,000
150,000 - 250,000
250,000 - 500,000
500,000 - 750,000
750,000 - 1,000,000
1,000,000 - 2,000,000
2,000,000 - 5,000,000
5,000,000 -10,000,000
10,000,000-50,000,000

37
50
105

73

62
113
117

kS
hi

5..5
7.

i5-.6
10.8
9.2
16.s

17.U
6.8
7-0

^5
20
5^
25
2U
U6
37
23
2U

Total




-Li

-1

100.0

50,000,000 and over

30k

lk.S
6.6
17.S

s
7
15
12
7
7
2
100.0

250
15U
208
81
U8
6^

27.5

332

17.0
22.9
8 •9

22k

5 •3

12
1

7 .0
6 •9
3 .0
l •3
.1

90S

100.0

63
27

367
13S+
223
217
96
S3
_21
1,886

17
11 •9
19 • 5
9 •5
7 .1
11.s
11,5
5.1

U.U
1.6
100.0

- 55 -

CHART 3

NUMBER OF BANKS IN 3 ^ PRINCIPAL GROUP SYSTEMS
NUMBER
NUMBER
BY SIZE OF BANK
300

300

200

200

100

100

» Z E & 0 U P S UNDER




150
TO
250

250

500

750

500

750

1.000 2.000 5,000 10,000 50.000 O E
VR

TO

TO

TO

1,000 2,00C1 5.000 10,000 50000
TO

TO T

TO

TO

AND

Number of banks in 34 principal group systems as of December
31, 1931, Banks c l a s s i f i e d according to si| ze of loans and
investments




- 56-

CHART h

NUMBER

NUMBER OF BANKS IN CHAIN AND GROUP SYSTEMS
BY SIZE OF BANK

NUMBER

400

400

300

300

200

200

too

too

0

_

SIZE GROUPS . _ , „ -

IN

THOUSANDS
Of DOLLARS

UNDER
I,S O
OU

150

250

500

250

500

750

TO

T
O

TO

750
TO

1,000
T
O

TO

5,000 10,000 saooo

TO
TO
1,000 2,000 5,000 10,000 5Q0O0

AND
OVER

Number of banks in chain and group systems as of December
31f 1931. Banks classified according to size of loans and
investments

- 57 -

The data appearing in Chart 5 a&d Table iZ show that from
6 to 9

ou

* of every 100 hanks in the country with loans and investments

of less than $500,000 were embraced in the group and chain movement as
of June 30, 1930«

On the other hand, hk out of every 100 active "banks

with loans and investments of $50,000,000 and over were included in the
movement. Of the 31 banks of this size in all chains and groups, 2^
belonged to leading groups; 6, to miscellaneous groups; and 1, to a chain.
June 30, 1930, is the latest date for which all active banks have been
distributed on a size basis. The relative position eighteen months later,
however, was in all probability little different.




Table 18 - Number of Banks in Chain and Group Systems per 100
Active Banks, by Size of loans and Investments, June 30, 1930
Size group
loans and investments
Under $150,000
150,000 - 250,000
250,000 - 500,000
500,000 - 750,000
750,000 - 1,000,000
1,000,000 - 2,000,000
2,000,000 - 5,000,000
5,000,000 - 10,000,000
10,000,000 - 50,000,000
50,000,000 and over
Total

IJumber of "banks in
chain and group systems
•per hundred active "banks

6.3
S.3
S.3
9.0
10.0
10.5
15.2
IU.S
27.s

U1.6

9.7

- 58 -

CHART 5

PER HUNDRED

NUMBER OF BANKS IN CHAIN AND GROUP SYSTEMS
PER HUNDRED ACTIVE BAJ1KS
BY SIZE OF BANK

PER HUNDRED

50

50

40

40

30

30

20

20

10

10

0 I
SIZE 6B0UPSfm„_ I C Q
IN
UNDER ' 2 r
THOUSANDS 1 3 Un
is
™
OF DOLLARS
250




S O O 10000 50,000
yO
TO

TO

AND

1QO00 50,000 OVER

Number of banks in chain and group systems per hundred active
banks as of June 30, 1930. Banks c las si f;ied according to
size of loans and investment s

- 59 -

Size of Towns in Which group and Chain Banks Operate
Table 19 shows that the leading groups have avoided the towns
with a population of less than 5*000 to a greater extent than miscellaneous groups and chains "but indicates the relative!y large extent to
which chain hanking has -developec in small towns.

Table 19 - Number of Group and Chain Banks by Si}ze of Town
December 31» 1931
Population
of town

Under 500
500 - 1,000
1,000 - 2,500
2,500 - 5,000
5,000 - 10,000
10,000 - 25,000
25,000 ~ 50,000
50,000 - 100,000

Chains
Other groups
Leading groups
Total
Uumber Per cent Number Per cent Number Peri cent Number Per cent
of
of
of
of
of
of
of
of
banks
hanks
banks
total
tal
total
hanks
total
tb

s

+9
113
79
100

3^
35

k.6
7-3

16.s
11.7
12.^
lU.g

5.0
5.2

67U




XX

Hi
2S

27
36
22
12
30U

100.0

12.2
10.9
13.5
9.2
8.9
11. S
7- 2
7.

22. k

22.1

100,000 and over
Total

37

100.0

236
I7I+
186
86
60
50
30
30
56

26.0
19.2
20.5
9-5

90S

00.0

0.0

5-5
3-3
3-3
6.1

30U
256
3U0
193
171
186
Sb
77

lo.l
13.6
18.0
10.2
9.1
•9

2:
d

i4.q
1,886
100.0

Table 20 - Loans and Investments of G-roup and Chain Banks by Size of Town
December 31, 1931

Leading groups
Other groups
Total
Chains
Loans and Per cent
Loans and Per cent
Loans and Per cent
Loans and Per cent
of
of
of
investments
investments
investments !
of
investments
(000 omitted) t o t a l
(000 omitted) t o t a l
(000 omitted) t o t a l
(000 omitted) t o t a l

Population
of town
Under 500
500 - 1,000
1,000 - 2,500
2,500 - 5.000
5,000 - 10,000
10,000 - 25,000
25,000 - 50,000
50,000 - 100,000
lOOyOOO and over

$

8^.2

7,133
9,516
22,472
17.777
3L335
109,057
102,767
78,670
2,0^6,116

$6,300,936

100.0

$2,4l4,84^

1
.

.1

1^5,675
342,708
5,2Ho,686

Total




5.3SO
20,349
61,232
72,9^3
123.335
2SS.62S

?

.

•3

1.0
1.2
1.9
4.6
2.3
5.4

$

3 3
*
84.-5

$ 43,093
42,277
72,931
65,886
66,596
114,952
99,83S
109,070
312,090

100.0

$926,733

•3
.4
.9
.7
1.3
4.5
*-3

4.6
4.6
7.8
7.1
7.2

$

r
.0

55,606
72,142
156,635
156,006
221,266
512,637
348,280

530,44s

.8
1.6
1.6
2.3
5.3
3.6
5.5

33.7

7,588,892

78.7

100.0

$9,64?,51 ?

12.4
10.8
11.8

,

100.0

O
1

ChAPTER IY

FACTORS ASSOCIATED WITH THE GROUP D5VSLOPLENT DIEIH6 1927-193Q

It is desirable to examine some of the factors that were directly
associated with the extraordinary formation of groups!, particularly in the
holding company form, during the years IS27-1930*

Reference to Table 8

will serve to recall the fact that most of tne leading names in the group
field came into being in the years 1927, 1928, 1929, and early 1930.
Various reasons have been assigned for the recent development
of group bank holding companies. Underlying all of t jhem were changes in
economic conditions.

Specific causes waich have beenl advanced as operative

in individual instances are low earnings, failures, and difficulties genrerally of the small country banks, the development of larger units in business and industry generally, a development of regional consciousness, desire
for personal importance or power, imitativeness, competitive self-defense,
attractiveness of bank stocks as investments, the growth of bank mergers
and consolidations, promotional activity, and preparation for permissive
branch bank legislation.
Of all the factors, however, the trend towards concentration,
which has been checked in one direction by restrictions against branch
banking, seems to be the most fundamental.

Concentration of banking re-

sources in other great commercial countries, particularly in Canada and
the British Isles, was effected by fusion of separate banking organizations




61-

62 -

ible where there is no
under one corporate charter. This is entirely possn
limitation on "brancn office activity.

d
In tne Unitec States, however,

where national and State "banking laws require in general the separate in~
corporation of "banking offices, the trend towards concentration could not
he met directly. Therefore, these indirect methods have been resorted to«
In the cities it was possible to combine banks through the processes of
merger and consolidation, to meet the need for largpr banking units de
manded by larger industrial units. In the smaller [centers this was more
difficult, and in tne country districts, especially] where branch banking
was prohibited, it was impossible. The group metho l was the only way open
i
for the development of large scale banking operations in the agricultural
regions of the Middle i e t and tne Southwest, The tatter part of this
/s
chapter will show from the statistics that group banking has had its greatest development in those States where prohibitions on branch offices are
most rigid.
The trend towards concentration is not n i r and, therefore, it
ek,
becomes necessary to look for some special characteristic of the era 19271930 which gave the holding company movement impetus at that time. This
characteristic appears to have been the promotional and speculative spirit
of that period.




Promotional and Speculative Profits
It mast be recalled that during tne time i r e the bank holding
Jhn

I

-63companies were being launched there was much activity in corporate promotion generally which was clearly of a speculative sort,

It would hardly

have been natural for the element of speculation not to creep into group organisations* la the pjiblij?utility and railroad fields promotion of companies
to buy the stock of operating units was common.

Stock bought by the hold-

ing companies rose continuously in the upsweep of the grbat bull market.
The rise of operating company stocks carried the holding company stocks
with them, and doubtless at times it was the other way around. There was
always the s?/irling around of stock from one buyer to another. As soon
as a speculator turned over one holding at a profit, he incurred a new commitment. Until the final accounting there were profits yo be made on these
shifts.
It is clear enough that promoters who bought bknks for cash in behalf of a holding company looked forward to the possibilp
ity of seeing the
holding company stock rise in the current bull market wif resultant profit
th
to them. Moreover, the owner of stock in an obscure bahjs that had no access
to the organized market, by trading his stock for shares| in a holding company, came into possession of a security which could be J30ld in the organized
markets.
The years from 1926 through 1929, furthermore,!were characterized
by high levels of corporate profits generally, including bank profits. The
shares of metropolitan "banks were bid up with the rest of the stock market
to exceptional levels, eren taking into a ccount the high level of earnings.
Mergers and consolidations were the order of the day among banks as among
other corporations.

It was not uncommon to hear the statement that the

directors were led to sell a bank, tempted by the high valuation the market
was placing upon it.




-ftNot only was the movement related to these aspects of security
speculation hut doubtless to others. There was a widespread desire to
share in the profits of the business of security merchandising in its
various phases of origination, underwriting, wholesaling, and retailing.

Group organizers realized that, by bringing together the resources

characteristic of several of the groups, sufficient financial strength
would be marshaled to make it feasible to enter this business. At the
same time the banks in a group afforded a final market in their portfolios for some of the securities not retailed to other investors. The
number of leading group organizations which have indicated their activity
in the merchandising of securities will be brought o | in subsequent paraut
graphs «
Although the relation of the organization o f groups to promo|
tional activities of the era of security speculation is unmistakable, the
.testimony of the group managers minimizes it. One grloup, however, answering the Committee's questionnaire acknowledged that there had been a promotional element in its formation which it was trying to live down. The
prevailing practice when independent banks are brought into a group has
been for the holding company or other controlling agdncy to exchange its
stock for that of the newly acquired subsidiary.

In throe cases out of

four some of the stock at least of the holding compan|ies was issued for
cash*




-65~

The majority of the groups made a rather detailed examination
of the condition of "banks before absorbing them. As a result of examination, a value was set upon the shares of a particular bank, based upon
an appraisal of assets, and upon earnings. Frequently allowances were
made for good-will, quality of management, past growth L and future
prospects. The value was sometimes determined with thfe purpose of enabling the holding company to earn a definite rate, fo^ example, 8 or
10 per cent.
Groups were asked to indicate the price paidl per share for the
stocks of any of their banks that were purchased outright, and the book
value of the same shares at the tine of purchase and at the time when the
questionnaire was answered. An analysis of replies inflicated that in
about half of the instances book value

and sale price were close. In the

other half of the replies, however, the value fixed onj the member bank
shares was considerably above book value.
The questionnaire was answered before the trbugh of the depression was reached, and none of the groups reported a general shrinkage in
the value of their bank shares since their acquisition.

In a few instances,

however, the book value of the shares of individual banks had undergone considerable decline. On the other hand, the holdings in a few of the groups
had appreciated to a considerable extent at the time -j questionnaire was
ft
c
he
answered.
Most groups have used more than one method o f acquiring their subl
sidiary banks.




Various combinations of outright purchase for cash, exchange

- 66 -

of stock, and organization of new institutions have been employed by most
of the organizations. However, five of them secured all affiliations by
exchanging their stock for that of independent banks, and five ethers were
formed entirely by purchase of the stock of the unit banks.
After the collapse of the security markets in the autumn of 1929*
there has been little activity in organizing groups.

It is unfortunate

that the historical statistics of the movement are so limited that they do
not trace completely conditions in the formative period.

By the time the

first comprehensive figures were gathered as of June 30> 1929» a large
proportion of the promotional activity in group banking'systems was at an
end.

It has been shown that there were 321 chain and group systems with

1,921 banks at that time. Six months later the number was 33 2 and since
that time it has declined, 273 "being in existence at the end of 1931»

The

maximum number of banks associated with group and chain systems was recorded
as of June 30, 1930*
of 1931*

a<t

2,229, which had been reduced to 1,886 by the end

The temporary inclusion of the Chase National Bank in the figures

as of June 30> 1*93!» ^ o r reasons explained earlier, caused the loans and
investments of the movement to reach $13,355>000,000 as of that date. Because of the elimination of this and other banks, $,nd because of the heavy
liquidation of bank credit, loans and investments 0f group and chain banks
had declined to $9,6-43,000,000 as of December 31, 1931.
While the depression has checked the movement, there is no indication that the group and chain development will not be resumed with the
return of more normal conditions, unless the tendency towards concentration
is given another direction.




- 67-

Larger Business Units in Industry

The merger of many small independent business enterprises in
the smaller cities of the country into national organizations, and the
consequent centralization of their headquarters in the largest cities
have operated to make larger banking units necessary to accommodate them.
It has worked also to the disadvantage of the smaller banks in the cities
which lost the headquarters of the enterprises merged.

This factor is

given as an important element in the original decision to form the Marine
Midland Corporation of Hew York State, and in its decision to acquire a
bank in New York City, as a means of retaining the accounts of some of the
firms which moved their headquarters to that city.
The Committee included the following in its questionnaire directed to important groups:

"Presumably many formerly independent enterprises

(stores,fixctories,etc.) operating in your region have been absorbed in
recent years by larger companies, witn the result that the local banking
connections have been disturbed.
list of such cases?

If so, can you give a representative

Are your banks seriously affected by this tendency?"

About half of the replies to this question indicated that the
banks of the organizations concerned were either not affected at all, or




- 68 -

at least not seriously, by this tendency. On the other hand, about a
fifth admitted that it had influenced the formation of their groups,
or had affected the "banks in their territory, in varying degrees. The
larger size and scope of the group organization have enabled it to
handle transactions which would have "been too large for any of the
members operating independently.

This has meant that some of the

groups have made it unnecessary for growing concerns in their trade
areas to go to the larger financial centers for funds.
On the other hand, a large number of the answers denied any
adverse effect on local banks from the increase in the size of business enterprise. A few replies even indicated that because the consolidated commercial and industrial concerns were in a strengthened
position, their accounts were worth more than those formerly kept by
the larger number of smaller firms.
In reply to more general questions as to the cause of the
formation of groups, the answers represented that the group banking
development has grown in part out of a desire to afford a type of
service not possible under the unit system.

Some statjed that the

organizations were formed in order to provide broader banking facilities on a more economical basis. About a fourth of the replies




~ 69-

indicated that changed economic conditions v/ore influential in the
formation of the group, while about a third declared that the development was mainly a matter of choice with them. In a few instances the constituent banks had already been loosely connected
by virtue of their stock being held by the same individuals, i.e.,
by a chain set-up. These groups were organized merely to consolidate control. Other considerations mentioned in two or more replies were:

legal restrictions on branch banking, the general

concentration trend in "banking, and the threatened control of the
banks in the area by interests in the larger financial centers.

Competitive Self-defense and Regional Independence
Many of the bankers in commenting on the movement have
stated that if they had not acted in their territory, someone else
would have done so. Tims, Mr. Decker of the Northwest Incorporation in his testimony before the House Committee^-*-/ suggested
that a number of instances had come to his attention in the Northwest of Eastern interests offering to purchase the ktock of banks.
He cited as a specific example of this, a purchase Of stock of the

(l)




ttld., P. 792-

- 70 -

First National Bank of St.. Paul by Blair & Company.

The Wisconsin

Bankshares Corporation was influenced by the invasion of Wisconsin
"by one of the Minneapolis groups. The Detroit Bankers Company perhaps felt that it had to follow the lead of the Guardian Detroit
Union Group.
This motive is associated with the matter of regional independence. Building up the banking business—commercial, investment,
and trust—of a territory, and preventing the loss of business to other
centers and other regions, have undoubtedly been among the important
causes for the formation of a number of the groups. The case of the
UTorthwest national Bank does not seem to have been an isolated one.
Many of the dominant banks of regional groups feared that financiers
located in the large centers such as Hew York and Chicago were about
to obtain control of their country correspondents.

That their forma-

tion of groups in self-defense has been generally successful in keeping this control in the region in which they operate is indicated by
the replies to questions as to the distribution of t j stock holdings
ie
in the group. Most of the groups indicated that upwards of 75 P e r
cent of the stock, of the holding corporation was hel& within the
State in which the head office is located.




- 71 -

The Position of the Small Country Bank

Those engaged in the operation of group qanking systems
frequently refer to changing economic conditions a l being fundas
mentally responsible for current evolution in banki|ng .

Generally

ssociated with the conspeaking, changing economic conditions are as
centration of business in the larger centers of th^ country.

It is

often stated that automobiles and good roads have r educed the inn
portance of the smaller communities, made for largej: business -units,
er
and made existence difficult for the small-town banfc
Other sections of the Committee's report sho\7 that the
failure record of banks with limited resources in ilar. •tl areas has
been high and that earnings of this class of banks [generally have
been unsatisfactory.

As has been shown in Chapter I I I , however,

the banks which have been combined in groups are no|t for the most
part the small-town country banks, but banks in coufn
ity-seat towns
and larger cities.




- 72 -

Preparation for Branch Banking
A good many of the group hank systems hkve "been organized
with the avowed purpose of converting into "branch systems when and
if possible.

The Fletcher American Group in Indianapolis promptly

so converted when a change in Indiana law e a r l y in 1931 made i t possible*

Some of the sponsors of holding companies declare that their

groups would have been set up under the branch form of organization,
i f t h a t had been possible, and that they w i l l change as soon as permitted.

The p a r t that laws l i m i t i n g branch officfes have played in

the organization of the holding companies may be rjudged by the r e p l i e s made to the following question in the Commitfctee questionnaire:
!l

If the law permitted, would the management prefer to organize t h i s

group into a branch banking system?

If not, woulfi your banks or-

ganize branches in the smaller communities?11
Out of 25 answers to t h i s question only| k were p o s i t i v e
in t h e i r preference for the group as against the ^ranch system. A
majority would adopt the branch bank organization! in one degree or
another i f the law permitted.

Some systems would convert a l l banks

to branches of the leading bank.
the group and branch systems.

Others would usfc a combination of

Since the questionnaires were returned,

several of the group bankers who were formerly dojibtful have indicated
a desire to convert into branch systems.




- 73 A Substitute for Branch Banking

Some of the statistical facts, which suggest that the group
movement is a method of banking concentration usedj as a substitute
for branch banking systems, are brought out in Tab^ e 21. Of the Gfk
banks belonging to the leading groups, 3^7 were in States prohibiting
the establishment of branches as of December 31, l4)31»
States where administrative ruling did

ani

93 were in

not allow hew branches although

the statute was silent on the subject. Moreover, ^ f the banks in lead>
ing groups, 2^+9TOre located in States which allowetp. branch offices only
in limited areas adjacent to the head office. Because of such limitation most of this group could not then be converted into branches of
the dominant "bank. A very small number, 25, of th^ banks in the lead1

ing groups were located in state-wide branch banking States.

In gen-

eral these banks could not then be converted into ^ranches of the
leading bank, when it, as a member of the Federal Reserve System,
could not further extent its branch activities outside of the head
office city under existing law,

|

In the States of Vermont, Maryland, Delat/are, and Virginia!1)
and the District of Columbia, all of which accorded their banks statewide branch privileges, no banks belonging to groups or chains were
reported.

North Carolina, also in this class of Spates, had but one

group bank.

In Arizona, Ehode Island, and South Carolina the repre-

sentation in groups and chains was much less than in California.
T/ In Virginia banks may establish branches in their home city or in
other cities of more than 50f000 inhabitants. They may also acquire
banks in the same or adjoining counties through mejrger and connect them
into branches.




Table 21 - Number of Banks in Group and Chain Systems, December 31, 1931
Number of banks
States classiLeading groups
Chains
Other groups
Total
fied according
Nation- State NonNation- State NonNation- State Nonto law regard- Nation- State NonAll
Total
Total
Total
ing branch
member member
member member banks
al
al
member member
al member member
al
banking

State-wide
branch banking peraitted

IS

Branches restricted as
to location

122

7

10

1

10

21

2^-9

52

2k

61*

1U0

70

10

9

100

27

25

11

19

37

1

27

65

130

211

2kk

62

29U

600
t

—•>

Establishment
of branches
prohibited

lk

150

138

86

9

^3

307

12+3

201

8

321

530

33k

31

-t

550

975 '
No provision
in State law

_I2

Total

362

•

-

-

-

1

,

-

,

1

,
-

-

• }

21

..

.

.

I

!

2

271

kl

-21
67k

107

,

«

...-.

-

...,.

> . . . . .

_k

_1

3.
.

.

1

.

.

.

.

.

.

30^

163
.

...•

•

.

.

. —

Data by States appear in the Appendix, Tables X, X I , and XII.




336

88

1kg

112

23

5ks

908

8O5

112

38

9S3

2U6
1,886

Table 22 - Loans and Investments of Banks in Group and Chain Systems, December 31, 1931
Loans and i n v e s t m e n t s i n m i l l i o n s of d o l l a r s
States c l a s s i Leading groups
j
Other groups
fied according
Chains
Total
f
t o law r e g a r d - Nation- S t a t e
ITon- „ , _ JEiation- S t a t e NonAll
Nation- S t a t e UonNation- S t a t e NonTotal
Total
Total
ing b r a n c h
member member
member member banks
1 al member member
al
al
1 a l member member
banking
State-wide
b r a n c h banki n g pennitted $

9^0

$ 66

$1,006 $1*26

$

129

$ 16

$

631 $ 16

$ 13

Branches r e s t r i c t e d as
to location

2,03s $

802

37S

3,218

221

1,101

163

1,1*25

193

$33

122

Establishment
of b r a n c h e s
prohibited

1,335

269

360

1,963

16S

5^

76

292

223

9

135

11

11»J

1

1

1

_i

-12.

$2,1*15 $522

$1*3

$356

$ 29 $1,1*1*2 $

Ho p r o v i s i o n
i n S t a t e law
Total




129 $

95 $1,666
1

102

$U,i+i6 $1,070

$215

$6,301 $275

$1,285

$255

1

i

2,1*52

1,725

332

139

1*22

1,936

1

729 5 , 1 1 7 ^

571 2,629
31

171

$927 $5,212 $2,392 $1,1*26 $9,61*3
. , . . . , , .

, -

„

•

......




-76 In many of the States in which no new branches were permitted, and where very few branches existed, a i important proportion
|
of all banks was included in groups and chains. For example, in
Minnesota there were 8S6 active incorporated commercial banks as of
December 31, 1931* One hundred and four of these belonged to leading groups and 256 in all belonged to groups aftd chains. As Table
23 shows, half of the banks in Nevada and a third of those in North
Dakota and Idaho belonged to group and chain systems.
In some of the States in which there were numerous branch
offices the proportion of individual banks numbered among groups
and chains was large. It is difficult in such cases, however, to
assess accurately the meaning of this condition. The relative importance of banking concentration through groups and chains is only
clearly isolated in States that require the separate incorporation
of banking offices. The proportion of the banking strength as
measured ^oy loans and investments included in the group movement in
any particular State is also somewhat misleading, because under the
definition used many great metropolitan banks are included in the
statistics.

Such banks in many instances represent concentration

not by reason of covering a wide geographical ejxpanse through a multiplicity of offices, either branch or separately incorporated, but
because they have on their books many commercial banking accounts of
large size.

- 77 -

Table 23 - Group and Chain Banks in States not Pernitting N e w Branches
December 3 1 . 1931

Number of "banks
Group and
All
(proup and chain "banks
In
In
incorporated
In
per hundred
chain)
commercial leading other chains
total
active banks
groups groups
banks

State

Alabama
Arkansas
Colorado
Connecticut
Florida
Idaho
Illinois
Kansas
Minnesota
Missouri
Nebraska
Nevada
New Mexico
Oregon
Texas
Utah
Washington
West Virginia
Wisconsin

256
276
3
187
122

,29U
923
886
992

633
32
50
199
,102
88
286
218
S69
66
246
524
263

13

9
9
22
28
1
104

6
7
Ik
3
9
36

7
21
1

I

10
5

12
36
23

53

New Hampshire^1/
North Dakota'l)
Oklahoma^ l)
South Dakota' ••
*>
Wyoming'1)

_I§

2

Total

9,966

400

38
19

5

3*
1*3

2*

9.*

J

J

6.9

16
55

25
g
23

1+5

55,
96
256

5

?
142
16
46
16
5

27

S
i
99

60
12
14
1
29

21

73
1
82

40
75
19

_i*
67s

11.2
29.U
36.9

*•?
10.4
28.9
2.7
8.4
50.0
10.0
13.1
9.0
23.9
25.5

,2

23
9H
53
16

33-7
17.9
20,2
20.5

1,221

12.3

(l) There is no specific legal prohibition in these Stp-tes, but because of
administrative rulings or other reasons, n o "branch] of State banks are
bs
in opere/tion therein•

Branch Banking among Groups. - There i s a t Dre sent a not inconsidr
erable amount of branch banking among the leading groups .

Table 2k shows

that within the 3U leading groups there were 898 brand |i offices as of December 31, 193!•

With the 67^ constituent banks t h i s mad^ a t o t a l of 1,572

banking offices, about half of the figure of 3,206 for a l l chains and groups •
One member of the Transamerica group contributed 3W+ of the branch offices.




- 78 ~
Table 2^ - Banking Offices in Group and Chain Systems
December 31, 1931
Number
Branch
Total
Banks
(head office) offices "banking offices
3^ leading groups
63 other groups
176 chains
Total

S98
321
101

67^
30U
908

1,320

1,2S6

1,572
625
iaOQa
3,206

There are not many branches among the chain systems although some
of the miscellaneous groups which center around large metropolitan banks in
States where at least some branch banking is permitted have numerous branches.
It is worthy of note that the banks belonging to the miscellaneous groups and
chains are mao&cdf, as is the case with leading groups, in States where limitations on branch extension exist, as shown in Table 21.
Table 25 shows that a majority of the branches among leading groups
are in the head office city of theTOopogtarcodominant bank*

Among miscel-

laneous groups two-thirds of the branch offices are in the head office city,
and among chains nearly three-quarters.

Table 25 - Branches in Group and Chain Systems, December 31, 1931
Number of branches
H
Number of
Outside head
"banks
In head
office city
Tot41
operating
office city In own In other
county counties
branches
3 + leading groups
*
63 other groups
176 chains




Total

2k

U91
214

11
1

1+!+

-a

778

77

383
63

1+65

ggs
3211
lqi

63
33

1,320

121

*1

- 79 ~

A majority of the branches among all chains and groups are in
States permitting limited branch banking, as Table 26 shows. Most of the
others are in those States allowing offices over the whole State.

In such

States, large banks which cannot establish offices outside the State, may
spread their services outside it through the instrumentality of the group.

Table 26 - Banking Offices in Group and Chain Systems
December 31, 1931
States classified
a c c o r d i n g to law
r e g a r d i n g b r a n c h banking

ITumber
Banks
(head o f f i c e )

B^nch {
offices

Total
"banking o f f i c e s

S t a t e - w i d e b r a n c h banking
permitted

65

575

61+0

Branches r e s t r i c t e d a s t o
location

600

728

1,328

E s t a b l i s h m e n t of b r a n c h e s
prohibited

975

17

992

Ho p r o v i s i o n i n S t a t e law

2U6

Total

i,ss6

—

1,320

2l46
3,206

Appendix Tables X, XI, and XII supply information under these classifications by States.




CHAPTER V

TK5 B A M HOLDING COMPANY; MAJOR SYSTEMS

The following pages will be devoted to important phases of the
organization, management, and policies of leading examples of bank holding companies. The cases will be grouped geographically for the sake of
convenience, but geographic divisions will not be taken up in their ordinary
sequence.

Those which have some of the more significant representations

will be discussed first. A general analysis of the holding company will be
given in succeeding chapters.

Western Grain States
Uorthwest Bancorporation and First Bank Stock Corporation. « There
are no better examples of the modern group banking movement than the two
groups, the Northwest Bancorporation and the Pirst Bank Stock Corporation,
both with head offices in Minneapolis, most of whose banks are located in
the Western Grain States.

In organization and policy they are much alike

and are typical of the dominant holding company-management type. Both cor*porations were formed under Delaware law early in 1929. There is only one
class of stock in each corporation.

In nearly all cases the stock of sub-

sidiary banks is fully controlled and was acquired by exchanging for it stock
in the holding company.
No double liability provisions attach to the shares of the holding
company, but the Northwest Bancorporation has stated that it follows the
policy of carrying other investments equal to 10 per cent of its bank stock




~ 80 ~

- 81 holdings*

These additional assets are a partial assurance to bank depositors

with respect to the holding company!s making good on the double liability of
stock owned by it* These corporations take the position that as a practical
matter greater protection is offered to the depositors and other creditors
of the banks owned by the corporations than is customarily true of those
owned by natural persons.
The First Bank Stock Corporation started its operations with the
idea not of exchanging stock in the corporation for stock in the banks included within the group, as was done by the Northwest Bancorporation, but of
employing the method of direct purchase of bank stocks. It was soon found,*KA*t*htAiU*,
they have explained, that banks in the territory did not wish to sell out,
but preferred the exchange of stock method of affiliation. Accordingly the
First Bank Stock Corporation shifted to that method of procedure.
The organizers of these groups have stated that they were motivated
by the long period of banking distress in thafc territory which affected principally farmers and business men in the small towns* Another consideration
which brought about the organizations was the activity of large Eastern financial groups in the territory, an outstanding instance df which was the purt
chase by Blair & Company of New York of a large interest in the First National Bank of St* Paul.

Is
It was desired by Twin City bahkep r to keep the terri-

tory more independent within itself.

It was also believed that bringing the

banks together in what was regarded by some of its organizers as a sort of
a cooperative movement might add to the profits of the banks*

One reason

for the bank failures in the district had been the inability of the small
banks to make money.




It was thought, too, that a strong group organization

- 82 -

could offer better and more varieties of service to the smaller communities
and country districts. Constant contact is maintained^ with the various units,
examinations are made, central records of loans and investments are maintained,
and frequent visits and conferences are a part of the group program. A central
auditing force is employed.
The Pirst Bank Stock Corporation has the reputation locally of
exercising a considerable degree of centralized control over its banks.
While loans are made locally as heretofore, daily reports of loans made
and loans repaid are required.

Officers of the corporation consider all

new loans and criticize those of doubtful merit.
Detailed information from these two groups as to the size of backs
owned, size of towns in which their member banks are located, distribution
of stock holdings, policies, and operations is contained in the questionnaires and tabulations in the appendix. The location of banks in these
groups is illustrated in Chart 6.
In addition to these two outstanding groups the Western Grain
States have a few minor groups and a number of chains. The Commerce Trust
Company of Kansas City

and the Lafayette South Side B^tnk and Trust Company

of St. Louis each dominates a small group of banks in its respective city.
ed
The Bank Shares Corporation of Minneapolis, incorporate in South Dakota,
operates 5 small banks in Minneapolis. Two other combinations, as much
chains as groups, appear on the group list. St. Olafs College and P. 0.
Holland of Eforthfield, Minnesota, are reported to control 8 small banks,







- 83 -

CHART 6

BANKS IN THE NORTHWEST BANCORPORAtlON AND IN THE
FIRST BANK STOCK CORPORATION
DECEMBER 31, 1931

/

<fi

*»/
/

(

•

\

I

I

•

•

MONT.

0

•

•

• •

s

! • % A
•

o

V/yo.

^^L____J

c

MINN.

MICH.

•MINNEAPOLIS

~ i °n»

A#

°
o

•

Wise.

< *

S.DAK. «*• g
o

O NORTHWEST
BANCORPORATION
% FIRST BANK STOCK CORPORATION

1

1

••

$0

1

•

* A#°
•• • A

N.DAK.

•*

*•

•

•••

*

•

/ • *
l

—

%

%

V

-4

•

\

0

o

o
8

O

10VVA
0

NEBR.
0
1

e

—

SI

~ sU~

and C. J. Weiser, Inc., Decorah, Iowa, controls S small banks. This organization is merely the incorporation of a family interest and is not really
a group in the normal sense.
Pacific Coast States
It is often stated that the present era of gijoup banking originated
on the Pacific Coast. The second chapter, however, whijch described early
examples of chain and group banking, showed that a considerable number of
systems had existed for decades in many parts of the country.

The State of

California with its permission to State banks to operate state-wide branch
banking systems set a pace in multiple banking that majt have had an influence
in adjoining States where other means were used to attain banking concentration. Undoubtedly the banking developments in the Western States were influenced by the active operations of the Bank of Italy and interests associated with that institution.
Transamerica Corporation* - Incorporated in 3i90U, the Bank of
Italy early became an instroment for setting up in California a state-wide
branch banking system. Because California law did not permit one bank to
purchase the stock of another bank, it became the practice of the principal
officers of the Bank of Italy to buy the stock of independent unit banks,
consolidating the purchased institution with the Bank 6f Italy, and operating
it thereafter as a branch. As transactions of this character increased in
number and in size, it seemed desirable to organize a corporation or holding
company to acquire and hold the stock of independent u j i banks, pending
iit
conversion of the institutions into branches of the Bai^c of Italy.




~ 85 -

Accordingly, the Stockholders Auxiliary Corporation was incorporated
under the laws of the State of California, June 20, 1917, and subsequent to
that date "became the purchaser of the hanks intended to he converted into the
Bank of Italy system.

In 1919 the Bancitaly Corporation was formed under

the laws of the State of Now York to foster a branch qanking system in New
York City,

The activities of these two corporations, land a score of other

interrelated and allied organizations, became nationwide and even international in their scope.
In 1928 Transamerica Corporation was organised to take over the
various Bank of Italy interests, banking, utility, insb.ra.nce, and otherwise.
It was much more than a group "banking concern.

,
Indeed, in 1930 it was rc~

liates^n become Transorganized along functional lines, and one of its affilp
america Bonk Holding Company.

As a matter of fact, Transamerica Corporation

had been more of an investment trust and trading corpop
ration than a bank
management or operating company. While it held the stock of banks in several
States and foreign countries, and negotiated for bank Stocks in other States
in the United States, it cannot be regarded as the sam| sort of institution
as the typically "group banking" corporations which developed elsewhere
simultaneously with it.

This is particularly true sine its reorganization
;e

in 1932, which will be referred to in the next chapterL
L

The early operations

of Transamerica, on the other hand, -pointed the way for a number of holding
companies in the banking field not only in the West but throughout the country
generally, some of which, however, were almost purely promotional in character^




~ 86 -

Marine Banco^ooration. ~ The date of incorporation of the Marine
Bancorporation of Seattle, Washington, September 10, 1927, may be tpken as
the opening of the present group "bank era.

The officers of that institution

originated the term "bancorporation," and it is probably true that the later
development of group banking has been very much influenced by the Marine
Bancorporation.
What is now the Marine Bancorporation group banking activity began
in 1924 when the Marine National Company, subsidiary of the Marine National
Bank,acquired the control of the King County State Bank, located in the
University district in Seattle.

It was the operation of this bank in con-

junction with the Marine National Bank which convinced the officials that
economies could be effected, credits and investments better supervised,
greater public confidence inspired, and profits increased with no serious impairment of local popularity or service

by the adoption of a group organiza-

tion.
Each of these affiliated institutions, the Marine National Company
and the King County State Bank,had some stockholders who were not stockholders
of the dominant bank, and the Marine Bancorporation wap organized in 1927
under the general corporation laws of the State of Washington to consolidate
the interests of these various groups of stockholders and "to provide a
corporate vehicle for the further expansion of the group banking plan,11
The stock was of two classes and the voting stock of no par value is in the
hands of a limited number of persons• Sixty per cent of it was owned by directors of the bancorporation, most of whom in turn are identified with the
National Bank of Commerce in Seattle, a consolidation of the Marine National Bank with the National City Bank and the National Bank of Commerce,




~ S7 ~

all of Seattle.

Since it was realized that there would " e no double liab

bility attaching to the shareholders of the holding company, the Bancorporatiori*s stated policy is to maintain assets, other than bank stocks, in an
amount not less than the par value of bank stocks owned.
Advantages of group banking as seen by the directors of this group
are:

(a) improved credit standards and facilities for credit investigation;

(b) improved facilities and more advantageous handling of investment accounts;
(c) ability to supplement local banking resources for the accommodation of
larger local borrowers; (d) improved opportunity for Employment of surplus
funds originating with local banks; (e) reduction in some items of expense;
and (f) increasing the marketability of investments in local banks and removing the uncertainties incident to probable change in management upon the
resignation or death of individual principals•
Andrew Price, President of Marine Bancorporation, in an address
before the convention of the American Bankers Association in San Francisco,
California, in 1929, described group banking as "a legal adaptation of, and
substitute for, branch banking."

It provides, in his opinion, "the means

for an orderly transition from the present form of unijt banking into a new
system which will be acceptable to the public, which ^ill be better adapted
to the changed conditions of the times, and will cure |the deficiencies so
well recognized to exist in our present system."
Further details with respect to this group ^xe to be found in the
questionnaire and tabulations in the appendix. Chart 7 shows the location
of banks in the group.







- g9 -

Anglo National Corporation* - The corporatiqn was organized tinder
Delaware law, December k, 192Sf

All of the Class B vdting stock is owned by

the Consolidated Securities Company, the stock of whidh is held in trust for
the -pro rata beneficial interest of the stockholders of the Anglo and London
Paris national Bank.

The shareholders of this bank then, in addition to

their individual holdings of stock in the Anglo National Corporation, have
the beneficial ownership of a corporation, Consolidated Securities Company,
which in turn owns all of the voting stock in the Anglo National Corporation, which in turn owns 30 per cent of the stock of the Anglo and London
Paris National Bank, and a controlling interest in l6 other banks, all of
which are in California with the exception of one in I,ongview, Washington.
The corporation does not buy all of the stock of a local bank when
taking it over. The management avers that it does not take away the financial interest or administrative responsibilities and initiative of the local
management; its activities are wholly supplemental, giving to the banks the
experience and facilities which their limited size would otherwise make impossible.

The development was partly to maintain a relative position of

prestige in a competitive growth of branch bank systems in the territory.
This group, could, through the conversion of the dominant national
bank to a State bank and the surrender of membership j n the Federal reserve
l
system, become a branch system

rather than a group organization.

It can be

readily understood, of course, that a bank which had 'been for years a member
of the national system, would prize that connection aid the advantages of
membership in the reserve system and be unwilling to forego them for the
sake of any advantages believed to inhere in branch banking as opposed to
group banking.

The officers of this group, however, have said that they

prefer group organization to branch organization, and have expressed the
opinion that they would not change the type of structure even if branch bank-




- 90 ~
ing were permitted under the National Bank Act, except to have the units of
the group organise their own near-by branches.
Details with respect to this group appear in the questionnaire and
tabulations in the appendix,
Miscellaneous Groups. ~ Another leading group on the Pacific Coast
operates out of Seattle and offers a number of contrasts to the Marine Bancorporation.

This is the Pirst National Company of Seattle, the investment af-

filiate of the Jirst National Bank of Seattle, and owned by the stockholders
of that bank.

It is thus not a management-service corporation designed for

that purpose alone but owns a majority control in several banks.
The Old National Corporation, operating out of Spokane, a group bank
holding company on the order of the Marine Bancorporation, acquired most of
its banks in the inter-mountain country.
which is non-voting.

It has two classes of stock, one of

Two groups of banks operate out of Portland. The

Pacific Bancorporation, incorporated July 17, 1928, is controlled through
stock ownership by the Anerican National Corporation.

The Bancorporation

has two classes of stock, only one of which has voting rights. The United
States National Corporation is owned by trustees for the benefit of the
shareholders of the United States National Bank of Portland. Most of its
banks were acquired from the West Coast Bancorporation, organized on May 8,
1928, by interests connected with the West Coast National Bank, which later
merged with the United States National Bank.

There i^ only one class of

stock, all of which is owned l>y trustees for the benefit of the shareholders
of the United States National Bank.

New England States
Some of the group organizations in New England in general organization are in contrast to the leading groups of the Northwest and the Pacific
Coast.

Each of two of the largest banks in Boston ha^ control of a small

group of banks operating in Boston and its vicinity.




- 91 -

First National Bank of Boston, - Old Colony Trust Associates, a
Massachusetts trust, was organized by the Old Colony Trust Company;, at the
present time tue trust division of the First National Bank, in May, 192S.
The prospectus issued at the time and offering first series trust shares of
no par value, stated that the Old Colony Trust Associates had purchased a
substantial interest in l6 strategically located banks representing a coi>siderable portion of the invested funds of the t:ust»
The prospectus made the further staturrent that:

"Tne local at-

mosphere of each bank is continued and fostered by directorates and a staff
of officers composed of local men of ability who have intimate first-hand
knowledge of the problems peculiar to the section served by the bank which
they manage. The greatest care has been taken to ifiaintain the local identity
of each bank and augment the pleasant personal contacts of a helpful local
institution.11
The Shawmat National Bank, ~ The Shawmut Association, also a
voluntary trust under the laws of Massachusetts, was organized May 21, 192S,
by Shawniut National Bank of Boston interests*

Seventh-five per cent of

the snares were subscribed for by the stockholders of| the Shawmut Bank#
At the end of 1929 > about 12 per cent of the investments of the association
were in the shares of affiliated banks, -and roughly another 2^ per cent in
other bank stocks. Locations of banks in the National Shawmut Bank group
and the First National Bank of Boston group are to be found in Chart 8,







- 92 -

CHART 6

BANKS IN THE NATIONAL SHAWMUT BANK dROUP AND IN THE
FIRST NATIONAL BANK OF BOSTON GROUP
DECEMBER 31,1931

MASSACHUSETTS

"IT

O WT/ONAL SHAWMUT BANK GROUP
mfmST NAT/ONAL BANK OF BOSTON GROUP

- 93-

An agent of the Shawmut Association visits the different banks
regularly, making reconmendations; and there are audflt s by examiners of
the National Shawmut Bank. The local management is bontrolled in large
nity who are officers
measure " y one or more directors living in the comma;
b
of the Shawmut Bank,
Other Groups* - Financial Institutions, Inc., of Portland,
Maine, was incorporated in that State in 1929*

Its by-laws prescribe

that not less than 80 per cent of its assets, exclusive of cash on hand
and on deposit, shall at all times be invested in shares of national
banks or trust companies. It has both common and preferred stock.
Another New England group is headed by the Worcester Bank and
Trust Company of Worcester, Massachusetts. When thi^ bank in 1930 acquired over 99 Per cent of the snares of the Worcester County National
Bank, it thereby acquired also control of five other banks, whose stock
is held in trust for the pro rata benefit of Worcester County National
Bank shareholders, of which the Worcester Bank and Txjust Coinpany is, of
course, the principal one.

Middle Atlantic States
Marine Midland Corporation. - The Marine Midland Corporation was
established as a Delaware corporation on September 23|, 1929• by interests




_ gU-

Closely identified with the Marine Trust Company of Buffalo. Many of the
banks comprising this group had been more or less affiliated for a number of
years through common stock ownership and close business relationships.
The absorption of local organizations by larger companies and the
growth of local enterprises into national enterprises were major inducements
in the organization of the group. Many of the business units in the sizeable cities of western and northernNew York were being absorbed by other
units in the trend towards larger companies and in the general merger and
consolidation movement.

It was felt that by combining into one organization

with a bank in Hew York City, the banking business of these concerns could be
retained rather than lost to a Hew York bank not connected with the group.
The corporation has only one class of stock. Operating control of
each bank is exercised through its own board of directors and officers with
the advice from Marine Midland Group, Inc., a separate subsidiary service
corporation organized under the laws of the State of New York, the stock of
which is owned by the trust companies and by various individuals representing
the State and national banks. The board of directors | f Marine Midland Group,
o
Inc., consists of the presidents and certain other officers of the constituent
banks.

.t
Its capital is nominal, and its expenses are m|p by an assessment each

quarter on the constituent banks.

This arrangement is carried out under ser~

vice contracts entered into between Marine Midland Group, Inc., and each of
the banks. The holding company itself takes no part in the management of
the affiliated banks, leaving that entirely to the seryice corporation.
Additional information with respect to this (group i s to be found in
the questionnaire and tabulations in the appendix,
persion of its banks.




Chiart 9 gives the dis-




- 95 -

CHART 9

BANKS INTHE MARINE MIDLAND CORPORATION
DECEMBER 31,1931

*.

*

NEW YORK

>BUFFALO

NEW YORK.CUV'

- 96-

Group Banking in New York City. - While g^oup banking organizations were being formed in other parts of the country, the movement was
making very little headway among New York City banks t some of which openly
opposed it#

A number of investment trusts, however, had acquired bank

stock holdings of considerable size representing interest

in banks the

country over*
Prominent among these were Goldman, Sachs Trading Corporation
with substantial holdings in the Manufacturers Trust Company of New York,
the American Trust Company of San Francisco, Foreman*State National Bank
of Chicago., Pennsylvania Company for Insuring of Lives and Granting Annuities (a bank) of Philadelphia, and other banks and financial institutions on the Pacific Coast and elsewhere.

Goldman, Sachs Trading Corpora-

tion, however, was usually thought of as an investment trust with bank
stock holdings as an investment.

In recent months it is reported to have

largely divested itself of bank stock holdings, and was not included in
the group banking statistics as of December 31, 1931*I
The Bank of Manhattan Trust Company has asspciated with it some
I
small banks in up-state New York. There have been rujnors from time to time
of New York interests negotiating for the purchase of I stock of country banks
as promotional efforts with the idea of building up group systems which
could then be turned over at a profit to some later cdmer in the field.




- 97 -

Little is known with definiteness of these activities. The Bank of America
N. A. in New York City was largely owned by the Trandamerica Corporation,
but was merged with the National City Bank of New York in the autumn of
1931 > &&<! as a result a block of National City Bank ^tock^ia owned by
Transamerica Corporation,
In up-state New York interests associated u f t the First National
jih
Bank and Trust Company of Slmira, the First Trubt andi Deposit Company of
Syracuse, the Northern New York Trust Company of Watdrtown, and the Ogdensburg Trust Company, are all engaged to some extent in group banking.

In

northern New Jersey there are also several groups of a few banks each. In
Pennsylvania a community of interest exists in a number of banks in and
around Pittsburgh, centering in the Union Trust Company and the Melbank
Corporation.

North Central States
In this area there are several important groups of the holding
company-management type, the Detroit Bankers, Inc., Guardian Detroit Union
Group, the Wisconsin Bankshares Corporation, and the pancOhio Corporation,
Other organizations center up in Chicago around great metropolitan banks—
First National Bank and the Central Republic Bank andj Trust Company.

Since

Illinois allows no branches, all banking offices in the metropolitan area
of Chicago must be independently chartered, but the gtreat downtown banks
have spheres of influence in outlying banks.




- 98 -

Wisconsin Bankshares Corporation* - The Wisconsin Bankshares
Corporation unlike its Minneapolis neighbors did not take out a Delaware
charter* hut incorporated under the laws of the Stat$ of Wisconsin on
December 10, 1929, with hut one class of stock.

The Corporation has a

contingent liability under Wisconsin statutes for th£ double liability
assessment which may be made against shareholders ofj Wisconsin banks.
Ihis contingent liability is anticipated by the maintenance of a reserve in cash and securities, it is reported, equal to 70 per cent of the
full amount which could be assessed against it • • • !pie policy is to own
'*'
practically all of the stock of subsidiary banks. TJie corporation follows!
much the same policies in connection with the direction and supervision of
local units, in the main, as have been described und^r the discussions of
the two large Minneapolis groups.
Detail information with respect to the group will be found in
the questionnaire and tabulations in the appendix, a i Chart 10 shows the
^d
location of banks owned by this corporation.




At the time the answers to the questionnaire were received.




- 99 -

CHART 10
=4

BANKS IN THE WISCONSIN BANKSHARES CORPORATION
DECEMBER 31,1931

- 100 -

Guardian Detroit Union Group, Inc. - The Guardian Detroit Group
was incorporated in May, 1929, under the laws of the State of Michigan.
During the period of its organization another company, the Union Commerce
Corporation, was being formed, within which ? e e included a number of
/r
banking institutions.

In the latter part of 1929 the Guardian Detroit

Group, Inc., acquired the stock of the Union Commerce Corporation through
exchange of shares and the title was changed to Guardian Detroit Union
Group, Inc. There is but one class of stock in the dorporation. By the
provisions of one of the articles of association of the corporation, it
is provided that holders of stock of the corporation shall be individually
and severally liable for any statutory liability of the holding company
because of bank stock owned.

Detailed infoimation wi|th respect to this

group appears in the questionnaire and tabulations in| the appendix,
Other Groups. - The Detroit Bankers Company was incorporated
under Michigan laws on January g, 1930•

Its stated purpose was "to provide

greater financial stability through common ownership, to extend the scope
of service rendered by its component units and to perjnit of a more economical operation."
In its first annual report the company stati that it was
es
necessary to incorporate a holding compaziy to accomplish these purposes
and maintain the separate banking institutions.
reads, "an endorsement of group banking."

"It is not," the report

There had existed between the

Detroit banks in Detroit proper and banks located in municipalities, in




- 101 -

interlocking of directors
fact included within the metropolitan district, an i
and officers, carrying with it all or a portion of t he control of +lne outlying hanks.
The BancOhio Corporation was organized und^r the laws of Ohio in
September, 1929-

The development grew, its organize ts say, from social

and economic changes all leading to larger business units.
Southern Mountain and Southeastern Stages
Group activity in the Southern Mountain States is largely accounted for by the Hamilton National Associates and the American National
group.

Hamilton National Associates, Inc., organized Jaraary 20, 193°,

under Tennessee laws, has an interest in seventeen b^nks of which the
Hamilton National Bank of Chattanooga, Tennessee, is the most important.
The American National Bank in Nashville through its Affiliate trust companies controls banks in the territory, the group totaling eighteen banks
in all.
The group headed by the Atlantic National ^ank of Jacksonville
is illustrative of a number of small groups in Florida. The shareholders
of this bank own ratably an affiliated holding company, the Atlantic Trust
Company, organized in 1908, under the laws of Florida.

The operation of

the trust company is controlled by three trustees, who are active senior
officers of the Atlantic National Bank.
affiliated banks

The trust coppany owns the

all of which,with the exception of lone, were organized

by persons controlling the Atlantic National Bank.

The development of

the group is said by its organizers to have been broU)
Jght about by an




- 102

economic need for banking facilities in the localities where banks have been
established, with due consideration to earning possibilities.

The First

National Bank of Miami and the Barnett National Bank of Jacksonville are
other national banks of Florida the controlling interests of which dominate
small groups.
The First National Bank of Atlanta also operates a group-

Its

shareholders own all of the shares of the Trust Company of Georgia, which
in turn owns all of the shares of the First National] Associates, which in
turn owns a controlling interest in four subsidiary banks.
A second group is controlled by the Citizens and Southern Holding
Company which was incorporated in Georgia, April 9> fL928, under Georgia
law, thus antedating the Minneapolis groups.

It was organized by the Citi-

zens and Southern National Bank for ,?the purpose of purchasing the control
or in entirety stock in certain banks, and for organizing new banks from
time to time.11

It is the policy of the company to purchase at least 66 per

cent of the stock in its banks, which for the most part has been done.
The South Carolina National Bank of Charleston also sponsors a
group banking organization, known as Socamat Bank Corporation, incorporated
July 11, 1929> under the laws of Delaware.
In the case of the First National Bank of Binningham, each share
of stock in the bank carries with it ownership of one share of stock in the
First National Company, a successor to Anerican-Traders Securities Corporati o n , incorporated July 9i 1927*

* n addition to performing the functions

of the bond department of the First National Bank, the First National Company owns 51 P$ r cent or more of the stock in a group of suburban banks^




- 103 -

Southwestern and Rocky Mountain Statejs
Exchange National Bank of Tulsa. ~ The most important element in
the group and chain movement in the Southwestern Staftes operates out of
Tulsa, Oklahoma.

The Southwest Bank Shares Corporation was organized under

Delaware law, February 6, 1930 > ^y interests connected with the Exchange
national Bank of Tulsa. Control of banks was acquired by this corporation
by outright purchase for cash.
In explaining the origin of the group, its sponsors have written:
,f

It seemed to us the trend of the country was towards group banking and it

seemed desirable that at least a nucleus be formed alround the Exchange E a »
T*
tional so that its interests would be protected in axiy advantages that might
arise out of this apparent economic change in banking methods.

It was

thought that the undertaking would be beneficial in stabilizing banking
conditions."
The Republic National Company, owned by the shareholders of the
Republic National Bank and Trust Company of Dallas, owns in turn a controlling interest in several Texas banks. Groups of 10 banks each center around
the Mercantile Trust Company of Dallas and J. M. Cr^ws and Associates of
Childress.
First Security Corporation of Ogden, Utah,

HChe largest group

with headquarters in the Twelfth Federal Reserve Didi
trict, measured by
number of separately incorporated banking units controlled, is headed by the
First Security Corporation of Ogden, Utah, organized under the laws of Delaware.

This corporation has two classes of stock, the voting stock being; con-

trolled by a handful of stockholders. The group incjludes banks in Utah,




-

Idaho, and western Wyoming.

IOU

-

Twenty-two of the banks in this group have the

name "First Security Bank. "
The First Security Corporation wa.s organized June 15, 1923, "but
the .original conception dates back several years before that. The organizers
individually owned stock, either majority or minority interest, in a number
of banks in the inter-mountain country.

It was found that increased atten-

tion had to be given the management and supervision of these various properties
in order to protect the investment.

It was also the conviction of the organ-

izers that the territory in which they operated would

never receive safe and

adequate banking service until a group organization was developed with sufficient capacity to handle legitimate requirements found in many of the communities to be beyond the legal lending limits of unit banks.
The corporation uses many of the methods of supervision and.control
previously described with respect to some of the other leading groups. It
has purchased several weak and unprofitable banks, and in one ca.se reorganized
a bank which had suspended operations. The capital of these banks has been
rehabilitated by the elimination of dead assets. New management has been put
in or old management closely supervised.
Additional details with respect to this organization may be found
in the questionnaire and tabulations in the appendix,
location of banks in this group.




Chart 11 shows the




- 105 -

CHART 11

BANKS IN THE FIRST SECURny CORPORATION OF
0GDF.N. UTAH
DECEkfflER 3 1 , « k l

WYOMING




OEAPTEB VI
THE BASK HOLDING COMPANY:

OHGMIZATIOH AND ^ANASMENT

The bank holding company, as it has developed in the
United States during recent years, has been of varying types#

A

description of these types is presented in this chapter, based
primarily on information furnished by a number of banking groups
in the replies made by them during the latter part of 1930 and
the early part of 1931 to a questionnaire sent out by the Con*mittee (see p* 15)* Throughout the digest of these replies, an
attempt has been made to indicate by appropriate references and
citations the nature of the source material•

Types of Bank Holding Companies
The different methods of grouping banks through coav
porate onmership of stock, as set forth in the replies to the
Committee's questionnaire, are exceedingly diverse. The various

- 106

- 107 -

forms overlap in such fashion that it is difficult and, as a matter
of fact, impossible, to draw lines separating them into rigid classifications. Within limits, however, and with the understanding
that the division is a very "broad and general one, group hanking
organizations may he classified as of three types:

(l) the invest-

ment trust, with no management or direction of the member hanks;
(2) the over-all holding company type, where the stock of all the
"banks in the group is owned by the holding company; and (3) the subsidiary holding company type, where a hank through a security affiliate or trust company .affiliate, or holding company affiliate or
subsidiary of other character, owns the stock of a group of banks.
Eheoretically at least, in any one of these types of organization
the ownership of stock may bo complete (with the exception of directors' qualifying shares), or it may be majority ownership, or less
than majority.
Sransamerica Corporation, since it reorganization in 1932,
may be cited as illustrative of the first type of group bank organization. Prior to its recent reorganization, that company operated in




- 108 -

a wider field than bank stocks, but u a i of its bank stock holdings
rcl
may be regarded more as group ownership and less as group operation
of the banks whose stocks were held. With respect to some of its
leading interests this was not true, however.

Its domination of the

Bank of America in San Francisco and the Bank of America U. A. in
Hew York was effective. With the sale of the Hew York unit to the
National City Bank and the announcement that Irans&merica would divest itself of other majority holdings, it became, from the point
of view of bank stock holdings, an investor, at least for a time.
Subsequently a new management came into control and its policies
have not as yet become clear.
The best examples in the group banking field belong to
the over-all holding company-management type, as Table ZJ brings
out.

In each of these cases all, or practically fell, of the

shares of each individual bank in the group (agaiji with the exception of the directors1 qualifying- shares), arej owned outright
IDJ the bancorporation.

One important distinction^ however, should

be noted. While the Northwest Bancorporation, fojr example, has but
one class of stock, each share of which has equal voting rights with
every other share, there are two classes of stockj in the Marine
Bancorporation, a small amount of voting stock, closely held by




109 -

persons intimately identified with the dominant bank of the group,
and a larger issue of non-voting stock, held more [widely.
The subsidiary holding company type is Well illustrated
" y the First National Associates of Atlanta, Georgia.
b

The Trust

Company of Georgia is affiliated with the First National Bank of
Atlanta, the stock of the former "being held by trustees for the
•pro rata benefit of the shareholders of the latter. The Trust Company of Georgia owns the entire capital stock of the First National
Associates, which in turn owns a controlling interest in six Georgia
banks and an investment company. Most groups of this type are characterised by a large amount of centralized management.
Another variation of this type is a group of banks owned
through the securities affiliate of the leading bank*

The primary

activity of the stock-owning company is that of dealer in securities.
The ownership of a majority of the stock in banks and the exercise
of managerial supervision over banks are secondary activities. Some
of the Boston organizations, for example, are in this class.
The securities company is not the only company used in
this way in the banking field.

In certain States trust companies

may own corporate stocks with very little limitatfion.

Thus, in ad-

ary business,
dition to their main operating activity, a fiducif
they may become holding companies for banks and exercise management




- 110 -

control over such "banks. The case of the Atlantic National Bank and the
Atlantic Trust Company of Jacksonville, Florida, is a good example of
this.
Table 2.1 - Leading groups (as of December 3[U 1931)
Classified by Type of Organization
Over-all holding company

Subsidiary holding company

Investment trust
or indeterminate

Hartford Connecticut Tr. Co.
Financial Institutions, Inc.]First 2!at!l 3k., Boston
Union Tr. & Melbank Corp.
Marine Midland Group, Inc. national Shawmut Bank
Worcester Co. Bk. & Tr. Co. Central Republic Bk. & Tr.
Detroit Bankers, Inc.
Co.
Guardian Detroit Union Group First Tr. & Deposit Co.,
Fills t ITat'l Bk., Chicago
Syracuse
Wisconsin 3ankshares Corp.
American national Bank
Fiijst ITatfl Bk., Trustees,
National Republic Bancor1
First Hat ! Brjik, Atlanta
Louisville
poration
Citizens & Southern Nat'l Bk. Commercial Natfl, Shreveport
BancOhio Corp.
First natfl Bk., Birmingham Conperce Tr. Co., Kansas City
Hamilton national AssoAtlantic national Bank
Transamerica Corp.
ciates, Inc.
Exchange Nat!l Bk., Tulsa
First Bank Stock Corp.
First nat'l Bk., Seattle
Northwest Bancorporation
U.S. Bfat'l Corp., Portland,
First Security Corp.
Oregon
Marine Bancorporation
Anglo national Corp.
Old National Corn.

Organization of Holding Companies
Many of the holding companies were organised under a Delaware charter, presumably to take advantage of the liberal corporation laws of that
State.

This was by no means always true, however, since many of the incorpora-

tions were effected under the laws of the State where the most important banks
of the groups are located (see Table 28). It was oftin the case that articles
of incorporation of the holding company enumerated a multitude of powers.
Even though the new corporation had no intention of covering a wide field of
activities, it had seemed wise to look to any contingencies that might arise
in the future.




111 -

It has been previously indicated that the scheme of organization
in many cases was to trade the holding company stock for stock in the bank
being acquired.

In most cases the stock of the bjanks which were jaken over

by the holding companies had no ready market, so that a value for the stock
was fixed upon the basis of the book value and earning power.

Reference was

made in the previous chapter to the degree to which stocks might have been
overvalued by this process.
In many cases, only one class of stock was issued.

In these in-

stances, stockholders of individual banks who wuri good traders were able to
obtain their pro rata representation and voice in the holding company.

In

those cases where the local stockholders received non-voting stock, however,
the control passed to a small coterie of men usual] surrounding the domily
nating bank of the goup. The following table includes some of the cases
in which two classes of stock were issued.




Table 28 - Organization Details of Selected Holding Companies(l)
Name

State of incorporation

Marine Midland Corporation
Guardian Detroit Union Group
Wisconsin Bank Shares Corp.
First Bank Stock Corp.
Northwest Bancorporation
First Security Corp. of Ogden

Delaware
Michigan
Wisconsin
Delaware
Delaware
Delaware

Marine Bancorporation

Washington

Anglo National Corporation

Delaware

Classes
of stock
One
One
One
One
One
two
Voting stock
closely held
Two
yoting stock
closely held
Two

(1) Those organizations which have given permiss ion to print
answers to the questionnaire in full.

- 112 It will be recalled also that in the case of many holding companies the policy has been to acquire a majority of the stock in all banks.
Other cases are on record where the holding company acquires only -n amount
.
sufficient to insure control.

In many instances this nay be less than $0

per cent. It often happens that even within one group the degree of control varies from one bank to another.
The Shareholder arid His Liability. - The stockholder who exchanges
his stock in the local bank for stock in the holding corporation ordinarily
gets a more marketable security, according to statements by group bankers.
For the most part, holding company shares are listed on some exchange, and
there is a more definite market for them than for the shares of many local
institutions. Whether or not the return to the shareholder is enhanced by
the transaction depends on whether the group organization has greater earning
power than the original bank.
Under some of the set-ups, where the bulk of the shares are nonvoting, the shareholder loses some of the ordinary rights and privileges of
stock ovmership. He may obtain, however, a wider interest in banking affairs
and regional business than he formerly had.

Since in most instances there

is no statutory double liability attaching to the ownership of holding company shares, the stockholder in many cases escapes that obligation.

Tho hold-

ing company itself is, of course, responsible for dpubLe liability assessments because of bank stock held by it.

Such assessments are collectible in

general only to the extent that the holding company^ has valuable assets.
Pour out of five groups, in answer to an (inquiry, stated that
stockholders in the holding company had no liability beyond their actual investments.

Double liability in the case of the real owners may apply in a

few cases because the subsidiary banks are controlled through direct owner-




- 113 -

ship of stock by the dominant banks whose stocMiolders are subject to double
liability provisions.

In such cases the stockholders of the dominant bank

naturally have the same liability as they had before the group was formed.
In two cases the articles of incorporation of a holding company, it is reported, specifically provide for liability of shareholders over and above
their investment.
Several groups reported that the holding company under its articles
of incorporation must hold assets other than bank stock.

The amount of these

other assets required by charter varies from case to case. One charter requires that such assets equal the amount of bank stock held, a provision
designed to insure that even if all member banks failed simultaneously, there
would be assets against which the double liability assessment would hold.
In answer to a question as to whether the protection offered bank
.
creditors because of double liability had been lessened or not, only 15
out of 30 groups ventured an opinion. None of these expressed the view that
this protection had been lessened, while two-thirds of them said that it
had been bettered by the affiliation of the individual banks with the group.
There is reason to believe that this view applied in particular to the case
in which a single member of a group, or only a few of its less important
members, failed.

This

would

involve

the holding company, owning the

shares and called upon to meet the double liability, in| obligations well
within the company's means.

It doubtless reflects also common knowledge

of the fact that for suspended unit banks the collections from assessment
of stockholders under the double liability clauae have [frequently fallen
far short of the par value of the stock.




- lli| -

Miscellaneous Institutions Associated witjh Groups
This report deals chiefly with those activities of hank holding
companies that "bring several commercial "banks under unity of control. All
of the statistical material presented in this study is concerned exclusively
with the relationships of three or more "banks engaged wholly or in part in
commercial "banking.
The "bank holding companies, however, have created a close community of interest "between commercial hanks and corporations engaged in a
variety of enterprises, financial

and otherwise. In some cases, the style

of enterprise is one which it is quite possible to carry on under the charters of some commercial hanks, even national hanks. On the other hand, some
of the enterprises are not within the scope of the charters under which most
commercial "banks operate.
One-fourth of the groups reporting on the matter had no non-hanking
affiliates, and another fourth had hut one affiliate each.

The other groups

reported varying numbers of non-banking affiliates, one having as many as
fourteen.

Of approximately 50 affiliates which were listed by function,

about half were reported to be securities or investment companies; a quarter,
safe deposit companies; a fifth, realty and insurance companies. Three land
banks and two building and loan companies were mentioned.

And finally, there

was a variety of concerns which were represented on^.y once on the list, among
which may be mentioned an employees1 stock purchase company, a restaurant,
and a municipal heating plant.
Of non-banking affiliates nearly 'half were acquired through exchange of stock; a quarter, by the stock purchase method; some were organized as new concerns; and some were previous!}- owned by banks which became




- 115 -

members of the group.

Stock OY/nership by the group in these non-banking

affiliates is generally reported as close to 100 per cent.

Control of the

non-banking affiliates in half the cases is directly in the holding company.

In the remaining cases trustee relationships exist, or subsidiary

banks exercise control.
Dealing in Securities. • Many commercial banks can deal in securi*
ties under their own charters. National banks may do so within limits prescribed by law and regulation.

The prevalence of securities affiliates in

the holding company set-ups, as indicated in the preceding paragraphs, is
due in part no doubt to a desire to carry security merchandising to a point
beyond that possible "under bank charters. Again, lending on real estate
mortgage security is a type of investment banking*

Most commercial banks

possess the power to make such loans to a limited extent. The prevalence
of various types of mortgage companies under the bank holding companies is
also an indication of a desire to go further into the field than bank charters permit.
More than a third of the groups stated that all the member banks
sell securities to the public, and no group indicated that it did nothing
in this line. Many of the answers did not directly indicate the relative
importance of securities business, but, on the whole, group banking has apparently extended this service quite generally, but as yet it has not been
widely used by the public. Two out of every three groups originate issues
directly or through affiliates, but over half of these stated that the amount
of their originations had been small. Three stated that they did no originating.

In a few cases issues originated by an affiliate are not sold

through the member banks.




~ 116 -

Trust Operations, - Operations of group hanks in the trust field
have been confined for the most part to the larger banks. It is perhaps
natural that in connection with this function, group bank organizations
would tend towards centralization of activity.

Trust business has been

potentially available in the outlying cities and country districts, but it
has been more or less neglected.

It is argued that the trust departments

of the city banks can be made readily available to the smaller institutions
through the group set-up.
Several groups reported that trust business was being referred by
outlying banks to the dominant bank or other large banks in the system. The
most prevalent method of supervision of trust estates is through the examinations and audits conducted by the regular examining force or by special
trust experts. The trust department of the dominant bank, trust committees
of the holding compariy, or general trust officers are employed in several
cases*

Extent of Holding Company Direction
The officers of the holding companies are in most cases officials
of the leading bank and may receive additional compensation from the holding
company for supervising the activities of subsidiary banks*

In some cases

there is a small staff which devotes its time exclusively to holding company
affairs.

In several cases subsidiary banks are charged with periodical ser-

vice or management fees.
The extent to which group bank holding corporations engage in the
management of the banks whose stocks they own varies greatly.




It ranges

~ 117 ~

from the holding company on the one hand which leaves the individual "banks
almost entirely free to direct their affairs to the holding company at the
other extreme which practically operates the "banks under its control. Some
of the group operators state that they exercise a high degree of intimate
control over the "banks in the group, in a few cases group operation "being
scarcely distinguishable from branch banking.

Others state that there is

little interference with local policies and practices* other than a broad
general attempt at insuring that good banking practices be followed.
The Committee's inquiry contained the following:
does your holding company share in the management of banks?

"To what extent
Has it a staff

devoted to supervising thern and coordinating their activities?"

Of the

replies to this question three-fifths said that the holding company shared
in the management of the member banks to a considerable extent, while the
remainder stated that they did so only to a limited extent.

In many cases

the head office theoretically acts in merely an advisory capacity, but no
doubt the local units accept the advice in most cases.
The form of the staff that devotes its time to supervising and
coordinating member bank activities varies considerably.

In some cases

employees of the dominant bank devote considerable time to the affairs of
the other units.

In others the only agency for the purpose consists of one

or more examiners who report the condition of the members to the head office.
One group employs a supervisor but no complete staff.

In another the staff

of the securities affiliate of the dominant bank acts in this capacity.




- us -

Still another has organized a separate management corporation, and the holding
company takes no part in the management.

Some groups attain uniformity of

policy by means of interlocking directorates and officers. That is to say,
officers or directors of the dominant hank, or more frequently of the holding company, are either officers or directors of the local institutions.
There are some contradictions in the replies to the questionnaire
in the matter of the degree of local autonomy allowed members of groups.
The amount of control from head office indicated in the preceding discussion
is not wholly consistent with allowing local directors a free hand in running a particular bank.

The groups were practically unanimous, however,

in stating that local directors were free to run their banks as they saw
fit, but in almost all of these cases the clause was inserted, "so long
as they conform to the stated group policies," or words to that effect.
Obviously the holding company, with its control of the stock of the member banks, may remove a board of directors and substitute one which is
willing to follow the policies laid down by the head office. Furthermore,
the system of frequent and detailed reports employed hy most of the groups
serves as a check upon the operations of each bank, and in those systems which
have representatives of the holding company or dominant bank upon the local
boards, this personal contact is able to forestall any radical departures
from the established regulations.

It is clear that the degree of legal

ownership and control of the leading corporations over members of groups is




- 119 -

sufficiently great to be effective. For example, a survey of yd.2. banks belonging to leading groups at the end of 1930 showed that in the care of
nearly half of them more than 90 per cent of their stock was owned by the
leading corporation.

In nine out of ten cases the degree of control was up-

wards of 50 per cent. Neither of the two large Minneapolis groups was included in this analysis and in the case of each of these the proportion of
stock ownership in the 100 odd banks composing the group is high.
Group Auditing. - Most of the group bank holding companies maintain
central auditing activities. The auditing force is responsible, in most
cases, to an officer or officers of the dominant bank or holding company.
In a few cases the responsibility \?as said to be directly to the board of
directors of the holding' corporation.

About half of the reports indicated

that the audits included loan investigations.

In some cases a separate

credit department investigates loans, and generally speaking, the controlling
agency of a group keeps a fairly detailed and accurate check on the portfolios of its subsidiary banks.
Local Personnel, - The answers to the questionnaires indicated
that local directors of baiiks acquired by group organizations are for the
most part retained.

In some instances, they are reported to have taken a

new interest in the affairs of the bank.

It is true that they are elected

"by the corporation which owns the stock of their bank, but it has been pointed
out that in order to retain the good-will of the community, there must bo no
clash of interest between the local directors and the group headquarters. Two
out of three of the groups state that practically all the directors of each cf
their subsidiary banks aae residents c the community in which tie bank is located. Some
f




~ 120 ~

of the groups place one or two representatives of the head office on each
local board, and appoint the remaining members from the local residents, who
are acquainted with the needs of the local community and the character of
the bank's customers.

So long as local directors are given some scope, local

sympathy appears to remain with the management.
Hie almost universal testimony of the group organization operators
is to the effect that wherever possible they retain, in addition to local
directors, the other local personnel, officers, and clerks,rchichwere operating the local "bank at the time of its acquisition.

The Holding Company
and the Correspondent Relationship
With respect to the correspondent relationship, replies to the Committee's questionnaire indicate a tendency for the correspondent accounts of
large numbers of country banks collected into group organizations to be consolidated by the groups. More than a third of the groups reported little
or no change in correspondent relationships, but indicated that group members
are favored with business whenever possible. A few indicated a policy of
changing such relationships only where necessary to eliminate duplicate or
excessive balances. In a few the members of groups have correspondent accounts
almost exclusively in the leading banks of the group.

The outside accounts

of this bank then serve the other members of the group.

In one case, all

correspondent accounts outside the group have been closed.




- 121 -

Nearly half of tne groups reported that aggregate correspondent
balances are smaller than would have been the case with the member? operating
independently.

This results in part from the lending of surplus fur is among

members, as well as from increased investments in readily marketable securities, in lieu of deposit in metropolitan centers, A few groups stated that
correspondent balances were larger for the group as a whole, because of the
improved cash position of the constituent banks.
Another phase of the correspondent problem is illustrated by an
experience of the STisconsin Bankshares Corporation,

Some independent unit

banks objected to tne advertising policy of tnis organization on the ground
that it cast reflections on the comparative safety of unit banks. The protests carried with them threats of severing correspondent relationships with
the First Wisconsin National Bank, the leading unit of the Wisconsin Bankshares Corporation,

It is said this bank has, however, suffered no loss

in its general correspondent business.

The EoIding Company
and the Federal Rose I v System
'e
One of the questions which arises in connection with the development of group banking systems is whether it will tend to increase or to diminish membership in the Federal reserve system*

Another is the effect which it

may have on the use of Federal reserve facilities.

Still another is the

possibility of influence and control which the holding companies might exercise over the regional reserve banks.
Some indication of the effect which group banking has had upon
membership in the system so far may be found in the answers to a question




- 122 -

asked by the Committee:

"When a member of the Federal Heserve System joins

your group, are its relations with its Federal reserve bank modified in any
way?' What effect does membership in the group have upon borrowing or rediscount ing with the Federal reserve bank?"
Edghteen of the twenty-four groups replying to this question maintained that the relations of their banks with the Federal reserve system
were not affected in any way because of their group affiliation. One group
reported that it was nationalizing all the State banks it controled. In one,
banks gave up their memberships, except those which would probably make frequent use of the facilities of the system.
quent use of the rediscount privilege.

Some groups reported less fre-

Some of the group bank organizations

have developed check clearing activities within their own group, but in general
members of groups make the same use of Federal reserve facilities as do independent unit banks.
As the method of electing directors of the Federal reserve banks
under the law gives each member bank one vote, a group which controls many
banks could dominate a Federal reserve bank.

The Comptroller of the Currency

prepared a memorandum showing that the First Bank Stock Corporation and the
Horthwest Bancorooration could dominate the election of some of the directors
of the ITinth Federal Reserve District. His statement in this connection appears in the appendix.

This matter will be referred to in later para-

graphs dealing with some.of the unsolved problems of group banking and
public regulation of bank holding companies.




- 123 Attitude of Group Management
Toward Supervisory Authorities
Although at present neither the National Bank Act nor the State
hanking laws generally provide that holding companies controlling hanks
shall he under the supervision of the hanking authorities, most of the groups
have consulted either the Comptroller of the Currency or their respective
State hanking supervisors in regard to their activities. Two-thirds of the
groups indicated that they had cooperated in this manner, although a few of
these stated that their consultations had been with the State departments
only.

One group stated that both the Comptroller and the State supervisor

were in full accord with its operations. Another said that supervisory
officials had been consulted on every move made by the organization.

A third

reported that the State banking department had asked the group to allow certain banks to affiliate with it in order to strengthen them.
Two-thirds of the groups expressed the conviction that bank holding
companies should be supervised by governmental authorities, while a few
stated that they should not. Several of those in favor of supervision thought
that because of the possible widespread activities of groups, the Comptroller
alone should have this power, and another said that all groups should be composed of either all national or all State banks.

One which was not in favor

of supervision could not see how it would be effective as long as groups were
composed of both national and State banks. Some, while not enthusiastically
in favor of supervision, stated that they would have no objection to it. The
question was not important with respect to two of the answering groups since
the stock of the subsidiary banks in these cases is held by trust companies,
which are already supervised by the State banking department.




CHAPTEB VII

THE BANK HOLDING COMPANY:

OPERATING POLICIES

Public interest in banks and banking structures may be said
to focus upon the matters of safety and service, ! h depositor wants
Ee
to feel secure with respect to his deposits and, at the same time, the
community demands service from its banks. Too generous service, however, may be inconsistent with safety, and it is a major problem of good
banking to combine safety with adequate service.
With respect to these matters, group banking must be tested
in comparison with unit banking on one hand and branch banking on the
other. Because of the relative youth of the movement, statistical
measurements are largely lacking.

Chapter VIII shows that during the

11 years ending with 1931 banks belonging to chains and groups had a
somewhat better record in respect to failure than banks in general.
The advantage, however, was not decisive.
Information relating to the operating policies of bank holding
companies has been assembled by the Committee from the replies made in
1930 and 1931 to its questionnaire already referred to (see page 15).
The information obtained from this source is digested in this chapter.




- 12k ~

~ 125 Lending Policies
According to replies to the Committee's inquiry, the lending
policies and operations of the "banks within a group ate unified and coordinated in various ways.

Nearly all of the groups require daily or weekly

reports from the individual "banks. In some cases loans over and above a
certain minimum must be approved at the head office of the group.
a joint loan committee meets to consider credit commitments.

In others

Officers in

some of the groups make periodic visits to the units to inspect and supervise credit extensions. Almost uniformly the holding companies maintain
central credit information files on prospective and active borrowers. In
some groups, this includes detailed information with respect to the types
of collateral, a classification of the purposes for which borrowings were
made, and much other pertinent information which is usually collected by
city banks with large and efficient credit departments.
All but three groups reported some form of coordination of lending
policies. Meetings and conferences of loan officers of the member banks are
held by several groups, at which loan policies are formulated, while others
direct loan operations through personal representatives of the head office.
One out of every four groups stated that there had been little or no change
in the lending policies of

its members. A slightly larger proportion,

however, maintained that their portfolios now possess & higher degree of
liquidity and several that their policies were more conservative, than was
true of the banks as independent institutions. An intention to decrease
real estate loans was expressed in some cases.

Installations of more seien*

tific credit systems, attempts to secure greater diversity, and annual cleanups are policies emphasized by some managements.




- 126 ~

About a third of the groups reported that the ratio of loans
and discounts to deposits had undergone little change, while about an
equal representation stated that such changes as had occurred were due
to economic conditions which have reduced the demand for loans. A few
stated, however, that loans had been purposely reduced in the effort to
attain liquidity. One reply made the point that the possibility of
shifting surplus deposits to members with heavy demands for loans had
altered the deposit ratio in several cases.
The banks in the groups have not set any minimum size for
loans they are willing to make. Some of them try to avoid too many
small loans, and say this is the general practice of banks, owing to
the high cost of making them. A minimum charge for small loans, running
from fifty cents to a dollar, is usual. One or two of the groups have a
number of banks operating small loan departments. Morris Plan banks are
sometimes associated with groups. On the other hand, one of the groups
relinquished ownership of an industrial bank, in order to confine its
activities to commercial banking and fiduciary activities.

Hates Charged on Loans
Answers to the questionnaire sent out by the Committee indicate that group bank organization has had little effect on the rates
charged by the member banks to their customers for loans made. The almost universal testimony is that rates have continued, as before, to be
determined largely by local conditions. Since the usual loaning rate
at country banks changes slowly, even variations in market rates in the
money centers have been little reflected in the banks outside of the
larger cities.




- 127 ~
Rates of interest charged ay group banks do not vary in general
from those charged by independent banks in the sane community, according
to the group bankers1 testimony, competition being the determining factor
in fixing rates. One reply said:

"It has been impossible to make any

changes by way of reduction of rates in many localities, for the reason
that they are also being served by independent banks whose income night
be seriously impaired by such changes." Another reply:

"We have not

undertaken to attract business from our local competitors by cutting
rates in any case, but have sought rather to fully cooperative with such
competitors. A number of such competitors have told us that they feel
much more secure in this respect with our competition than they had
previously felt with the independent unit bank competition."
Pew of the groups operate upon a uniform rate basis. Hates are
determined by the same considerations as those in a loan made by any
bank:

locality, competition, quality of the risk, character or type of

loan, and the value of the account of the borrower.

"Naturally in the

larger communities where there are choicer loans and money is more
plentiful, rates are lower on many classes of loans," one group replied,
"whereas in the small outlying communities with small lines of credit and
greater hazard, the rates are naturally more." Another replied:

"Out-

lying banks by virtue of small loan accommodations have a higher average
yield

than down-town banks*"
A few of the answers indicate that the tendency has been for a

lowering of rates to customers, particularly for better names, due to the
fact that as prime risks can ordinarily get better rates at city banks,
and since the group member is supposed to have access to a city institution,




- 128 these borrowers have demanded a lower rate. One group replied, for instance:

"On the more favorable lines, our rates have in some cases been

reduced from what the independent bank had previously charged, as the inability of the unit bank to meet rate competition and in some cases to
provide the size of lines required has been throwing this most desirable
business to the large centers." Another replied:

"As applied to larger

and better borrowers, we have found that the result has been to lower
their rates because these borrowers have felt that they were doing business in effect with a city organization and have asked city rates, and
being entitled according to city standards to such rates, have been allowed them. We believe this is a natural result of a group or branch
banking operation which is helpful to a local situation rather than otherwise."
The Effect on the Bank Borrower
The following is another inquiry made by the Committee: "Have
there been any changes in the credit policies of any of your banks since
they were acquired, with the result that certain types of borrowers find
it more difficult to get credit?

If so, have you had an undue amount of

protest from these quarters with perhaps some propaganda against your
group system?"
About half of the groups answered that they have become more
strict in their requirements regarding applications for loans, but that
no "legitimate" borrower is ever refused accommodation. Nearly half of
the answers stated that there had been some criticism or propaganda against
them because of their loan restrictions, but in no case was this opposition
reported to be of any considerable importance. Nearly all of those that
have adopted more conservative policies have received some protests on this




- 129 account. inhere ill will has arisen from this source, it is stated, a compensating growth in good-will has been experienced among customers who
have felt the group to be offering stronger and safer facilities* A certain amount of ill will they attribute to the class of borrower who should
not be granted credit by any bank that has a proper sense of its responsibility for the interest of its depositors and its community•
It is incorrect to consider the bank borrower as a separate
entity from the bank depositor, or even the bank stockholder, since in most
small country banks, at leasts many of the customers of the bank are all
three at the same time*

In so far, however, as the borrowing function

is

a different phase of bank relationship from bank depositing, it may be
pertinent to consider the effect of the new type of bonk organization upon
the person who borrows from a group unit, as exhibited in the replies made
by leading banking groups to the Committee1 s questionnaire, apart from the
effect of the sano development upon possibly the same person as a depositor*
Absentee Credit Decisions* - It is often alleged that the group
organization like a branch organization tends towards credit decisions at
head office, and that the local borrower is not given the same sympathetic
and neighborly consideration that he gets from the purely local banker, who
is familiar with his peculiar needs and credit standing*

The credit risk,

which is acceptable from the customary standpoint of neighborhood banking,
may not be acceptable under the methods of credit extension in use at the
city bank which heads the group*
To combat this allegation, several of the groups insist that
credit decisions are made locally to the same degree that they were before
the group was formed*

It is to be noted, however, that it is difficult to

reconcile this with claims of these groups to increased efficiency and
higher standards of management*




- 130 -

Group operators do not concede that local "borrowers necessarily
get less consideration when the credit decisions are made at group headquarters, "but reply that if such is the case, it is probably because many
of the local borrowers should not have had accommodation, and that it is
only inferior bank management which has enabled them to get it. Indeed,
an occasional independent banker will testify that the existence of the
group as a competitor has made it possible for him to deny credit applications which he would otherwise have felt it necessary to grant, while feeling
them unjustified.

Some of the independent bankers in the areas where group

banking has had its greatest development agree that banking standards have
been raised as a result of the group development, and that less poor credit
is being extended.

The credit decision is an extremely difficult one to

make, and it is still an open question in the minds of many whether the
liberality of the old style banker may not be better than the coldly
analytical methods of the new school.
With respect to this matter, as in other phases of group banking, short experience and an unusual era are handicaps in making proper
estimates.

Under some conditions it might be possible to compare the rela-

tive merits of group banking and independent unit banking by a statistical
analysis of the amounts loaned and the number of borrowers accommodated by
a bank before and after joining a group.




The last few years have been of

- 131 such a character, however, as to make such a comparison unfair and lacking
in significance. Credit has been granted with caution in recent months, by
banks of all descriptions*
Larger Lending Capacity* - One of the advantages claimed for the
group bank set-up from the standpoint of the bank borrower is that it enables larger loans to be made to single customers whose credit needs are
of a size that exceeds the legal limits of many of the smaller banks*
Through the affiliation of many banks, it is argued, large lines may be
carried within the group organization*

This is regarded by some as of even

greater advantage to the local bank or to the dominant bank of the group
than to the borrower, although it is recognized as being of some advantage
to the latter as well* The statement is also made by some proponents of
the traditional banking system that correspondent banking accomplishes the
same result with respect to large lines as group banking*
According to the testimony of four-fifths of the groups a demand
for loans beyond the resources of the local bank is often met by other member banks, while several stated that such a situation had not yet arisen in
their group* Within the groups, situations of the sort are handled in a
variety of ways*

Local applications may be sent up to the dominant bank

for consideration there, or paper already acquired may be sold to it or
other institutions within the group, usually without recourse*
Uniformity in Investments* - Speaking generally, the investment
function of the banks is more centralized under the group bank holding con-




- 132 -

pany than the lending function.

This is, of course, also characteristic of

the great branch systems of Canada and England.

In some of the groups the

holding corporation, or the dominant bank, does all of the buying for the
group; in others, purchases are made "by the unit banks from a list of
approved securities furnished by the head office. A central file of investments held by the various members of the group is frequently maintained,
and sometimes analyses of the investment position of individual banks are
made •
About a third of the groups reported that the controlling agency
acted merely in an advisory capacity as to the purchase of security investments.

One in four indicated that a uniform policy of supervision over the

bond accounts of member banks existed.

In a few organizations practically

all investments are purchased by the head office, and thence distributed
to the subsidiary banks.

In these cases, it may be assumed that the autonomy

of the member banks in regard to investment policy has practically disap*.
peared.

Profits and Costs
In any process of concentration in business enterprise, such as
the bank holding company movement, it is generally assumed that managers
see in the amalgamated concern the possibility of increasing the rate of
profit on invested capital.

It is generally assumed that profit motives

have been of first importance in the growth of the concentrated branch banking system of England.

Better profits may come about throtigh increasing

gross returns or by cutting down the costs of handling a unit of business.
The group banking movement is so young and the period since its inception
has been so abnormal that any attempt to measure statistically its accom-




- 133 plisliments in improving profits would be futile.
frross Income, - There are nevertheless some observations which
can be made with respect to profit possibilities. The rate of return on
invested capital of the members of a group would be improved if the volume of business could be increased without increasing capital. There are
doubtless conditions under which this may be done with safety and conservatism, but the ratio of capital to deposits can not be lowered indefinitely
without lessening safety. The minimum limit varies from locality to locality and from bank to bank and many of
touched this limit.

the banks in the groups have already

It is not likely that group managers expect to improve

their average gross return on loans, since they are subject to local competition.

In fact, if a group brings more conservative bank management to

an individual bank, the higher grade portfolio might actually result in a
lower rate of gross return per $100 of loans and investments.
Perhaps, the best possibility of increasing gross income as a
result of group management rests in the matter of miscellaneous activities,
in the fields of fiduciary business and of merchandising securities and in
miscellaneous other undertakings. The extent to which leading groups have
become interested in these fields was bought out in a previous chapter.
In the matter of reducing banking costs or expenses, a group
management might be expected to achieve results at some points. With respect to interest on deposits local competition would probably be controlling, but handling the same business in a member bank at a lower payroll cost is a possibility.

So also among miscellaneous expenses, includ-

ing office supplies, and advertising, group management makes claims of cutting down costs.




Two-thirds of the groups indicated that weak banks were taken over
which became profit makers under their management* Various reasons for being able to turn unprofitable institutions into profitable ones were given*
It was stated that sound banking principles were substituted by the group
management for the inefficient practices formerly employed.

In a number

of cases announcement of the fact that the group had assumed control restored
public confidence to institutions which had been losing deposits* Most of
the groups stated that they have not established new banks, as distinguished
from taking over existing banks, where unit banks can not profitably operate,
while three maintained they had*
In some isolated cases, with the hope that future developments will
enable a favorable return to be secured, banks are being operated which are
returning very low dividends to the group or just breaking even* One group
reported that the cost of acquiring the weaker banks had been so low that
they were able to make money with them whereas their former owners, with a
relatively larger investment, could not*

In the case of two groups, un-

profitable banks which had been acquired were said to be giving promise of
becoming profitable*
Losses on Loans and Investments* « At the time when this survey
was concluded, in the early months of 1931i the leading groups were still
too young to have acquired much actual experience as groups with respect to
losses on loans and investments*

Interpretation of the experience record,

furthermore, was complicated in some cases by the nature of relations between banks and affiliates*

In these circumstances, groups replying to the

Committee's questionnaire stressed the general principle that diversification of assets has an important bearing on the loss record of banks* The
unit bank operating in a small town usually employs a large part of its
funds in that locality*.. If the industry upon which the community is mainly
dependent suffers from unfavorable conditions, the bank is often faced with




- 135 substantial losses* A group, since it operates institutions in various communities, usually achieves as a whole more diversification than any one of
its member banks. If one community in which the group operates is adversely
affected by local economic conditions, the others may be prosperous, and the
losses in some places may be offset against earnings in others.
It is stated that the individual member bank of a group has not been
able to increase diversification to the same extent, as it is under pressure
to use a largo part of its funds locally. About half of the groups indicated
that their member banks had not secured any greater diversification than it
is possible for independent unit banks to achieve. The remainder, however,
stated that their members had achieved somewhat better diversification.

In

some cases this has been accomplished by making loans to customers of other
members of the group, or to the other member banks directly.
In line with minimizing losses, practically all of the groups have
undertaken some method of handling the slow and doubtful assets held by banks
when they became members of the group. Upwards of a third of the groups reported that the head office carefully watches over such assets and makes suggestions to the banks owning them as to how they may bb most readily and efficiently liquidated.

Several groups stated that all puch assets were liqui-

dated by the former stockholders of the individual banks, and in two others
reserves were set up at the time of acquisition which were sufficient to absorb any loss that might be incurred from this source.
In another group the doubtful assets were not used in calculating the price at which the subsidiary banks were purchased. Other




- 136 -

methods employed in individual cases were the purchase of doubtful assets
by the holding company itself, and the organization of a separate company
to work out the doubtful paper. One group stated that it was not bothered
by this problem for it purchased only "clean banks."

Still another frankly

admits that it has never found a satisfactory method of handling slow and
doubtful assets.
Interest on Deposits. - Interest paid to the depositor is one
of the major costs of doing a banking business in this country.

It would

appear that banks belonging to groups generally pay about the same rate
of interest as other banks. Answers to questions indicate that the member
of a group must be guided by the local competition with respect to interest
paid on deposits. One group replied that the "rates paid on deposits by
our banks are for the most part more liberal than rates paid by independent
banks here," while another stated that "I think our rate of interest, if
anything, is smaller than that of independent banks*" One group spoke
of cooperative effort with competitors to lower rates. Another said
that "in some instances our rates are lower."

Still another contributed

the statement that "We have been outbid in cases of deposits of public
moneys."

It should be remembered, of course, and some of the replies

indicated this, that recent months have witnessed a reduction in tho interest paid on deposits by all banks, group and unij;.

It would seem

clear that whatever changes there have been have no| been due so much
to group bank organization as to other causes.

j

Wages and Other Costs. - A fourth of the groups reported that a
reduction in payroll costs had been accomplished*




in some cases replace-

- 137 -

ments were made at lower salaries, while others had not replaced those
leaving the organization.

Salary reductions had "been instituted in some

cases and in one case forty-four employees were eliminated through consolidating three banks. A great number of groups Reported economies in
the consolidated purchase of supplies and equipment.

In one group, 97

of the 117 members were using the central purchasing service at an average saving of 12 per cent.

Supplies and equipment, however, represent

a rather small proportion of the total costs of banking operations, and
saving in these items does not go far towards reducing operating expenses
in the aggregate.
A number of organizations have economized time and labor by
standardizing5 forms and operations. The forms used by all the banks of
a group mast be fairly uniform before any great saving can be secured
in their purchase price.

Other economies which were mentioned were:

the making of a consolidated State income tax return, so that the losses
of some banks could be set off against the profits of others; taking out
a blanket bond for all affiliated institutions; reducing the aggregate
cost to from 50 to 70 per cent of the total of the individual bonds; discouraging excessive activity among the member banks jin lines which were
not profitable.
Reduction of Non-earning Assets. - Seduction of cash reserves and
other non-earning assets among the members of a group would be in the direction of lowering costs or increasing profits. Indications are that little
change has been made along this line. According to their statements,




- 138 none of the groups load established a definite rule as to how nuch cash each
of its banks oust keep in its own vault. Instead, tlie local requirements
of each community are allowed to determine the amount of till money, as a
rule. As some group banks operate under laws which Require them to keep a
certain amount of cash on hand, these banks naturally must meet these requirements whether they coincide with what the management believes to be a
safe minimum

or not. Two answers stated that inasmuch as banks v/ere prac-

tically independently managed, the officers of each innit were permitted to
determine the amount kept on hand.

In most cases it was stated that cash

in vault was never more than was absolutely necessary, so that danger of
loss from robbery would be minimized.
High Cost Factors, * Over and against the possible economies of
*
the group, the overhead of the home office, its personnel and office space,
complicated reports, and red tape would be an offset0

When the groups have

been in existence longer, a statistical analysis of conditions before and
after formation will test the question of whether this type of banking concentration rests upon sound profit advantages.

It is rather widely stated

by the friends of the group movement that it does not have the same possibilities in this respect as a branch office system^
Elements of Strength and Weakness
on, management, and
The foregoing discussion of the organ!zatit
operating policies of bank holding companies has indicated elements of
both strength and weakness which may be briefly sxoajarized in the following paragraphs.




- 139 Elements of Strength, - Such elements of strength as are possessed
" y the holding company grow largely out of the fact that it is a method of
b
concentrating hanking resources. It has been pointed out in the various
studies on "branch banking—-especially the Canadian a x d English reports—
ji
that the large banking institutions in those countries have been successful,
partly in consequence of their size, in surviving periods of strain. Large
financial institutions appear to gain their strength partly through achieving a higher degree of diversification.

It has been shown that in many

cases a bank holding company has brought together a large aggregate of
banking resources, frequently several times that of the leading bank in
the group.
The larger aggregation of resources should be able to command a
higher grade of management which should work in the direction of reducing
costs and losses in all of the banks of the group, especially the smaller
units.

With respect to loans, the detached central management is less

likely under local influence to grant unwise accommodation. With respect
to making investments, the larger organization can command experts, not
available to small banking units.
The large organization built up through tlje holding company device can offer a wide range of services to its custopers, particularly those
in outlying towns. Eor example, such customers may have access to an expert
fiduciary service. The local borrower dealing with a group bank taps a
larger reservoir of loanable funds, which is particularly advantageous to
the large borrower. The association of many banks in a holding company contributes to the mobility of funds. Surplus lending power arising in one
part of the area covered ^oy the group may be made use of in another locality




- 1U0 -

where a greater demand for credit exists. A membeij hank suffering a drain
of deposits may " e supported by other members of the group where the situab
tion is easier. The individual "bank shareholder, who exchanges his shares
for stock in a holding company, may improve his position in that his risk
is more scattered and his equity has a wider marketability than the one
he has given up.
Elements of Weakness and Unsolved Problemd. - From the point of
view of public policy elements of weakness in groujj banking are the possibilities of manipulation inherent in complicated corporate interrelationships.

Safety may be impaired by shifting of fund^ from one bank to

another, by forcing worthless securities on a membejr bank, by pyramiding
of reserves, and by using the funds of one bank to [buy the stock in another,
All of these can endanger not only one bank, but the whole system.

A later

chapter, reviewing group and chain bank failures, shows that abuses of this
sort have caused disasters in certain cases.
The holding company has resulted in many c^ses in the close
association of commercial banking activities and t j merchandising
he
securities.

/^p

The dangers inherent in these relationships have had many

exemplifications of late. The fact that the holding company movement
in the banking field enjoyed its greatest development during the recent
speculative era adds to the suggestion of its inherent manipulative
possibilities.




While most of the existing groups are in conservative

- lUi ~

"banking hands today, the instrument of the holding company lends itself
to manipulation.

Supervision of a group system isj difficult, especially

when it contains "both national and State chartered "banks. The transfer
of the double liability of hank shareholders from natural persons to
corporations through the holding company device is one of the unsolved
problems of the movement*

Moreover, the use of the holding compaiiy

to separate control and ownership of hanks through the device of different classes of stock, some non-voting, may he contrary to public
policy.
The elaborate structure of a group system in itself has certain
drawbacks.

Inherently, the type of organization is cumbersome and

difficult to supervise and audit*

Complicated reporting systems are

necessary to bring the separate banks under head office control*

Since

each unit of the group is a separate corporate entity, it is probable
that the holding company can not operate its outlets as economically
as a branch system in extending the same services. This, no doubt,
accounts for the fact that most group managers would prefer to operate
their groups as branch systems*
Thus far the holding company has done litfcle towards solving
the problems of the banking structure where they ape most acute. Only
a minor fraction of the banking units in the major group systems are
banks of less than $500,000 loans and investments*




Other sections of

- ite the Committees report have indicated that independent banks of t h i s
s i z e , taken as a whole, have not had s a t i s f a c t o r y records of safety
or profits*







CHAPTER VIII

SUSPENSIONS AMONG GROUP AND CHAIN BANKS:

1921-1931

The group movement, as represented by the leading bank
holding companies, has covered such a brief period of time that
few conclusions can be drawn as to the safety record of this type
of banking*

It is not possible for most of the period covered,

1921~1931» to separate those suspensions belonging to chains
from those belonging to the group form of organization, but it
is clear that the great majority were chain banks*

Many of

them belonged to systems that combined some of the features of
both chains and groups.

In some cases where failures occurred

the holding company had been used as an instrument by a single
individual to secure control over several banks*

-1U3-




~ llfc-

There is evidence that in some cases the chain
and group vehicles have been used for promotional and
manipulative purposes*

In other cases of failure, sys-

tems have been the victims of honest but incompetent management.

The reasons for failures of groups and chains

are probably about the same as for failures of independent banks.
ment.

The test has been the quality of the manage-

Chains and groups, however, lend themselves more

readily to manipulations and are more difficult to supervise#
The small unit banks have been easy prey, in
many cases, for unscrupulous individuals who have secured control through these instrumentalities, more for
the purpose of exploitation than with the idea of
strengthening the banking structure.

Control of the

larger institutions is somewhat more difficult to acquire owing to the greater outlay of capital needed*
Daring the years 1921-1931 the majority of group and
chain banks as of unit banks that have suspended were
small institutions.




~ 1^5 ~

The abuses which have led to the failure of a
number of chains have turned conservative bankersf writers,
and banking supervisors against the chains.

The attitude

of students of the subject is revealed by the oft repeated
statement that chain banking has all of the limitations
of branch banking with none of its advantages. On the
other hand, the group system in the hands of capable and
honest management has elements of strength resulting from
the common interest and cooperation of a number of banks.

Group and Chain Suspensions. 1921-19*51 l/
During the elevei>-year period, 1921^1931t 551
group and chain banks belonging to 120 systems suspended,
involving loans and investments of $519,696,000.

£J This chapter was written in 1932 before the developments of more recent months had occurred in which several important groups of banks suspended operations.




- 1U6 -

It is sometimes difficult to identify? among suspended
banks those belonging to chains and groups because of the limitation in the data regarding these organizations. In compiling these
statistics only banks were included that were members of groups or
chains at the time they suspended, and nothing was considered a
group or chain unless there was definite information to show that
it contained at least three banks, exclusive of private and mutual
savings banks. As in the other reports of this Committee, mutual
savings and private banks are not included in % o tr.bles.
It is also difficult to determine how many of the 551
group and chain banks which suspended during the period can be
classified as group banks and how many as chain banks• The
Witham system contributed 117 suspensions and the CaldwellBanks system contributed 41+#




- 1^7 -

Both of these systems were on the "border line "between
chains and groups•

Of the 39O other hanks, kS appear

to have been group banks and 3 ^ chain banks.
Geographic Distribution. - Table 29 shows the
geographic distribution of suspensions among group and
chain banks during the period, 1921-1931*

Tjie agri-

cultural regions, comprised of the Southeastern, Southwestern, and Western Grain States, accounted for 79»5
per cent of the total number of group and chain banks
suspending during 1921-1931 •

^h-e concentration in

those areas was even more marked among group gind chain
suspensions than among all suspensions during the elevenyear period.

This was due partly to a few important

cases of failure and partly to the concentration of
group and chain banking in those areas»




~ iks ~

Table 29 - Suspensions of Group and Cliain Brinks during
I92I-I93I by Geographic Division
j

Geographic
division

Suspended! banks
loans
Percent
[Percent
\ and inNumber
of
! of
vest!of svs~ ! Number
! total
total
ments
|tems^x'
(000
dmitted)

i

New England

1

10

1.8 i 61,93^

11.9

Middle Atlantic

7

15

2.7

29,00^

17.1

12

ks

8.7

83,626

16.1

2

5

.9

85,293

l6.4

Southeastern

Ik

167

30.3

89.359

17.2

Southwestern

12

103

is.7

^.553

86
.

Western Grain

59 ;

168

30.5

^5,804

8.8

22

5.1;

17,53^

3.H

Z

l»3

2.589

.
5

North Central
Southern Mountain

Rocky Mountain

'

s i

Pacific Coast

!

5,

UNITED STATES

120

551 i

100.0

$519,696| 100.0
J

;

Systems in which one or more banks failed*
Details by States appear in the Appendix, TJables XIV and XV#




- 1^9 -

The Eastern part of the United Stat|es, the
first five geographic divisions named in Tablje 29, sup**
plied three-quarters of the loans and investments involved in chain and group hank suspensions. Although
the number of suspensions in the Western Graijn States
and in the Southeastern States was about the same, the
loans and investments involved were about ha3jf as great
as in the former as in the latter.

The loax^s and in-

vestments of the 15 group and chain banks which failed
in the Middle Atlantic States practically eqoialled
those of the 167 suspended banks in the Southeastern
States.

While the agricultural regions suffered the

greatest number of suspensions, the banks woare relatively much smaller than those which suspended in such
industrial sections as the New England, Middle Atlantic,
and North Central States.

Because of the B&ncoKentucky

failure, the average size of suspended banks was much
larger in the Southern Mountain States than ^ywhere else.
i




- 150 ~

Among individual States, Georgia, Arkansas,
North Dakota, and Florida, each had over So Suspensions.
The collapse of the Caldwell find Witham systems accounted
for most of the failures in the three Southern States.
Suspensions in each of the States, Illinois, Pennsylvania,
Florida, Massachusetts, and Kentucky, involved over
$50,000,000 of loans and investments.

On the other hand,

the 71 suspensions among group and chain hanks in North
Dakota involved less than $11,000,000 in loahs and investments.

Details by States and by years are to be

bound in the Appendix, Tables XIV and XV.
Suspensions 19^0-1931« - Table 30 shows that
of the 551 gro^-P & i chain suspensions occurjriisg in
*d
eleven years, 237t or * 3 per cent, occurred in the last
+
two years.

This is slightly higher than the percentage

among total bank suspensions.

Virtually no suspensions

among group and chain banks occurred in the industrial
States of New England, Middle Atlantic, and Itforth Central in the first nine years.

In the years 1930

1931 this area accounted for 3^*3 P e r

ceirfc

an

&

°£ a H group

and chain suspensions and for 60.S per cent of the loans
and investments involved.

The average sizd of the sus-

pending group and chain banks in these areas was much
larger than the average size of banks else?irliere.

- 151 ~

Table 30 - Suspensions of Group and Chain Banks dufring 1921-1929
and during 1930-1931, by Geographic Division
1
Geographic
division

192:
L-1929
Loans
and in?er
vestcent
ments
of
(000
total
omitted)

Number

New England

-

Middle Atlantic

-

Southern Mountain

Per
cent
of
total

-

1

-

10

4.2 $ 61,934

16.1

~

-

1

North Central

Per
cent Number
of
total

1930-1931
I Loans
Per
and incent
vestof
ments
total
(000
omitted)

-

15

6.3

89,oo4

23.1

^7

19.8

5

2.1

85,293

22.2

707 !

•3 $

»5
-

-

-

Southeastern

ll+6

46.5

77,434

57.3

21

8.9

11,925

3.1

Southwestern

32

10.2

11,596

8.6

71

30.0

32,957

8.6

109

3^.7

28.426

21.0

59

24.9

17,378

4.5

2k

7.7

16,305

12.1

4

1

1,229

.3

5

2.1!

1.843!

.5

Western Grain
Rooky Mountain
Pacific Coast
UNITED STATES




2
31*+

-

82,919 ; 21.6

.6!

7461

100.01 $135,214

•51
100.0

237

*7

100.0 $384,4821 100.0




- 152 -

Suspensions by Size Groups. - The increase
in size of suspended hanks in the last two years is
brought out in Table 31.

During 1921-1929, 80#2 per

cent of the suspensions were among banks with loans
and investments under $500,000, while in the years I93O
and 1931 the proportion in this size class was 6l#2 per
cent.

The distribution of loans and investments among

the size classes during the two periods is even more
striking.

In the early period banks larger than

$5,000,000 accounted for 13.8 per cent of the loans
and investments of group and chain suspensions, compared with 63.I+ per cent in the years 193O-193I, This
change in the size of suspended group- and chain banks
is similar to that shown for all suspended banks.

- 153 -

Table 31 - Suspensions of Group and Chain Banks during 1921-1929 and
during 1930-1931, by Size of Loans and Investments
L-1929
192]
Loans
i Per and inSize group
vest'"SOX: Icent
loans and investments
of
ments
W
total
(000
(omitted)
1

Under $150,000

12S

Per
cent N"um~
of
ber
total
1

1

iq-?o-iqii
Loans
Per jand in- 1 Per
cent
cent 1 vestof
of ; ments
total
total j (000
omitted)

1+0.8 $ 11,948

B.&

n

29.5 $

5.787

1.5

150,000 - 250,000

68

21.6

12,663

9>

4o

16.9

7.852

2.1

250,000 - 500,000

56

17.8

20,250

15.0

35

14.8

12,272

3.2

500,000 - 750,000

19

6.1

11,721

8.7

19

8.0

11,279

2.9

750,000 - 1,000,000

l4

*.5

11,913

8.8

16

6.7

13.7^0

3.6

1,000,000 - 2,000,000

19

6.1

26,152

19.3

23

9.7

32,735

8,5

2,000,000 - 5,000,000

S

2.5

21,840

l6.2

18

7.6' 56,8^9 i4.S

5,000,000 - 10,000,000

1

.3

5.005

3.7

8

3.V

10,000,000 - 50,000,000

1

.3

13.722

10.1

8

3.*: lS4,26l 47.9

50,000,000 and over

-

- •
;

-

Total




«*

mj

59,707 15.5

i

-

'

-

3l4 100.0!$135,21^; IOO.O: 237 100.0 $384,4821 100.0




~ 154 -

Taking the eleven years as a whole, Table 32
brings out the fact that banks of less than $5001000
accounted for 72#1 per cent of the number of group and
chain bank suspensions but for only 13*6 per cent of
the loans and investments involved*

On the other

hand, banks of $5t0°0s0°0 or more account fojr only 3»2
per cent of the number of suspensions but fojr ^Q.S per
cent of the loans and investments involved ih group
and chain bank suspensions.

- 155 -

Table 32 - Suspensions of Group and Chain Banks diiring 1921-1931
by size of Loans and Investments

Size group
loans and investments

Number

Suspended blanks
Loans and
Per cent 1 i n v e s t ments
of t o t a l
(000
omitted)
l

Per cent
of t o t a l

i-

Under $150,000

19S

36.O

$ 17,735

3.*

150,000 - 250,000

108

19.6

20,515

3.9

250,000 - 500,000

91

16.5

32,522

6.3

500,000 - 750,000

38

6.9

23,000

k.k

750,000 - 1,000,000

30

5.5

25,653

Ks

1,000,000 - 2,000,000

kz

7.6

5S.S87

11.3

2,000,000 - 5,000,000

26

Kl

78,639

15.2

5,000,000 - 10,000,000

9

1.6

6l+, 712

12.5

10,000,000 - 50,000,000

9

1.6

197,983

38.1

50,000,000 Euid over
Total
'1'




-

'

551

100.0

*m

$519,696

-

. 100.0

Details by States aijpear in the Appendix, Tsibj es XVI and XVII.




~ 156 -

Disposition of Suspended Banks.

-

During the

ten-year period, 1921-1930, U26 group and ch4in hanks suspended.

Of these, llH, or more than one~fouitth* were

either reopened or taken over, as shown in T^ble 33* Among
all suspensions the coitfparable proportion was ohe-fifth.
In the Southeastern States, where l6l banks Were involved,
59 were reopened or taken over.




- 157 -

Table 33 - Disposition of Group and Chain Bank Suspensions
during 1921-1930 " y Georgraphic Division'1'
b

Geographic
division

Reopened

ProcComDisess of plete- posiTaken
liquily
tion
over
daliqui- untion dated known

New England

-

-

1

Middle Atlantic

-

-

2

North Central

1

-

Southern Mountain

1

Southeastern

Total

•
•

1

-

-

2

3

-

-

k

-

k

-

-

5

5^

5

76

26

-

161

Southwestern

22

5

59

6

-

92

Western Grain

20

l

95

17

-

133

Rocky Mountain

1
+

-

10

9

2

25

Pacific Coast

1

mm

2

UNITED STATES

103

11

252

^

wa

2

52

U26

1

(!) Details by States appear in the Appendix, ifable XVIII.




~ 158 -

Among group and chain honks reopened or taken
over during the period threes-fourths occasioned no loss
on general claims to depositors, as Table 3 + shows• On
I
the other hand, among those hanks completely liquidated,
in more than two-thirds of the cases depositors realized
less than 60 per cent on their general claims, and indeed in a third of the cases less than 20 per cent. This
record in general, however, is better than in the case
of all national and State bank suspensions.

~ 159 Table 3H - Distribution of Suspended Group and Chain Banks
Eeopened, Taken Over, or Completely Liquidated during
1921-1930, Classified According to Per Cent of
Greneral Claims Realized by Depositors

Per cent
of general
claims
realized by
depositors

Pei ' cent of
Number of suspended
;otal
banks
ReContComHeopened pletely
opened pletely
and liqui- Total
and liqui- fotal
taken dated
taken dated
over
over(l) (2)

0-19

1

19

20

•9

33-9

12.1

20 - 39

-

7

7

-

12.5

U.2

Uo - 59

6

12

IS

5.5

21.1*

10.9

60 - 79

12

S

20

11.0

lU.3

12.1

go - 99

6

1
+

10

5-5

7.2

6.1

8k

6

90

77.1

10.7

^U.6

109

56

165

100.0

100.0

100.0

100
Total

(1) Ho data for 5 banks.
(2) No data for 2 banks*







~ i6o -

Some Leading Cases of group and Chain Failures Prior to 1932

An example of early chain suspensions was that of
the Heinze-Morse hanks, which occurred during the panic of
1907• Banking concentration in that period wasi often obtained,
as it is today, through interlocking directorates, and this
chain was held together by that means. The leading institution
was the Mercantile National Bank of New York, the directors of
which were also on the boards of several other banks, both in
New York and elsewhere.
The most important director, F. A. H0inze, moreover,
had a substantial interest in the State Savings 3ank of Butte,
Montana, and after having incurred heavy losses in copper
deals, both the Mercantile National and the Mohtana.bank
closed on October 17, 1907•

Another director, C. P. Morse,




- 161 -

controlled the Bath Trust Company and the Lincoln National
Bank, both of Bath, Maine.

Immediately after t h Mercantile
je

in Hew York had closed, the first of those Mainje banks suspended, and the second required a thirty-day notice for
withdrawals of deposits. In view of the fact that many independent banks were involved in difficulties $t this time,
the' Heinze-Morse suspensions were no doubt related to general conditions as well as to chain banking irregularities.
The lessons learned from the evil potentialities of interlocking bank directorates influenced some of the provisions
of the Clayton Act a few years later.

In this instance, as

well as in some more recent ones, the directors were able
to exercise control over the banks in the chain with very
little investment of their own funds. A larg^ block of
stock in one bank was held by borrowing on it at another
bank of the chain.




- 162 ~

The WithannMaaley System

With the collapse of the Florida b o j more than
oii
117 banks of the approximately 200 belonging to the Witham
chain suspended around the middle of 1926. Th0 suspension
of these banks involved $k&f 560,000 in loans ajid investments and affected tremendously the business situation in
Georgia and Florida.

In Georgia the 82 Withan^ banks, which

suspended, represented 1^*7 per oent

of the number and U»5

per cent of the loans and investments of all Commercial
banks in the State, as reported on June 30, 1$26#

In

Florida the 35 Witham banks which suspended represented
10#5 P e r cent of the number and 6*k per cent 0f the loans
and investments of all commercial banks.
Ihe Witham system had its inception three decades
before its collapse.

In I896 W. S. Witham of! Atlanta began

to organize new banks and purchase control in| others. Mr.
Witham1 s activities at first were confined to small agricultural communities in Georgia whore there were} no banking




- 163 -

facilities. As the chain developed, however, banks were
established in towns where one or more banks were already
in existence, and ultimately it was operating in the States
of Georgia, Florida, New York, and New Jersey. The fundamental idea behind the organization of the Witham chain
was that for a consideration Mr* Witham agreed to act as
financial agent for the banks affiliated with him, assisting them in borrowing money during the lending season and
in investing their surplus funds when loans were at their
low point.

In some of the affiliated banks Mr. Witham

held no stock whatever, while in others he voluntarily
purchased a majority interest. After a bank was once
organized, Mr. Witham left the details of the management
to the local stockholders and directors, but was actively
interested in supervising and executing loan and investment policies in a broad way.

On September 1$, 1905t Mr.

Witham organized the Bankers Financing Company, a Georgia




- 16U -

corporation, which took over the Sanctions Mr. Witham himself had "been exercising as an individual. On July 1,
1911, the Bankers Trust Company, a Georgia corporation,
was organized to succeed the Bankers Financing Company as
the controlling agency for the affiliated banks.
The Bankers Trust Company transferred funds between the banks and was responsible for them on call,
having to repay them from other sources if the borrowing
bank was not able to meet the demand.

Call loans were

made in New York and participating certificates in such
loans were sold to member banks desiring to increase such
commitments. The Bankers Trust Company also borrowed
from the banks and promoted corporations, whose stocks it
sold to the banks.

It also acted as fiscal agent for the

banks charging fees from $500 to $1,500 per bank per annum
depending on the size of the bank. The member banks submitted semiweekly statements to the Bankers Tjrust Company
and were examined semiannually by its auditors.




~ 165 -

By 1911 the number of banks in the $hain had increased to approximately 108, and connections with several
banks in Florida had been made. Because of the objection
of some of the Florida affiliates to doing business with a
foreign corporation, a Florida corporation was organized—
the Bankers Financing Company—with offices i i Jacksonville.
t
The affiliated banks in Florida were served by the Bankers
Trust Company through this Florida company. Affiliation between banks in Georgia and Florida was particularly advantageous in the seasonal movement of funds. Deposits in
Georgia banks reached their peak in the fall of the year at
a time when customers of Florida banks needed financing for
winter crops. When Florida loans were repaid in the spring,
requirements for accommodation with respect to the summer
crops of cotton, tobacco, and the like were high in Georgia.




~ 166 -

Jbx associate of Mr. Witham, Mr. W. D. Manley, came
to be more and more influential in the chain after 1910, and
about 1916 Mr. Witham sold his interest in the company, Mr.
Manley becoming the dominating force in the ma4agement of
the Bankers Trust Company.

In 1923 Mr. Manley organized the

Georgia State Bank of Atlanta, which began to establish a
state-wide branch bank system as an affiliate 0f the Bankers
Trust.

Several of the affiliated banks of the chain had ac-

quired so much bad paper that their capital had been entirely
wiped out, and rather than liquidate the banks entirely it was
decided to convert them into branches of a newly organized
bank owned and controlled by the Bankers Trust Company. The
original stockholders of the banks in difficulty suffered a
100 per cent loss on their capital stock investment. Some
branches in this corporation were established j e novo: others
i
represented absorptions of active banks or the purchase of
assets of failed banks.




-167-

The Witham chain collapsed concurrently with the
Florida boom when Georgia banks could not meet the demands
of Florida banks for the return of funds. The failures were
directly associated with the decline in farm lstnd values
after 1921. While land prices were rising, tho Georgia
banks made real estate loans at excessive valuations, and
when the decline set in these banks were left t'ith a large
proportion of frozen assets. During I92U and 1925 deposits
in Florida banks more than doubled as the speculative boom
in real estate values reached its peak, and the Florida
banks in the chain made available to the Bankers Trust Company a large part of their increased funds. Apart of these
at least was absorbed by Georgia banks in further advances
to their farmer customers.
The Bankers Trust Company utilized a part of the
increased supply of funds in promotional activities. The
capital stock of the company was not fully paid in, and with
money borrowed from its member banks it organized and operated
subsidiary corporations in a wide variety of lines. Money was
borrowed for the purpose also of making further investments in
bank stocks and in thus acquiring new affiliates of the chain.




~ l6S ~

On petition of the Bank of Umatilla, Florida, receivers were appointed for the Bankers Trust Company on July
lH, 1926•

Immediately, runs began on affiliated banks, and

more than 100 of them soon closed. A few of these were able
to reopen through the assistance of outside co-respondents,
but by far the majority of those that suspended remained in
the hands of the supervisory authorities.
It is stated that the managing officials of the
Witham chain lent funds of the banks in the chlain to ventures
in which the officials were interested.

Their influence on

the managements of the affiliated banks was not in the direction of conservative loan procedure.

In theso circumstances

the chain was not able to withstand the untoward economic
factors, including the collapse of speculation in farm lands
and in Plorida real estate, and the stagnation that followed
upon these.
Chart 12 shows the location of the >anks in the
Witham chain just prior to failure.




- 169 -

CHART 12
r

II

I

•

•

\

• /

•

\
\

•L
•*

•

u

•

• • •

^ ^
•

•

r
•
•
•• •
\
*%
\ ••• •t**TLA2T*
\*

II

II

\

1

•

i

#

*

••

• k

•

•
•

• •

\

•

^ >

•

I

1

II

/

II

J
\

• • *
*

., \

<

a

y

.

•

.- «

*m •

~

•
r

^ \

•
•

•

1
\
\

•
••

\

FLA.
\

BANKS INTHEWITHAM CHAIN
THERE WERE ALSO FOUR BANKS IN NEWJERSEY AND"
SIX IN NEWYORK AFFILIATED WITH THIS CHAIN
EARLY, m 1926

\

•
t

•

J r\

#

Csvv

\
•\

•

if

I

•\
^

II

\

*\

•/
• (

1
||
||




- 170 -

Ba&coKentucky~Caldwell~A«B> Banks
The l a r g e s t of the group and chain suspensions
of more recent years concerned three systems, so interwoven
that any account of t h e i r operations must de^l with them t o gether*

S t a t i s t i c a l l y i t has been possible to separate them

into two parts-—the Caldwell-Banks system with ^

suspensions

involving $52,31^000 of loans and investments, and the BancoKentucky Corporation system with 3 , involving $59,180,000 of
loans and investments*

The controlling agencies were Cald-

well and Company, BancoKentucky Corporation, A. B* Banks and
Company, and t h e i r a f f i l i a t e s , personal and corporate, operating in Kentucky, Tennessee, and Arkansas*

Although the number

of banks involved in t h i s group of f a i l u r e s was l e s s than in
the Witham system, the loans and investments nrere much larger*




- 171 -

Caldwell and Company controlled 13 bafcks, mostly
in Tennessee, and was affiliated with others thro-ugh interlocking directorates and community of interest. It was also
interested in 9 insurance companies and 32 othe|r corporations.
Rogers Caldwell was said to have been sole own^r of the company bearing his name, until he exchanged Caldwell and Company stock in May, 1930i with the BancoKentue&# Corporation.
This company then owned half of Caldwell and Cqmpany.
A. B. Banks had been a stockholder iij many banks in
Arkansas for some time, the number being about 50 in 1930. Most of
their stock was actually held by the Home Fire Insurance Company, the Home Accident Insurance Company, the Home Life Insurance Company, A. B. Banks and'Company, Lumber Underwriters,
and other corporations controlled by Mr. Banks and his associates*

Caldwell and Company, meanwhile, acquired a con-

trolling interest in the three Home insurance Companies, and




- 172 -

an independent interest in at least one of the more important
Arkansas banks of the Banks chain. These were the links by
which the three interests were associated.
Caldwell and Company, the first of the three interests to fail, was placed "under the control of a committee of
Nashville bankers on November 5, 1930, with a receiver appointed
a few days later. Banks in Tennessee of the Caldwell chain were
closed shortly thereafter, and other banks, not affiliated with
this group, were suspended during the subsequent loss of public
confidence. In Arkansas the .American Exchange Trust Company,
leading unit of the A. B. Banks chain, closed November 17, followed by nearly all the other members of the chain, and the Home
insurance companies were taken over by other organizations. A
receiver was appointed November 2 + for the BancoKentucky Corpora*
tion*

The National Bank of Kentucky, the leading bank of this

group, had suspended on the 17th as had the Louisville Trust
Company. Since many matters connected with these failures are
still in litigation, it is too early to describe in detail the
circumstances that led to the failures. '
(1) Many of these circumstances are described in the following
sources among others: Report of the Tennessee Legislative
Investigating Committee, appointed January, 1931; Plaintiff's
Bill, Paul C. Keyes, Receiver of the National Bank of Kentucky of Louisville, Plaintiff, v. John S. Akers et al.,
Defendants, Louisville Courier-Journal, March 31, 1931;
Testimony before the Joint Investigating Committee on
Banks and Insurance, Arkansas Legislature, Hearings beginning January 26, 1931.




- 173 -

Minor Chain Suspensions
In addition to the major suspensions just described,
the Committee attempted to collect information with respect to
the circumstances surrounding some of the lesser chain failures.
Some of the information collected was of a confidential nature
and not a matter of public record*

Certain important facts re-

garding these lesser chains have been classified in Table 35*
The tabulation brings out the extent to which, certain characteristics have been common to a number of the failures, including
heavy borrowings, and excessive local loans, especially to
interests which dominated the chain•

- 17U -

Table 35 - Characteristics of Ten Minor Chain Systems Which Failed
Number
of
Year
of "banks
fail- suspendure
ing

Location
of
chain

[InvestLoans to
ments
dominant inBorrowings per per $100
terests per
of loans
$100 of
[ $100 of loans
and
capital funds
and investments
invest1 ments

Deposits
at time of
suspension

Southeastern
1

1927

11

Southwestern
2

1929

12

2,678,000

192S
and

6

3,163,000

3

s —

192^

5
6

1

*5

30

1

1 1931
Western Grain

$:9

$3,727,000 $ko

k

70, one bank
only

Heavy (no exact
data)

$16
Excessive (no
exact data)

h

1,117,000

90

1

19

Heavy (no exact
data)

1926

7

3,827,000

90, varies fron1
0 up to $300

1

Heavy (no exact
data)

1926

6

l,l&3,000

1U0

9

$25

7

!

1926

3

539,000

115

,

6

$Uo

8

1 1927 1

7

921,0001

^5

!

20

j$3S

9

1930

7

i,7^5,ooo

120, 6 banks
average $50,
the 7th is •
'
$260

6

1925

k

h, 639,000

Heavy (no exact
data)

Rocky Mountain

10




1 15

JU

$17




- 175 The following paragraphs represent a siammation by
responsible banking authorities of the causes of failure of
several of these chains•
Chain A - "
completely dominated the policies
and was given a free hand in the management of
the parent institution as well as the other banks
in the chain* In the opinion of the writer, the
agricultural depression was only a contributing
cause. The prime cause of the failure of the chain
of banks was due to mis-management by Mr,
;
_
and his associated. This is indicated by the
large accommodations of credit extended to himself and his interests,
"As far back as 1922, Directors and their
concerns appeared to be over-extended financially.
Paper was freely ex«£i.anged between the banks in
the chain in large amounts, and practically all
of such loans were of a capital and fixed nature.
All the banks in the chain have been over-extended
for a period of years, were frequently penalized
for deficient reserve, and earnings were exceedingly small, Mr,
and his associates were
speculating not only in local land but in land
in Southern states,
"I am of the opinion that if the banks had
been under conservative management, and independently operated and controlled, they would not have
closed,"
Chain B - "The failure of this chain may be attributed
to the over-extended financial position of
,
which resulted in his use of his seviral banks to
an unwarranted extent, and to losses and a frozen
condition in the several banks which resulted from
a too free extension of credit during and immediately after the war, when high prices prevailed for fann
lands and all farm and live stock products, and the
subsequent collapse of these prices,"




-176-

Chain C - "The failure of this chain was chargeable
to a combination of circumstances* Mr.
. s
*
optimistic belief in values of farm and coal
properties led him to borrow heavily to add to
and operate his holdings. This placed him in
poor position to meet a situation presented by
a depressed condition of the coal industry in
southeastern
, due to a falling-off in the
demand for the quality of coal found in that section, increased freight rates, and labor troubles.
This situation, together with lack of demand for
farm and pasture lands, made it difficult or impossible for Mr. mmmmmmmmmm to raise money by the sale
of any of his properties, and resulted in his borrowing, in one way or/another, from his various banks, to such an extent that the banks were
placed in a weakened and frozen condition. The
immediate cause of suspension of the banks of the
chain was the discovery of irregularities in Mr.
1
s dealings with the banks, and his inability
to raise money with which to restore the banks to
solvency."
Chain D - "A summing up of the history of this chain of
banks indicates that during the last several years
of its existence it was operated almost wholly for
the benefit of
and
• It lacked proper
supervision. Apparently the State Banking Department was not equipped to make simaltaneous examinations, or otherwise properly supervise the system.
The credit policies of
and
were unsound.
Their personal business ventures proved unprofitable
and they continued to place inci*eased amounts of
their paper in their different banks. Conditions
continued to grow worse until suspension was inevitable."




- 177 -

Chain 1 - "In the inflation period during and following
the war, a too-liberal loan policy was followed and
the hanks "became over-extended* Practically unlimited
demand for loans at high interest rates tempted the
management, through the hanks and the
t to take
on a large volume of cattle paper. Much of this paper
was re discounted with the
of
and the t ,
°f .
and a considerable amount was sold without
recourse to hanks within and without the chain• The
western mmmm^mmmmm and eastern ^m^mmmmm^ hanks were in a section of the country where there is little accumulated
wealth, and much of the business is done on borrowed
money• In such communities times of falling prices
are times of financial difficulties, and in the deflation period, commencing in 1921 and continuing for
several years, the .
valley region suffered severly* The cattle industry was particularly hard hit,
and the banks in the
chain were unable to withstand the shrinkage of deposits which came with falling prices, and the pressure exerted by the necessity
of taking care of the large volume of placed paper*"
Chain i1 - "The immediate cause of suspension of the banks
in this chain was the death, generally believed to be
suicide, of Mr #
, immediately following unsuccessful attempts to borrow money to provide working capital
for his banks* The frozen condition of the banks, and
the resulting exhaustion of liquid funds on which to
continue banking operations, waa due principally to
long continued depression in the communities served
by the banks because of cessation of oil production
and oil operations, coupled with poor crops arid the
adjustment in values of farm lands and live stock
and agricultural products from the high prices which
prevailed during and immediately following the war*"




- 172 -

f
Chain G - "The period immediately following Mr*
s
entry into the banking business was a period of
falling prices, particularly as affecting farm land,
farm products, and live stock* The
banks waged
active campaigns to enlarge their businesses and in
so doing extended credits on a very liberal basis#
This urwise loaning policy, in the face of continued
reductions in farm and live stock values, brought
large losses to the country banks of the chain, and
to the three larger
. banks, both on loans made
direct by them and on loans taken by them from country bank correspondents, and resulted in the absorption of working capital in an accumulation of an abnormally large volume of loans in the several banks
which could not be properly clasif ied as liquid banking assets*

"An important immediate cause of the failure
of the
, which was followed by the failure of
the other
banks, was live stock paper made
through the
» a
company, and sold to
banks and investors. As this paper matured, ranch
of it could not be paid by the borrowers, and conditions had so changed that the cattle loan company
could not keep the usual volume of paper sold out*
The loan company and the bank were thus forced into an over-extended condition which they could not
withstand*"
Chain H - "The immediate cause of the suspension of this
chain of banks was a demand by the
State banking department that the several State banks in the
chain withdraw their deposits from the
of
and place then with some other reserve agent* There
were many contributing causes of the suspension, including the gradual withdrawal of deposits from the
State banks, due to general lack of confidence in,
and later, the collapse of the
, and frozen and




* 179 -

worthless assets in all of the hanks, due to failure to recognize and remove losses as they occurred
over the past several years and failure to avoid
losses and frozen conditions in loans by making adjustments of loaning policies as conditions changed
in the respective communities. The business of all
of the banks was predominantly agricultural, and the
depression in the agricultural industry since 1921
placed many difficulties in the way of successful
operation of small country banks, but with these
difficulties must be included the incompetency of
the management. Since the failure, investigations
have disclosed many irregularities on the part of
and also on the part of his son,
.
confessed guilt on a number of criminal charges
brought in the State court, and is now serving a
long sentence in the
penitentiary.n
Chain I - M l . Liberal loaning policy of controlling
interest.
2. Extending credit on valuations from $200
to $275 P° r acre.
involved in land speculation.
Exchanging of paper between the parent
bank and members of the so-called chain
in order to avoid showing excess loans.
5» Practically no free secondary reserve.
6. Inadequate credit data.
7» Lack of earning power caused by a large
volume of other real estate and second
mortgage loans on which no interest was
received.
S. Concentration of credit to individuals
far in excess of their financial responsibility.
9« Exorbitant rate of interest paid on deposits.

I:

10.
11.
12.

Values knowingly i n f l a t e d .
Large extensions of c r e d i t to tenants on
land owned or controlled by the
•
Agricultural depression was only one of
the contributing causes."

CHAPTER IX
FEDERAL REGULATION

The status of Federal regulation of group and chain hanking
may " e reviewed in three phases:
b

(l) Federal laws which have a hear-

ing on the movement, (2) attitude of the Comptroller of the Currency
and the Federal Reserve Board towards groups and chains, and (3) proposals for new regulation of the group and chain hanking movement.

Existing Federal Law
National Banks As Holding Companies. - There is no Federal
statute under which an organization may he incorporated to act as a
holding company for hank stocks. The Federal statutes, on the other
hand, contain nothing which has prevented a holding company incorporated under State law from gaining control of a national hank.

A

part of the Federal anti-trust legislation, the Clayton Act, however,
has a hearing on community of interest between banking institutions
building upon common directorships.
T r e Congress made provision for national ibanks by the Act
fin
of IS63, the apparent intention was to limit their Activities to the
business of discount and deposit, with the note issuing privilege.
The central power accorded the new institutions was phrased as
follows^ 1 )

(^




Act of June 3, 186U, c. 106 Sec. g; 13 Stat. L. 101,
- ISO ~

- 181 ~

,f

To exercise by its board of directors, or duly
authorized officers or agents, subject to law, all such
incidental powers as shall be necessary to carry on the
business of banking; by discounting and negotiating
promissory notes, drafts, bills of exchange, and other
evidences of debt; by receiving deposits; by buying and
selling exchange, coin, and bullion; by loaning money
on personal security; and by obtaining, issuing, and
circulating notes according to the provisions of this
title."
In the early days of the national banking system, it was
established by court decision that national banks did not possess
the power to purchase and hold stocks of other corporations generally, including bank stocks.

It is not necessary to trace in

detail the history of adjudication on this subject, but some typical expressions of the courts may be quoted.

In the case of the

national Bank vs. Case, the Supreme Court held:




!,

Ho express

- 182 power to acquire the stock of another corporation is conferred upon a
national bank*11' '
"It is settled that the United States statutes relative to
national banks constitute the measure of the authority of such
corporations,, and that they can not rightfully exercise any
powers except those expressly granted, or which are incidental
to carrying on the business for which they are established.
Logan County Bank v. Townsend, 139 U. S. 67, 73• No express
power to acquire the stock of another corporation is conferred
upon a national bank, but it has been held that, as incidental
to the power to loan money on personal security, a bank may in
the usual course of doing such business accept stock of another
corporation as collateral, and by the enforcement of its rights
as pledgee it may become the owner of the collateral and be
subject to liability as other stockholders. National Bank v.
Case, 99 U. S. 628. So, also, a national bank may be conceded
to possess the incidental power to accept in good faith stock
of another corporation as security for a previous indebtedness* It is clear, however, that a national bank does not
possess the power to deal in stocks. The prohibition is implied from the failure to grant the power. First National
Bank v. National Exchange Bank, 92 U. S. 122, 128."(2)
It is true that the general powers of national banks have been
broadened from time to time since 186^.

Specific statutes allow national

banks to purchase stock, usually in very limited amounts, in certain special
corporations, e. g., Federal reserve banks, certain corporations engaged
in the financing of foreign trade, and safe deposit companies. Neither
the statutes nor the courts, however, have extended to national banks the
right to purchase and hold corporate stocks generally.

Thus a national

bank cannot -under existing law act as a holding company for bank shares,
either as its chief business, or as an auxiliary activity.
Clffvton Act. - Although there is nothing in existing Federal law
which prohibits holding company control of national banks, a portion of the
anti-trust legislation strikes at extended community of interest between

(1) 99 U. S. 628 (1878).
(2) California Bank v. Kennedy, 167 U. S. 362, i. c. 366, quoted in Senate
Document No. 92, 72nd Congress, 1st Session, May 9, 1932, p. 5.







- 183 ~

one national bank and other banks based on interlocking directorates. The Pujo Commission had found during itsi investigations
that interlocking directorates among city banks were common and
believed such community of interest was not wholly desirable.
The Clayton Act of I91U was directed at these relationships.
This act was liberalized by amendments in 19l6, 1920, 1928, and
1929, so that its present prohibitions and exceptions are complex.
In general, it does not limit the number of directorships or positions which a person may hold with any number of banks providing
the size of none of the banks exceeds $5,000,000 in resources and
none of them is located in a town of more than 200,000, The directorships and positions which a person may hold in banks of the
larger size or located in the larger places are limited. With the
permission of the Federal Reserve Board, a person may hold positions with as many as three of these large organizations.
Even in the years immediately following 191*+ when the
provisions of the act were most rigid, it was not effective in
reducing community of interest between banking organizations.
Those who had to relinquish positions could easjily be represented
by their agents«




- 1SU -

Attitude of Federal Supervisory Authorities
Both the Comptroller of the Currency said the Federal
Eeserve Board have believed that their powers were ineffective
with respect to regulating the group and chain movement*

The

Federal supervisory authorities are without visitorial powers
with respect to bank holding companies themselves or with respect to nonmember banks associated in a group With national
banks or member State banks,
Federal Reserve Board. ~ Daring the spring of 1930
Roy A. Young, then Governor of the Federal Reserve Board, testified before the Committee on Banking and Currency of the House
of Representatives. At that time, he offered for the record a
previously prepared statement outlining the attitude of the
Board toward group and chain banking, as follows:^ '

' * ' United States Congress, 71st, 2nd Session, (Hearings before
••
the Committee on Banking and Currency, House of Representatives, under H. R. lUl, March 18, 193O, ppj I&2-V+3.

0

iS5 r

11

1. Conditions of membership, - Prior to the enactment of
the McFadden Act, the board prescribed conditions of membership
under which State banks could be admitted to the Federal reserve
system, in order to effect some degree of control over chain
banking. One of the conditions with which State banks entering
the Federal reserve system were required to comply, reads as
follows:
,M

(5) Such bank or trust company, except aftjer applying for
and receiving the permission of the Federal Reserve Board, shall
not consolidate with or absorb or purchase the assets of any
other bank or branch bank for the purpose of opeitating such bank
or branch banks as a branch of the applying bank; nor directly
or indirectly, through affiliated corporations o t otherwise, aci
quire an interest in another bank in excess of 20 per cent of
the capital stock of such other bank; nor direct I y or indirectly
j
promote the establishment of any new bank for the purpose of acquiring such an interest in it; nor make any arrangement to acquire such an interest*'
"This condition of membership was incorporated in the board!s
regulations of 192*4 and was prescribed for every State bank admitted to membership betvzeen April 7* 192*+, and January 3> 1928#
As a result of an amendment to section 9 contained in the McFadden Act (February 25» 1927) t there is some doubt whether the
board now lias authority to prescribe this broad condition and,
therefore, it has been unable to exercise the same degree of
control over chain banking. It has, however, prescribed the following condition of membership for every State batik or trust company admitted to membership since January 3* 1928*
fM

(3) Except after applying for and receiving the permission
of the Federal Reserve Board, such bank or trust company shall
not acquire an interest in any other bank or trust company,
through the purchase of stock in such other bank or trust company • !
H

2. Recommendations for legislation. - As eirly as January
S, 1926, the board addressed a letter to Congressrpan McFadden
recommending that there be incorporated in the petiding McFadden
bill certain provisions designed to secure adequate information
regarding national and State member banks which are closely related in management, operation or interests to other banking institutions and, in particular, to afford some chectk upon the
abuses frequently occurring from chain banking, fhese suggestions were not adopted by Congress*
!,

3t Correspondence with Hon. Louis T. McFadden re adminietrative control. - Under date of May 2, 1927, Congressman McFadden addressed a letter to the Comptroller of the Currency, suggesting that he adopt administrative measures calculated to




- 186 control or prevent the growth of chain banking among national
banks and sent a copy of his letter to the Fed0ral Reserve
Board with the suggestion that the board should adopt similar
administrative measures with reference to Stato member banks
of the Federal reserve system. The board, uad^r date of May
IS, 192S replied that it was powerless under t}ie law to take
any such action. The board called attention tp the fact that
it had suggested legislation along this line, but that Congress had not adopted its suggestions, and also called attention to the fact that Congress in the McFadden Act had amended
the law so as apparently to take away the boards power to
control this practice through conditions of membership. The
board1 s letter concluded with the statement thfxt the remedy
lies with Congress."
In 1932 the Board in making recommendations in connection with
the G-lass bill made some specific suggestions with [respect to the regulation of groups. These will be brought out in later paragraphs in which
certain provisions of the Glass bill are dealt with in detail.
Comptroller of the Currency. - The earliqr annual reports of the
Comptroller of the Currency have taken little note of group banking, but
in the 1930 report he points out what he regards as some disadvantages of
group banking as compared with branch banking; but agrees that:* '
" . . . group banking in the main is in capably hands, and includes some of the best-managed banks in the Country. However,
the field of group banking is now open to eve^y type of operator or promoter who may be able to purchase bcjmk stocks. This
constitutes a source of potential danger. Injorder to facilitate the supervision of group banking, in tho^e cases where the
Federal Government has any responsibility, it is my view that no
national bank should be permitted to become a constituent of
such a group, except upon the condition that ill other banks in
the group are also national banks. The Comptroller of the Currency under these conditions could more effectively examine and
supervise the entire group operation. It is therefore my view
that group banking should be brought under the visitorial powers
of the Federal Government in those cases wherp membership in the
group is composed in whole or in part of national or State member banks of the Federal Reserve System. Legislation along
these lines seems to be necessary in the public interest.t!

(1) Annual Report of the Comptroller of the Ourrenby, 193°> P» 3*




- 1S7 Action Proposed by Members of Congress
After the large scale formation of bank holding companies culminating in 1929, members of Congress began to evince an active interest in
the movement and its regulation. Although numerous bills were introduced,
no Federal legislation had been enacted by the end of 1932»

*n

tlie

early

part of January, 1930, four bills were introduced into the House of Representatives dealing with group banking. Two of the House bills looked
toward control of groups; both Congressmen McFadden^ ' and Beedy^

pro-

posed that visitorial powers be granted the Comptroller of the Currency
with respect to the holding corporations where members of the Federal reserve system were involved.

Congressmen Strong^' and Goldsborough^'

proposed to dissolve the movement by one legislative device or another.
On February 10, 1930, the Committee on Banking and Currency of
the House of Representatives was empowered "to make a study and investigate group, chain, and branch banking during the present session of Congress." ^5/

i n April, Congressman McFadden introduced a second bill which

would have required holding companies to procure permission from Federal
supervisory authorities before acquiring control of members of the Federal
(G)
reserve system/ ;

For several months the committee held hearings, which

aided in clarifying the major issues involved.

In thcj subsequent Congress,

Congressman Goldsborough reintroduced his bill. *'

(1) United
(2) Ibid,.
(3) Ibid*.
( 0 Ibid..
*
(5) Ibid,.
(6) Ibid,.
(7) United




States Congress, 71st, 2nd Session, H. R. (9^*
H. R. 8OO5.
E. R. S367.
H. R. 8363.
H. Res. lUl.
H. R. 12034.
,
States Congress, 72nd, 1st Session, H. R. fK)0.

1SS

Beedy Bill, - The Beedy bill provided "That every corporation
which may own or control the majority of the stock of more than one national and/or State member "banks of the Federal reserve system shall he subject
to the visitorial powers of the Comptroller of the Currency."
McFadden Bills, - The first bill provided that the Comptroller of
the Currency should examine at least twice a year all of the affiliated corporations of a member bank, as well as the member banks themselves. Affiliated corporation is defined in the bill.

In addition to transferring

other visitorial authority to the Comptroller, the bill would give him the
new responsibility of examining State member barics at least twice a year.
The second McFadden bill would have made it:(l;
". . . unlawful for any corporation, copartnership, individual,
or trustee to purchase or otherwise to acq-aire more than 10 per
centum of the shares of the capital stock of more than one member bank of the Federal reserve system, whether state or national bank member, except after first obtaining the approval of the
Comptroller of the Currency with respect to national banks and
the Federal Reserve Board with respect to State member banks."
Penalty for violation of the act would have been made a misdemeanor punishable by a fine up to $10,000.
Goldsborou^h Bill. - This bill was intended to prohibit with penal
provisions the voting of national bank stock or State member bank stock ovrnec
hj a corporation.

It would also have re quirod the payment of a tax of two

cents per $1 on the face amount of each check drawn op. any bank when more
than 25 per cent of its stock is owned by any corporation. This bill also
proposed by a similar tax to prevent the further extejnsion of branch banking.

^'United States Congress, 7'lst, 2nd Session, E. E. +203^




- 189 Strong Bill, - The Strong bill was designed to "prohibit group
or chain banking," although its provisions seem not to reach chains. It
would have prohibited "any bank or trust company, whether or not a member
of the Federal reserve system . • . • which is one 6f a group of banks as
defined" in the bill, "from (l) using the mails; (23 shipping or delivering, or causing to be shipped or delivered in interstate or foreign commerce, any article or commodity of whatever nature; or (3) transmitting,
or causing to be transmitted, any intelligence by wire or wireless in interstate or foreign commerce."

Moreover, a national bank belonging to a

group would forfeit its franchise; a State member belonging to a group, its
membership in the Reserve System; and nonmember banks belonging to groups
would be denied all rights and privileges under the| Federal Reserve Act.

Glass Bill
i

In the Senate, proposals for Federal regulation of groups, though
apparently not chains, have centered in the "Glass [Bill."
Glass of

Senator Carter

Virginia introduced into the 71st Congress a preliminary bill:

"To provide for the safer operation and more effective use of the assets
of national banking associations to regulate interbank control, to prevent
the undue diversion of funds into speculative operations, and for other
purposes."(1/
Subsequently, under the chairmanship of Senator Glass, a subcommittee of the Committee on Banking and Currency be<fean, on January 19, 1931,
hearings under a broad resolution permitting a general survey of the national and Federal reserve banking systems. Among the various other subjects,
(!) United States Congress, 71st, 2nd Session, S. 4?23.




- 190 -

the resolution called for an examination into "the desirability of
chain banking; the development of branch banking as a part of the
national system, together with any related problems which the committee may think it important to investigate."
Extensive hearings were held and as a result of this investigation, Senator Glass introduced a new bill on January 21,
1932#

(?)

The bill contained provisions dealing with problems of

the banking structure, including the extension of branch banking
and the regulation of group banking. Under the terms of the bill
(S. UUl2, April IS, 1932) regulation of groups would be sought
largely by bringing under the visitorial activities of Federal
authorities all elements or affiliates of a group organization.
Section 11 of fi. *&12 (April 18, 1232). - The most important provisions of the bill which were aimed at bringing the
bank holding company under Federal regulation are contained in
Section 17#

It provided that:

United States Congress, 71st, 1st Session, S. Res. 71.
(2) Ibid.. 72nd, 1st Session, S. 3215.




- lgi " . . . shares controlled by any holding company affiliated)
of a national bank shall not be voted unless such holding
company affiliate shall have first obtained a voting permit . ."
In order for a holding company affiliate to get a voting perait
to cast one vote for each share of national bank stock controlled by it,
application would have to be made to the Federal Reserve Board.

The Board,

in passing on the application, would be required by the statute to cause
the holding company to enter certain covenants.

It would be required to

agree to the examination of itself and all State banks controlled by it,
to agree to accumulate assets other than bank stock to serve as a reserve against double liability provisions of bank stock owned by it, and
to agree to have no interest in organizations in the business of merchandising securities. These provisions would also be made applicable to holding
company affiliates of State member banks by Section 5(b) •
Some of the statutory stipulations of Section 17 (S. HUl2, April
IS, 1932) are:
Examinations and Reports. - "Every such holding company
affiliate shall, in making the application for such permit,
agree (l) to receive, on dates identical with those fixed for
the examination of banks with which it is affiliated, examiners duly authorized to examine such banks, who shall make such
examinations of such holding company affiliate as shall be necessary to disclose fully the relations "between such banks and
such holding company affiliate and the effect of such relations upon the affairs of such banks, such examinations to be
at the expense of the holding company affiliate so examined;
(2) that the reports of such examiners shall contain such in*-

(!) Sec. 2(c) of S. UklZ (April IS, 1932)
"The term 'holding company affiliate1 shall include any corporation, business trust, association, or other similar organization—
"(l) Which owns or controls, directly or indirectly, either a
majority of the shares of capital stock of a member bank or more than
50 per centum of the number of shares voted for the election of directors of such bank at the preceding election, or controls in any manner
the election of a majority of the directors of such bank; or
"(2) JOT the benefit of whose shareholders or members all or
substantially all the capital stock of a member bank is held by
trustees•"







~ 192 -

formation as shall be necessary to disclose full;j the relations between such affiliate and such banks and he effect
of such relations upon the affairs of such banks (3) that
such examiners may examine each bank owned or controlled by
the holding company affiliate, both individually and in conjunction with other banks owned or controlled by such hold|f
ing company affiliate; and (k) that publication <) individual or consolidated statements of condition of such banks may
be required;"
Eeserves Against Double Liability, - "After January 1,
1935 > every such holding company affiliate (l) stall possess,
and shall continue^o possess during the life of such permit,
free and clear of tSITlien, pledge, or hypotheca ion of any
nature, readily marketable assets other than banl[ stock in an
b
amount not less than 12 per centum of the aggre mte par value
of all bank stocks controlled by such holding coippany aff iliate, which amount shall be increased by not less than 2 per
centum per annum of such aggregate par value unt 1 such assets
shall amount to 25 per centum of the aggregate p, , value of
r
such "bank stocks; and (2) shall reinvest in readi ly marketable
assets other than bank stock all net earnings o c jr and above
vj
6 per centum per annum on the book value of its < > n shares
tw
outstanding until such assets shall amount to 25 per centum
of the aggregate par value of all bank stocks coitrolled by
it;
"Notwithstanding the foregoing provisions e f this section,
r
after January 1, 1935> (1) any such holding company affiliate
the shareholders or members of which shall be individually and
severally liable in proportion to the number of Shares of such
holding company affiliate held by them respective^ ly, in addition to amounts invested therein, for all statut ry liability
imposed on such holding company affiliate by reason of its control of shares of stock of banks, shall be r
required only to
establish and maintain out of net earnings over ^nd above 6 per
centum per annum on the boo^ value bf its own shares outstanding a reserve of readily marketable assets in an amount not
less than 12 per centum of the aggregate par value of bank
n
stocks controlled by it, and (2) the assets re quired oj this
section to be possessed by such holding company 4ffiliate may
be used by it for replacement of capital in b a h M affiliated
with it and for losses incurred in such banks, biit any deficiency in such assets resulting from such use ihall be made
up within such period as the Federal Reserve Boaafd may by regulation prescribe;" • . . .
IITT.Divorcement from Securities Business,
Evefry such holding company affiliate shall, in its application for such voting
i
permit, (l) show that it does not own, control, c r have any in-

- 193 -

terest in, and is not participating in the management or direction of, any corporation, business trust, association, or other
similar organization formed for the purpose of, or engaged principally in, the issue, flotation, underwriting, public sale, or
distribution, at wholesale or retail or through syndicate participation, of stocks, bonds, debentures, notes, or other securities of any sort (hereinafter referred to as securities
company); (2) agree that during the period that the permit remains in force it will not acquire any ownership, control, or
interest in any such securities company or participate in the
management or direction thereof; (3) agree that if, at the time
of filing the application for such permit, it owns, controls,
or has an interest in, or is participating in the management or
direction of, any such securities company, it will, within
three years after the filing of such application, divest itself of its ownership, control, and interest in such securities
company and will cease participating in the management or direction thereof, and will not thereafter, during the period
that the permit remains in force, acquire any further ownership, control, or interest in any such securities company or
participate in the management or direction thereof; and (h)
agree that thenceforth it will declare dividends only out of
actual net earnings.n
National banks belonging to holding companies, which do not comply with these provisions, would have their franchise withdrawn under terms
of the bill, and State member banks would have to give up their membership
in the Federal reserve system.
Section 3(b) of the bill would provide that in the election of
directors of Federal reserve banks "Whenever any two or more member banks
within the same Federal reserve district are affiliated with the same holding company affiliate, participation by such member banks in any such nomination or election shall be confined to one of such banks, which may be designated for the purpose by such holding company affiliate.11
These are the provisions of the Glass bill (S. kkl2.9

April IS, 1932)

aimed directly at bank holding companies. There are several other sections
of the bill which incidentally relate to certain types of groups. These are
provisions which stipulate examinations and reports to Federal supervisory




19^ -

,(D
authorities for all types of affiliates^ ' of member banks, both national
and State. Member banks are required within a perio^. of a few years to
sever all connections with security affiliates. Loaxjs and other commitments
by a member bank to all its affiliates mast come within a limited total.
The practice of joining member banks with other corporations through the
device of making one stock certificate represent ownership in two or more
corporations would have to be discontinued within a Stipulated number of
years. The joining of member bank with member bank is expected from this
provision.
Federal Reserve Board and Glass Bill. - On March 29,. 1932, the
Jodotfal Hocerve: Boaydt through Governor Eugene Meyerj presented to the
Committee on Banking and Currency of the Senate its Suggestions on the
Glass bill. The general principles of the board's recommendations included
bringing holding companies controlling member banks t(nder Federal visitorial

(1) Sec* 2(b) "Except where otherwise specifically provided, the term 'affiliate1 shall include any corporation, business trust, association,
or other similar organization—
1
1
(1) Of which a member bank, directly or indirectly, owns or controls either a majority of the voting shares or more than 50 P6** centum
of the number of shares voted for the election of its directors,
trustees, or other persons exercising similar functions at the preceding election, or controls in any manner the election of a majority
of its directors, trustees, or other persons exercising similar functions; or
M
(2) Of which control is held, directly or indirectly, through
stock ownership or in any other manner, by the shareholders of a member bank who own or control either a majority of the shares of such
bank or more than 50 per centum of the number of shares voted for the
election of directors of such bank at the preceding election, or by
trustees for the benefit of the shareholders of any such bank; or
"(3) Of which either a majority of the metjbers of its executive
committee or a majority of its directors, trustees, or other persons
exercising similar functions are directors of 4 member bank."




- 195 -

authority and providing for the building of reserves by holding companies
because of double liability on bank stock owned. The implications of the
G-lass bill appear to make it mandatory upon the supervising authorities to
examine and require reports from bank holding companies while the Board
would have made it permissive with respect not only to holding company
affiliates but other bank affiliates as well*

In this connection the memoran-

dum of the Board presented by the Governor said:
"Under the definition of 'affiliate1 contained in Section 2
and under the provisions of Sections 6, 27, and 2p of the Bill,(1)
if amended in accordance with the recommendations contained in
this report, all holding companies which control member banks and
all banks owned or controlled by such holding companies will be
affiliates of such member banks and will be required to make reports and submit to examinations whenever deemed necessary or
advisable by the Comptroller of the Currency, the Federal Reserve
Board or examiners appointed by them; and, therefore, it is suggested that the provisions regarding examinations and condition
reports of holding companies be omitted from this section and
from the corresponding sections regarding holding companies which
own or control State member banks."(2)
[
The Board*s recommendation to the effect that holding companies
controlling one or more member banks and one or more nonmember banks should
convert all nonmembers to members upon authorization of the Federal Reserve
Board, if they were eligible for such membership, was not included in the
April draft of the G-lass bill.

The Board's recommendation as to the size

of reserves against double liability assessments and the method of their
accumulation differed in some details from the pendin) bill.
k
The Board also criticized provisions of earlier bills in connection
with limiting the power of banks belonging to groups [and chains in voting
for Federal reserve bank directors* The Board1s memorandum in this connection
said:

Refers to the earlier draft of the Glass bill.
(2)
The memorandum of the Board appears in full in tfye Federal Reserve
Bulletin for April, 1932, pp. 206-222.




- 196 ~
,r

It is recommended that this section be omitted. It prohibits banks that belong to a group or a chain from voting for
Federal reserve bank directors. The wording of the section is
such as not to confine the prohibition to group and chain banks,
however, but to include all banks that are not controlled entirely by locally resident stockholders. Since the stock of
many important banks is widely owned throughout the country,
this might restrict the voting privilege to smaller and less
important banks that are owned by local stockholders. It is
to be feared that this section would bar from participation in
the selection of Federal reserve directors many of the better
managed banks."
The subsequent draft of the bill made some concession to this criticism although it still proposed to prevent a bank holding company from having too
strong a voice in the election of Federal reserve bank directors, under the
provisions of Section 3(b) of S. W+12 (April 18, 1932) quoted in an earlier
paragraph.
Federal Reserve Members in Groups and Chains
It is proposed at this point to refer again to the statistics of
group and chain banking in order to bring out the extent to which the proposals of Federal authorities would reach the whole group movement. Only
such bank holding companies as have one or more banks which are members of
the Federal reserve system would apparently be reached.

Table 1+5" shows that

of the 67U banks belonging to leading groups as of December 31, 1931, 362
were national banks and Ul were State member banks.
3h
Table U3 - Number and Loans and Investments of Banks in Groups and Chains
by Class of Bank, December 31, 1931
Type of
group or
chain
Leading groups
Other groups
Chains




Total

Loans and investments
(in millions of dollars)
NonState NonAll National State
All
National
member member banks banks member member banks
banks
banks banks
"batiks banks
Number

362
107
805

Hi
3U
98

271
163

30U
qos

: 933 1,886

$H,Hl6 $1,070 '$ 815 $6,301
875 1.2S5
255 2.U15
528

927

$5,818

$2,398 $1,U26 $9,6U3

- 197 -

.#

Table W

shows that every one of the leading groups included

one or more banks which are members of the federal reserve system, either
State or national. Therefore, every leading group as it was constituted
as of December 31, 1931 would be brought under Sectibn 17 of the Glass
bill (S. HUl2, April 18, 1932) unless the control by the holding company
of member banks in certain cases was less than 50 per cent. One group,
however, has only one bank that is a member of the federal reserve system
and two groups have only 2.

Out of the 3^ leading groups, 2U have five

or more banks that are members of the Federal reserve system. All of
these groups may be identified in the appendix, Tables I and III.




- 19« ~

37
Table ¥ T ~ Groups and Chains by Mfumber of Batiks in.jte^k
Belonging to the Federal Reserve Sysijem,
December 31, 1931
lumber of
Number of syst ems
national and
State member
Other
Leading
banks in each
Cha.ins
groups
groups
system

0
1
2

3

*•*

1

2
2

g
12
2+
1
g

31
P1

15
|
c2
11

k
5
S

5
3

7

5
5
3
3

8

2

-

-

9

-

1

2

10
11
12

ik
15
19
20

so
S3
Total

1

3

6
5

1
l

l

~
~
~
_

2
1
1
1
1
_1

-

—H

3^

1
1

63

-

r

17 0

Of the 30^ banks belonging to miscellaneous I groups on December 31,
1931$ 107 were national banks and 3^ were State banks| 1Blonging to the

3C
Federal Reserve System, as shown in Table 1*%

Of the|63 miscellaneous groups

S included no national banks or State banks which weri members of the Federal
Reserve System.

These g groups would not be subject - o Federal regulation
p

under the Glass b i l l / x / ^ ,

O f ^ ' f i M * ) -

Table « 5 shows that of the 90S banks belonging to chains 336 were
+*
national banks and 23 were State banks which were members of the Federal




- 1S9 -

Reserve System.

Of the 176 chains operating as of Depemher 31, 1931, 1^5

included at least one national or State member hank, |No satisfactory proposals have "been worked out to regulate such chains, kad yet the suspension
chapter has shown that there have "been many disastrous hanking experiences
associated directly with matters peculiarly characteristic of chain operartion*

/
Tahles U5; w f and J+f, respectively, classify groups and chains

according to the number of national "banks, of mem her J l a o hanks, and of
jtt
nonmemher hanks in each.




Table )&$ - Groups and Chains by Number of national
Banks in Each, December 31, 193 1
Number of
national
banks in
each system

Leading
groups

Other
groups

0
1
2

1
+
1

18
17

3
5
5

7
3
3

3
k
5
6
7
S

Kumber of systems

14

2

3

16
79
SO
Total

36
51
kk
21
11

5
3
1
l
l
l
l

1

9

10
11
12
lk

Chains

3
l
2
1
1

3^

63

176




- 200 -

5?

Table kGT~ Groups and Chains " y Number of State Banks in Each
b
Belonging to the Federal Reserve Syst|em
December 31, 193*
lumber of
member
State banks
in each system
0
1
2

Number of systems
Leading
groups

Other
groups

Chains

17
9

Ho

159

1
2

5

3
k
5

17

1
1
1

3
1

7
Total

lfr6

63

»#>

Table Uf - Group and Chain Systems by Number of Banks in
Each not Belonging to the federal Reserve System
December 31, 1931
Number of
nonmember
State banks
in each system
0
1
2

3
1
+

5
6
7
8

9

10
11
12

13
21

24
26
42

Number of systems
Leading
groups

Other
groups

1
1

S
16
14
9
7

k

6
3
1

4
4
2
l
l

Chains

1
2

3
1
2

1
l
l
l
1

kk
Total

34

63

176

CHAPTER X
S'fATS REGULATION

Many States prohibit their banks and trust Companies from owning
stock, and therefore these institutions can not act directly as holding companies in addition to their main banking business.

In many cases, however,

they may have affiliates which can operate as holding companies of bank
stocks, and in these cases the prohibition against direct ownership of stocks
is ineffective.

In other States the banks and trust companies may hold stock

directly and, therefore, they are in position to act as holding companies
themselves.
As a general rule, there appears to be little to prevent non-banking corporations from owning State bank stock. Only a few States have attempted to prohibit or to regulate the activity of holding companies in the
field of bank stocks.

In some States the general corporation law does not

provide for the incorporation offfuroholding companies, but, as a rule, the
powers of most corporations are broad enough to permitj t h e h o l d i n g of bank
stocks in quantity. Even where holding companies may Inot be o r g a n i z e d u n d e r
the la,ws of a particular State, foreign holding companies can usually operate
there.
The counsel of the Federal Reserve Board witlh the assistance of the
counsels of the various Federal reserve banks has prepared two digests of
State lav?s relating to these questions:

one deals witp. the State statutes

regarding the purchase of corporate stocks by banks and trust companies,
and the other with State statutes regarding the purchase or ownership of




- 201 -

- 202 -

bank stocks

by holding corporations* This chapter is largely a summary

of the important points brought out in these digest
State laws as of August 1, 1932*

of the status of the

The digests themselves are incorporated

in this report as appendices B and C. Table * l pre 4ents in abbreviated
+
form some of the principal features of the statutes in each State.

Banks Jk$ Holding Companies
Roughly two States out of five by statute i
prohibit their cornmercial banks from owning bank stocks, and another one-fifth of the
States place limitations on their commercial banks with respect to their
bank stock holdings. Most of these limiting stipulations are to the
effect that the bank can not invest more than 10 to 20 per cent of its
own invested capital in the capital stock of any other one corporation.
In the remaining States unlimited stock ownership ii a possibility. In
a third of these there is a positive statutory stipulation allowing the
purchase of stock. In more than half of the States trust companies are
either prohibited or limited in their ownership of bank stock. In the
remainder of the States where trust companies exist it may be possible
for them to own bank stock without restriction. In the case of both
commercial banks and trust companies, however, the iower to hold bank
stock may have been limited in some States by court decisions or departmental rulings.




- 203 ~

Table M l - State Statutes Bearing on Groups
(This table has been prepared as a rougt
index to the digests of State statutes made by counsel as they appear in the arDondtx)
!•

ii

iM'i

"i » • !

1

nun

ii •

New England
Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut

1

~
~
-

!

-

Limited

•

»

••

•

«i

• i ••

•

i

i

i

ill

i

»i

i i ill

i win

in

• man

•

1

u0m

•

ill i«ii»nii

n

-

Implied
~
-

!

!

Implied
| Limited
Limited
1 Limited
Permitted
Limited

«.
"-

~

-

-

Banks have no D.L.
«.
~
-

Prohjbited^ ^
Limited
Permitted
Limited
Permitted
| Permitted
~
-

Implied
|
Regulated and l t d . Required
Impli ed prdfc ibition
Conflict
1 Required
—

-

Prohibited
~
—

—

-

mm

1
Not bank stocks
m»

•••

-

-

Permitted
| Inplieid prohibition Implied
Permitted
|

-

-

-

*"

No prohibition
**
"

Perrkttaa
i Proh i b i t e d

**
"

Plorida




' '»"

~
-

Southern Mountain
West Virginia For investment onferj
Virginia
Kentucky
Implied prohibition
Tennessee
Implied
1

Alabama
Mississippi

•Bin

1

-

Doubtful

Middle Atlantic
New York
New Jersey
Delaware
Pennsylvania
Maryland
D i s t . of Col,

Southeastern
North Carolina
South Carolina
Georgia

•

MM,

State s t a t u t e s governing:
:
\
Ban|ks as holding companies
Holding companies for banka
I Right of State
Right of trust
commercial
iRight to own bank 1 Double l i a b i l i t y
of own s h a r e company to cm
bank : to own
stock
holders
stock
1
^tock
T
1

State by
geographic
division

North Central
Michigan
Wisconsin
Illinois
Indiana
Ohio

«i '

1 Proh i b i t e d

~
~

Limi ted

Prohibited .
| Liolted
Conditionally
permitted
Conflict of
laws
I Doubtful
Proh i b i t e d

- 20^ -

r
rable

State by
geographic
division

Southwestern
Louisiana
Texas
Arkansas
Oklahoma
Western Grain
Minnesota
North Dakota
South Dakota
Iowa
Neb ra^ka
Missouri
Kansas

1*8*- State Statutes Bearing on Groups [Continued)

State statutes governing:
_ _
BanlJ s as holding companies
Holding companies for banks
Eight of State
Eight of trust
Double liability
commercial
Eight to o?/n bank
company to own
of own sharebank to own
stock
stock
holders
stock

—
—
—
-

Doubtful
Doubtful
Implied
Implied

~
—
Implied prohibition

Permitted
Amount of bank stock limited
I Permitted
Not bank stocks

No
—
_
-

Prohibi ted

Prohibited
!
Prohibited
Prohibited

_
Implied'1)

Prohibi ted
•
»
Prohibi tedU)
Surety may be exactedProhibi ted

Eo cky Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Nevada

No prohibition
Implied
No prohibition
Implied
Implied

—
Prohibi ted
Permitted
Banks have no D. L.
Prohibited
Prohibited
~
Prohibi ted
| Permitted
Limited
| Permitted
Must be approved
Must be approved
Prohibited

Pacific Coast
Washington
Oregon
California,

Implied
Permitted
No prohibition

-

i[Limited

T*C\ TITiTT- trfrnfl-

Limited
Limited

Prohibited
Prohibited
j Prohibited

|
Blanks indicate no part of the statutes bear on point.
(1)Court decisions •

i
i

Holding of Bank Stocks by Other. Corporations

0nly a few States have positive provi sions i p. their st atutes re~
garding the ownership of bank stock by corporations, a kd it is difficult to
determine w ith certainty the attitude of the other Sta pes regarding this
question, p articularly their a ttitude towards h olding companies of bank




fJ^JU**A.

- 205 -

stocks.

In many cases the corporation law appears to provide for holding

company operation in general, and nothing appears in the statutes to indicate directly that they might not own bank stocks freely.

On the other hand,

there is a legal doctrine extant in some jurisdictions to the effect that a
holding company is really engaged in that business in which it ov/ns and controls operating corporations. Therefore, a bank holding company might be
said to be in the banking business*

Many of the State banking codes provide

that all banking corporations operating" in that State, other than national
banks, be organized under the banking laws. A bank holding company might be
construed to be operating in violation of this principle.

It has not been

possible to review the court decisions in the forty-eight States bearing upon
these points, and the following paragraphs with respect to existing lav/ are
based wholly on statutes.
Two States, West Virginia and New Jersey, have definite statutory
provisions which appear to be intended to prevent control of banks by nonbanking holding companies.

A statute in Vermont, though apparently not di-

rected at bank holding companies, may nevertheless curtail their activities
(see Appendix), There is a ruling of the Attorney General of Missouri opposing the bank holding company. Wisconsin and Indian^ have attempted to
make shareholders in bank holding companies liable fori assessments against
the company because of bank stock owned.

Officials in both Ohio and Michigan

have said that in those jurisdictions shareholders in holding companies might
be construed to be liable in this connection.
West Virginia, - This State probably has gone further than any
other in a positive attempt to curtail bank holding company activity. A: law
of 1929 provides: (O

-j^Z^^ cJL*f*"H ^^f'9^9.



- 20b -

"It shall be unlawful for any firm, association or corporation
to purchase and hold stock in any banking institution organized or
authorized to transact business hereunder for the purpose of selling, negotiating or trading participation in the ownership thereof
either for the purpose of perfecting control of one or more such
"banking institutions or for the purpose of inducing other persons,
firms or corporations or the general public to become participating
owners therein* Nothing herein shall prevent the ownership of
stocks in any such banking institution by any corporation for investment purposes,n
It will be noted that no penal provision is included in this statute. It
raises the question to what extent it would be effective against holding
corporations organized in another State.
New Jersey. - The situation in New Jersey presents a curious anomaly.
A statute of 192S " . . . prohibits corporations that own more than ten per
cent of the stock of any "bank or trust company in the State from purchasing
after the date the statute became effective more than ten per cent of the
stock of any other bank or trust company doing business in the State. This
statute does not require corporations to dispose of any bank stock that they
may have owned before the law became effective. . . n

On the other hand,

neither banks nor trust companies in New Jersey are limited as to stock ownership and they are specifically exempted from the prohibition above outlined.
In four other States, California, New York, Washingtoil, and Wisconsin, bills
have been proposed which sought to control the movement by machinery comparable to that in New Jersey.
Missouri. - A ruling of the Attorney General of Missouri denies
the right of a bank holding company to sell stock in that State on the ground
that group banking is branch banking under a different guise. Branch banking
is illegal in that State. This ruling, however, would not seem to reach a
foreign holding company which buys the stock of Missouri banks, provided its
own stock is not offered for sale in that State. There nave been legislative




- 207 proposals for prevention of group and chain banking among banks in Arkansas
and Nebraska*
Wisconsin, - The laws of this State impose double liability on the
stockholders of bank holding companies by provisions ^hich have been stimmarized as follows:v^/
Domestic corporations and foreign corporations authorized to
do business in the State which own or control the stock of a State
bank or trust company shall be held liable for any assessment made
against the stockholders of such bank or trust company to the par
value of the stock so owned or controlled; and sfuch holding corporations are required to deposit with the State Treasurer securities equal to fifty per cent of the par value of the stocks of
State banks or trust companies owned or controlled by such holding
companies, except that the aggregate amount of such securities shall
not exceed the largest amount required to be deposited by Wisconsin
trust companies.
If the stockholders1 liability of any such holding company is
not fully paid, the stockholders of such holding company are liable
for an assessment sufficient to cover the deficit.'
Indiana* - In this State, the double liability statute is an fol.(2)
lows:
"The shareholders in any corporation formed under the provisions
of any law of this State for any purpose whatsoever, and the shareholders in any corporation formed under the laws of any other State
or country and admitted to do business in this state, shali be held
individually responsible for all contracts, debts and engagements of
any bank, the shares of which are held by any such corporation, each
to the amount which the said shareholder's interests in said corporation, as represented by his shares of capital stock in the same,
bears to the total amount necessary to be collected from the holders
of shares of stock in any such bank,***"
Oregon. - In Oregon a holding company controlling a bank may not
borrow from such bank nor may the holding company sell securities of other
corporations controlled by the holding company througjh such bank without receiving permission from the corporation commissioner.
Arkansas. - Arkansas has a provision somewhat similar to that in
Oregon: (3)
(!) Chapter 445, Wisconsin Laws of 1929—Published, August 30, 1929.
(2) Sec tion 4—-Act approved March 2, 1931.
(3) Section 3 of Act No* 252 of the 1931 Acts of Arkansas, approved March
31, 1931.




- 208 -

"• . • any person or persons, and/or any company, co-partnership, corporation or other legal entity in which such per$on or persons own
or control a substantial interest, owning either singly or jointly an aggregate of fifty (50) per cent or more of the capital stock
of three or more banks and/or trust companies, thus forming a chain
or group of hanks and/or trust companies, shall he, and are hereby
prohibited from borrowing from, or becoming indebted to, such banks
and/or trust companies> thus owned and controlled, in any amount or
in any manner. . . n

Ineffectiveness of State EeCTilat^on
This summary of the situation in the various States with respect
to the regulation of groups and chains indicates that little of importance
has been accomplished.

In trying to deal with the bank holding company

States are confronted with the problem of the dual banking system*

A State

probably can prevent a holding company from gaining control of its own banks
and trust companies by revoking charters of such banks or trust companies *
when control is proven.

In order to bring to light all cases where such a

condition exists elaborate machinery would doubtless be necessary. Revoking
of charters, however, is a drastic remedy for either national or State
authority to use in view of the competition which exists between the two
systems.

It is conceivable that a bank holding company might specialize

in national banks and be represented in every State in the Union*

It is not

clear how effective any State could be in reaching such a situation. It
might, of course, deny to a national bank belonging to such a holding company
the right of being a State depository.
A State might bring under its visitorial activities any holding company -which owned control in a bank or trust company incorporated in that ^
State.

It would use much the same machinery as tne Gl^ss bill proposes with

respect to members of the Federal Reserve System*




In fact legislation exists

- 209 -

amine affiliates of
in Kansas giving the "bank commissioner authority to 0x,
banks including those which may own asranchas 25 pe^ cent of the stock of
any bank in that State.




(See digest in appendix.)

CHAPTER XI

SUMMARY

Group Banking.
The bank holding company, as it has developed since 19271
is an instrument of banking concentration which aims at objectives
similar to those of branch banking. Many of the managers of holding companies themselves have indicated that they would prefer to
operate their organizations as branch systems if the law permitted*
The most significant part of the group movement consists of less
than two score holding companies, controlling in 1931 about 700
banks and about $6,000,000,000 of loans and investments*
These group organizations have had their greatest development in those States where branch offices are either wholly prohibited
or are limited to local areas* Of the Sjk banks belonging to the leading groups at the end of 1931, 307 were in States then prohibiting the
establishment of branches, and 93 were in States where administrative
ruling did not allow new branches although the statute was silent on
the subject* Thus, these UOO banks could not at the end of I93I have
been operated as branches of the leading bank. Moreover, 2U9 of the
banks in leading groups were located in States which allowed branch
offices only in limited areas adjacent to the hea4 office* Because
of such limitations most of this group could not iiow be converted
into branches of the dominant bank*




~ 210 -

211 -

A very small number, 25, of the banks in the leading groups
were located in state-wide branch banking States*

In addition to the

700 banks belonging to the major groups, about JQQ banks belonged to
about 60 miscellaneous groups, many of which bear little resemblance
to the major holding companies. Many of the miscellaneous groups
came into existence by reason of the association of two or three
small banks with some large city bank.
Because of the relatively short experience with the bank
holding company, statistical evidence is lacking with respect to
what may be accomplished regarding the profits and costs of the
individual banks belonging to groups. Moreover, the complicated
interrelationships of many corporations makes it difficult to determine the position of the entire group through formal income
statements. It is not yet clear whether the holding company will
be able to operate a small separately incorporated bank more economically than it could be operated as a separate concern.
The degree of centralization of management varies greatly from group to group. Some of them approximate a well organized
branch system in this respect. Others appear to leave more local
autonoiqy to the individual banks. In organizations of this type,
however, there is usually a tendency towards increasing centralization of management.




- 212 -

The group movement, as represented by the leading holding companies, has covered such a brief period of time that few conclusions can be drawn as to the safety record of this type of banking compared with the record of independent unit banks. Groups,
however, have done little to strengthen the banking structure in
the small towns and rural communities. Relatively speaking, holding companies have not acquired many banks of less than $500,000 of
loans and investments.
The Problem of Groups. - The chief weakness of the holding company device as an instrument for strengthening the banking
structure lies in its manipulative possibilities, and the difficultxes
of adequate supervision. In the period of adjustment through which
the country has been passing, there have been frequent examples of
the abuse of the holding company in fields other than banking. The
complicated interrelationship of many corporate entities is a convenient vehicle for the activities of the unscrupulous. The major
part of the bank holding company movement has been in the hands of
conservative bankers, but there are examples of t | consequences
he
when conditions are otherwise. The fact that the bank holding company movement largely matured in an era of

speculation makes dif-

ficult its dissociation from some of the manipulative operations of
the times. Shifting of assets between different elements of a group
and the splitting of credit lines are among the moire potent abuses
to which this form of banking organization is open.




- 213 -

The problem of groups is bound up inextricably with the
broader problem of the banking structure in general* Bank holding
companies have developed partly because of the legal necessity of
separately incorporating banking offices, and the dual system of
banking control, State and national, has made adequate supervision
and control over groups difficult*

Chain Banking
The control of a number of banks by one or more individuals
known as chain banking began to appear in this country before the beginning of this century*

The number of such arrangements multiplied

with the passage of time, and indeed they were the predecessors of
the more modern groups*

The statistics as of the end of 1931 account

for about 175 chains, iiicluding about 900 banks with an aggregate banking strength of about $1,000,000,000 of loans and investments. The
community of interest in a chain of banks is elusive, and it is quite
possible that the official statistics have not recorded all of the
cases*

There are instances in which the investment in bank stock

brings about a community of interest in several banks, without a
deliberate intent to control*

Chain interests in many instances do

not openly avow their responsibilities as do the modern bank holding
companies*
The very elusiveness of the movement presents one of its
serious problems*

The ease with which new banks have been char-

tered, partly as a result of the competition between State and




- 21^ -

national systems, and the small capital outlay needed to secure
control over a string of banks are associated with the growth of
chains and the high rate of incompetent management among them*
Many failures of chains have resulted because they were operated
by men inexperienced in banking*

In many cases the chain of banks

has been utilized as an avenue through which to finance the often
speculative outside "undertakings of the dominant interests* In
some cases control has been exercised over a string of banks with
a very small investment, stock owned in one institution being used
as security for a loan the proceeds of which are used in the purchase of stock in another*







APPENDIX A
Statistical Tables

Tatle

Group
number
(2)

13
i4
15
16

by
Loans and Investments "; Class of Bank and Number of States and Cities
b
in Which Operating
>,U) December 31, 1931

[^
Name of group and l o c a t i o n of head o f f i c e
Total

Middle A t l a n t i c
Banca Comnaerciale I t a l i a n a Trust C o . , New York, N. Y.
C e n t r a l Hanover Bank & T r u s t Co., New York, N. Y.
F i r s t N a t i o n a l Bank & T r u s t Co., E l m i r a , N. Y.
F i r s t T r u s t & D e p o s i t - C o . , Syracuse, N. Y.
Interbanc^l Investors°J5«7, B u f f a l o , N. Y.
Marine Midland Group I n c . , B u f f a l o , N. Y.
The Manhattan C o . , New York, R. Y.
N o r t h e r n N. Y. T r . Co. and trie Northern N. Y. Sec u r i t i e s Corp.
Ogdenshurg T r u s t C o . , Ogdenshurg, N. Y.
Orange County A s s o c i a t e s I n c . , Goshen, N. Y.
Camden Safe Deposit & T r . Co., Camden, New J e r s e y
C i t y N a t i o n a l Bank, Hackensack, New J e r s e y ' 3 )
Hudson Co. N a t i o n a l Bank, J e r s e y C i t y , New J e r s e y ( 3 )
i
Mechanics T r u s t Co., Bayonne, New J e r s e y
M o n t c l a i r T r u s t Co., M o n t c l a i r , New J e r s e y
Bank of N u t l e y , N u t l e y , New J e r s e y
P e o p l e s T r u s t & Guaranty Co., Hackensack, New J e r s e y ^ 3 )

-^rrig
19
20
21
22
23
24
25
26
27

- Groups:

Hew England
E a s t e r n T r u s t & Banking C o . , Bangor, Maine
F i n a n c i a l I n s t i t u t i o n s I n c . , Augusta, Maine
F i r s t N a t i o n a l Bank of Boston, Boston, Massachusetts
N a t i o n a l Shawmut Bank, Boston, Massachusetts
Western Mass-. Banking A s s o c i a t e s , G r e e n f i e l d , Mass.
Worcester Co. Bank & T r u s t C o . , W o r c e s t e r , Mass.
I n d u s t r i a l T r u s t C o . , P r o v i d e n c e , Ehode I s l a n d
B r i d g e p o r t C i t y T r u s t Co., B r i d g e p o r t , Connecticut
F i r s t N a t i o n a l Bank, B r i d g e p o r t , Connecticut
H a r t f o r d Connecticut T r u s t Co., H a r t f o r d , Conn.

1
2
3
4
5
6
7
S
9
10
11
12

I




$

Loans and i n v e s t m e n t s
i n thousands of d o l l a r s
NationState
al
member
hanks
1 hanks

10.25S 1
7 9 . 8 7 1 i$

4so,434 I
i42,4i7 !
5,436 |
69,326
139,201
34,963
20,466 !
33.3*7

20,991
4o4,650 $
138,261
5,436
29,901
6,294
17,611

s.953

$
52.9S3
-

36,4so

129,378
-

Number Number
of
of
States c i t i e s

Nonmember
hanks
10,255
58,880
22,301
4,136
2,945
3,529
34,963
2,855
29,394

1
1
1
1
1
1
1
1
1
1

3
7
18
6
3
6
2
3
1
7

'
1

13,71^

5^5,533
i6,57S !
97,145
11,973
441,553
314,511
14,514
9,325
13,174
33,249
4,920
^3,339
13,626

is,535
4,4oo
24,285

1,124

538.sUo

15,548
7,681
6,714
43,84o

81,295
312,176
311,285

_
1,582
2,248
13,174
564
3,923
32,305
1,372
1,483
1,645
1,577

11,551
6,652
32,233
297
12,307
2,755
22,70s

13,714
5.569
1,030
8,169
5,259
85,537
3,226

3
2
l
1
1
1
1

1,381
425
1,052
700
11,034
12,254
4,745
-

1
1
1
1
l
1
1
1 i
1
1

!

3
3
5
15
3
19
3
6
7
6
3
5
3
2
2
l
8

Table

Group
2»amber
(2)

28
29
30
31
32

3,
r

3o

37
3S

9

?
4o
4i
42
44
45
46
47
US
49
50
51
52

I

- Groups: Loans and Investments by Class of Bank and Number of States and Cities
in Which Operating, (l) December 31, 1931 (Continued)

Name of group and location of head office
Total

Middle Atlantic (Continued)
Plainfield Trust Co., Plainfield, Kew Jersey9
Union County Trust Co., Elizabeth, New JerseyUnited States Trust Co., Paterson. New Jersey
West Jersey Trust Co., Camden, Sew Jersey
West Side Trust Co., Newark, New Jersey
Colonial Trust Co., Pittsburgh, Pennsylvania
Commonwealth Trust Co., Pittsburgh, Pennsylvania
Monongahela Trust Co.* , Homestead, Pennsylvania
Peoples Pittsburgh Trust Co., Pittsburgh, Pennsylvania
United States National Bank, Johnstown, Pennsylvania
Union Trust Co.. & Melbank Corp., Pittsburgh, Penna.
.North Central
Detroit Bankers Inc., Detroit, Michigan(4)
Guardian Detroit Union Group Inc., Detroit, Michigan
Wisconsin Bankshares Corp., Milwaukee,-Wisconsin
Central Republic Bank & Trust Co., (3) Chicago, Illinois
First National Bank. (3) Chicago • Illinois
National Republic Sancorporation, Chicago, Illinois
State Savings Loan & Trust Co., Quincy, Illinois
First and Tri State Corp., Port Wayne, Indiana
Old First National Bank & Trust Co., Fort Wayne, Ind.
BancOhio Corp., Columbus, Ohio
Southern i^ur^tain
" First"National'Bank Trustees, Louisville, Kentucky
American National Bank, Nashville, Tennessee
Commerce Union Bank, iNashville, Tennessee
Hamilton National Associates Inc., Chattanooga, Tenn.




Loans and investments
in thousands of dollars
State
Nationmember
al
banks
banks

18,180
15,842
20,515
10,019
12,391
22,490
16,477
10,223
166,975
15,961
522,763

431
902
2,748
2,050
3,076
78,55s
11,716
314,751

513,572
333.769
231,394
183,602
596,290
25,273
4,324|
3,759
35,371
61,306

24,524
48,623
4,956
32,139

24,895
13,271
85,604
218,555

454,66s

45,672
62,602
12,2631
34,932l

17,749
2,777

237,030
133,951
10,286
402,437
i^45
2,198
24,242
55,147

46,559
16,880
153,370
13,284
—90&
3,310

16.3S5

Non-*
member
banks

Number Number
of
of
States c i t i e s

1
1
1
1
1
1
1
1
1
1
1

3
1
2
1
2
4
2
2
2
16

5S.904
50,180
30,563
19,946
180,569
17,122
1,014
l,56l
11,129
6,159

1
1
1
1
1

8
23
26
3
l

1
1
1
1

2
5
2
9

4,763
13,979
7,307
2,793

1
1
1
2

5
15
2
17

12,163
20,515
10,019
,64 3
,545
,206
,147
,813
,245
49,457

Table

Group
number

I

- Groups: Loans and Investments by Class of Bank and Number of States and Cities
in Which Operatingt(l) December 31, 1931 (Continued)

Name of group and location of head office

(2)

53
5^
55
56
57
5S

59
60
61
62
63
64
65
66
67
69
70
71
72

73
74
75
76

Total

Southeastern
Socarnat Corp., Charleston, South Carolina
Citizens & Southern national Bank, Savannah, Georgia
First National Bank of Atlanta, J*t?.anta, Georgia
Almours Securities Inc., Jacksonville, Florida
Atlantic National Bank, Jacksonville, Florida
Barnett National Bank, Jacksonville, Florida
First National Bank, Miami, Florida
American Securities Corp.,Mobile, Alabama
I First National Bank, Birmingham, Alabama
Britton & Koontz Inc., Natchez, Mississippi
Southwestern
Commercial National Bank, Shreveport, Louisiana
Interstate Trust & Banking Co., New Orleans, Louisiana
Continental Bank & Trust Co., Fort Worth, Texas
J. M. Crews & A s s o c , Childress, Texas
Mercantile Bank & Trust Co., Dallas, Texas
'BepufcXic~ffr~B;ff'Trusf"Co., Dallas, Texas
Sxcharjge National Bank, Tulsa, Oklahoma
Western Grain
Bank Shares Corp., Minneapolis, Minnesota
First Bank Stock Corp*1 Minneapolis, Minnesota
Northwest Bancorporation, Minneapolis, Minnesota
St. Olaf College & P. 0. Holland, Northfield, Minn.
C. J. Weiser Inc., Decorah, Iowa
Commerce Trust Co., Kansas City, Missouri
Lafayette South Side Bank & Trust Co., St. Louis, Mo.




$

Loans and investments
in thousands of dollars
NationState
al
member
"banks
banks

33>247 $
57,136
9^,723
21,197
30,838
16,571
l6,71b
3*112
50,108

2,217

26,354
23,042

6,133
1,537
15,3S0
52,202
48,026

5,329
312,182
316,213
2,060
4,075
71,594
32,795

27,088
52,676
81,239 $
18,151
29,933

16,571
16,100
1,614
48,6*45
2,057

—
13,484
—
—
_
-

M76

19,780
«
.

857

75

49,37^

14,027
—

41,138

267,o4o
501
2,613
8,981

$

12,802
15,262
65,844
23,814

Number jtfumber
of
of
States cities

2
2
1
1
1
1
1
1
1
2

4
6
6

2,224
3,262

2

5
9

825
605

1
1
1
1

6,159
4,46o
-

3,o46
905
-

616
1,^8

l,463
160

19,254
5,308

1,680
268,142

Nonmember
"banks

1,353
2,8236,888

3,649
31,238
33,911
1,559
^,075
3,137
-

3

8

6
5
4
5
3
3

11

9
8

3

3

17

1

1
91
115
8
8
1
2

5
8
2
2
1
1

Table

Group
number |
(2)

77

78
79

80
81
82

S3
8k

85
86
87
88

89
90
91
92

Groups: Loans and Investments by Class of Bank and Number of States and Cities
in Which Operating,(!) December 31, 1931 (Continued)

I

Name of group and location of head office
Total

Rocky Mountain
First National Investment Co., Boise, Idaho
Vollmer Clearwater Co., Lewiston, Idaho
First Security Corp., Ogden, Utah

$

! Pacific Coast
American Securities Co., Spokane, Washington
Coffman Dobson Bank & Trust Co*, Chelialis, Washington
First National Bank, Seattle, Washington
Hall Investment Co., Carnation, Washington
Marine Bancorporation, Seattle, Washington
Old National Corp., Spokane, Washington
Peoples Corporation, Seattle, Washington
Yaklroa Holding Co., Yakima, Washington
Linn Securities Co., Albany, Oregon
Oregon Investor Corp., Hillsboro, Oregon
Pacific Bancorporation, Portland, Oregon
U. S. National Corp., Portland, Oregon
Anglo National Corp., San Francisco, California

613
32,352
29,247
12,232
6,607
2,553
1,309
9,732
71,909
160,154

A q o A p i Q"hpr} f n * 5 "hr» 1 0
?.l

96
97

Citizens National Trust & Savings Bk., Riverside, Calif.
Sebastopol National Securities Co., Sebastopol, Calif.
Security First National Bank, Los Angeles, California
Transamerica Corp., San Franciscof California

$r
95

Tj*hr\ - _ Sfln

TPTV^YIPI QC*r»

)| ?Rg

rV^li'F

UNITED STATES
•

(1)
^2J
v3v
v*0

-

-

-

11,035 $
4,232
33.052
5,637
2,118
69,128

Q^

TTnlrlTriP'q

Loans and investments
in thousands5 of dollar s
NationState
Konal
member
meaiber
banks
"banks
banks

7,906
2,05^
445,549
877,652

7,371
3>176
11,217 $
-

$

9,200
-

5,637

-

459

30,831
26,875

986
6,349

868
917
9,732
70,632
151,256

1,544

—
—
-

613

8,910

25s

760
WiJ50
821,350

812

873
-

Ipl

U,6il

1,521
2,372
2,336

-

_
-

392
-

1,277
8,898
q-71
^7*

3,295
1,294

799
56,302

$8,715,779 $5,290,132 $2,355,093 $1,070,554
.

.

.

_«

-

. , . . , „ .

,

,

States and cities in which head offices of individual banks are located.
On subsequent tables, this number is used in lieu of the group name.
-Control both personal and corporate.
Does not include several small banks in which the control is less than 20 per cent of the stock.




3,664
1,056
12,635

1,659

67,584

7

-

Immber Nuaibe r
of
of
States cities

2
2

3
1
1
1
1
1
2
1
1
1
1
1
2
2

10

9
26
3
4
1

4 ,
8

H-

19 t
2 '
2
1

3
4
7
16

Q

1+

1
1
1
2

2
2

3
7

Tahle

II - Chains:

Loans and Investments by Clas s of Bank and Number of States and Cities
in Which Operating,*1' December 31, 1931
Loans and i n v e s t m e n t s
i n thousands , of d o l l a r s
NationState
lionTotal
al
member
member
"banks
hanks
"banks

Chain
Name of c h a i n and l o c a t i o n of head o f f i c e
number
(2)
i ^ e w England
1 I J . C. Makepeace & Family, Wareham, Mass.
2

3
k
5
6

r
g

9

10
11
12

13
iH
15

i6_

Middle A t l a n t i c
J . W. C r a n d a l l & Family, Westfielcl, H. Y.
G. W. Hamlin & Family, Holcomb, N. Y.
C. E. E u l b e r t & A s s o c i a t e s , Downsville, N. Y.
W. J . & E. J . Humphrey, Warsaw, Mf. Y»
L e s l i e E. Palmer ( E s t a t e o f ) , I r v i n g t o n , N# Y«
Dobler B r o t h e r s , P a t e r son, IT. J .
J . D. E v e r e t t & H. L. Holmes, Orange, H. J .
TSn. C. Heppenheimer, J e r s e y C i t y , N. J .
Kean Family, E l i z a b e t h , l\f. J .
N a t i o n a l I r o n Bank, Morris town, H. J . w )
J . J . S t a m l e r , Newark, N. J .
Berwind-White Coal Mining Co., P h i l a d e l p h i a , P e n n a . ( 4 )
C a r l i s l e T r u s t Company, C a r l i s l e , P e n n a . ( 4 )
F i r s t N a t i o n a l Bank, Johnstown, Penna. ( 4 )
Union T r u s t Company, New C a s t l e , P e n n a . ( 4 )

North C e n t r a l
C o r n e l i u s Gerber, Fremont, Mich.
John C. H i c k s , S t . J o h n s , Mich.
F r a n k Hubbard, D e t r o i t , Mich.
20
C. W. McPhail, C e n t r a l Lake, Mich.
21
F r a n k 1?. M e r r i c k , Saginaw, Mich.
22
A. E. S l e e p e r , Bad Axe, Mich.
William Alden Smith, Grand Rapids, Mich.
23
F r a n k Wolf, D e t r o i t , Mich.
2U|
Harry D. Baker, S t . Croix F a l l s , Yfisconsin
25
2b!
C. C* Brown, Kenosha, Wisconsin

17
is
19




$

S,229 $

5,576
9,o46
4,593
13,744
27,263
2,333
S,2S0

75,021
37A56
7,34l
33,213
6,473
4,290
is,529
11,563
2,173
1,27s
1,644
2,12S

1,497
4,250
15,672
21,555
S74
9,24s

2,460
4,117 $
5,866
4,593
S,255
24,060
_

7,013
-

$
l,03l+
~
_
-

21,71+1

6,269

6,36s
20,1+66
351

—
6,122

1,131

3,159

15,327
7,569
-

—
-

939
615

1+57

-

7,935
-

8,872

—
-

530
297
ll+,S80
—

Number itanber
of
of
States c i t i e s

5,769

1

1
+

1+25

1
1
1
1
1
1
1
1
1
1
1
2
1
1
1

1
+
1
+
1
+
7
1
+

1
1
1
1
1
1
1
1
1
1

5
3
3
9
k
13

3,180
-

5,1+89
3,203
2,338
1,267
75,021
9,lU6
973
13,3^7
-

3,262
3,99^
1,231+
1,263

i,6Ui+
2,128

967
3,^96
798
13,620
S71+

376

2
2

3
k
3
l+

5
3
l
1

2

7
5
l

,
<

,

Table

II - Chains: Loans and Investments by Cleiss of Bank and Number of States and Cities
in Hlhich Operating,(l) December 31, 1931 (Continued)
Loans and investments
in thousands of dollars
NatioiiH State ! Non-

Chaitt

Name of chain and location of head office
number

Total

(2)

27
2S
29
30
31
32

33
3*
35
36
37
32

39
HO
ll
+
42

*3
44
u5

46
^7

ks
h9
50

North Central (Continued)
C. C» & A. E. Coe, Almena, Wisconsin
J. W. Dunegan, Stevens Point, Wisconsin
First National Bank, Eacine, Wisconsin
Judson Rosebush, Milwaukee, Wisconsin
Ralph N. Ballou & E. I. Wagoner, Chicago, 111.
A. W. Baltz, East St. Louis, 111.
Alben E. Bates, Elmhurst, 111.
John A. Carroll, Chicago, 111.
John Clay, Chicago, 111.
First National Bank & Trust Company, Bloomington, Ill.(^)
Morris Family, Chicago, 111.
W. Pitts Barnes & Associates, Cleveland, Ohio
W. &. Mather, Cleveland, Ohio
Southeastern
!• 0. Benton, Monticello, G-a.
First National Bank, Columbus, Ga.
Exchange National Bank, Tampa, Fla.
First National Bank, Tampa, Fla.
Cary it. Hardee, Live Ga&, Fla.
First National Bank, Clanton, Ala.
First National Bank, Do than, Ala.
Capital National Bank, Jackson, Miss. (3)
First National Bank, Hattiesburg, Miss.
Grenada Bank, Grenada, Miss.
Morris Lewis, Lexington, Miss.

Southwestern
Calcasieu national Bank, Lake Charles, La.v^v
First National Bank, Shreveport, La.
L. P. Atmar, Groveton, Texas
53

51
52




$

al
banks

—
79^
3,292 $ 2,390
12,21+9
10,833
8,112
7,356
9,370
2,667
10,482
9,759
—
3,181
6,226
5,302
4,492
6,U96
3,268
3,187
15,862
15,862
244
158
6,371
5,999
397
3,360
14,146
15,429
525
1,^73
7,622

6,533
3,984

5,653

298
1,561
10,271
12,785

member
banks
—
—
—
—
-

$

—
1,168
—
—

19,639
953

States eities

794
902
1,416
756
6,703
723
2,737
924

1

4
4
2

81

1
1
1
1
1
1
1
4
1

86
372

1
1

99

1

3

l
1
1
1

l
8

836
—

3
2

6
4
1

9
3
3
3

3

1,799
3.S75
2,644
525
523 i
792
3,908
534|

4

950
6,830
2,625
3,U50
-

-

11,0^7
13,990

6sk

—

1

--?-

1

6
1 3
9

2
1

!
1

5
7

5,653<

1
1

1

1,233 :

"•*

1,233
11,289

$

Wt

—
—
—
—

member
banks

Number Number
of
of

1

3
3

242
5,649
2691

1
2

1

4

6
2
2

Table

II - Chains: loans and Investments by Class of Bank and Number of States and Cities
in Fnich Operating,(l) December 31, 1931 (Continued)

Chain
Uame of cbain and location of head office
number
(2)

j Southwestern (Continued)
R. C. & D. E. Couch, Haskell, Texas
54
F. L. Dennison, Temple, Texas
55
L. M. Feagin & John K. Kirby, Houston, Texas
56
W. H. Fuqua, Amarillo, Texas
57
58 Henry James, Abilene, Texas
M. C, Parrish & Associates, Austin, Texas
59
60 H. B. & K. L. Seay & Associates, Mercedes, Texas
61 1 Carter Steward & Associates, Houston, Texas
62 ! H. H. Thompson, Houston, Texas
C. L. Wilklns & Associates, Brenham, Texas
63
I. -H. Nakdimen, Forth Smith, Ark.
64
ITeil Sims. Fort Smith, Ark.
65
66 1 Edward Stevens, Rushing, Ark,
B. M., E. G., & G. W. Athey, Enid, Okla.
67
H. T. & N. Douglas, Shawnee, Okla*
6S
Willard Johnston & Family, Shawnee Mounds, Okla,
69
E. C. Mullendore & Family, Cleveland, Okla.
70
W. D. Myers, Alva, Okla.
71
C. F. Stuart, Pawhuska, Okla.
72
IX
J^ W*, J^ i . , aacUlSV^B^ Stuart, Layerne, Okla.
7+ Thurmond Brothers, Oklahoma City, OkLa.
*
L. G. Voorhees, Oklahoma City, Okla.
75
E. A. Vose & Associates, Oklahoma City, Okla.
76
H. K. Wooten, Chickasha, OkLa,
77
78 M. L. Harris & W. Mathies, Wister, Okla.
Western Grain
Adams Investment Company, Fergus Falls, Minn. (3)
J. W. Black Company, Minneapolis, Minn.(3/
SO
Si
Otto Bremer et al, St. Paul, Minn.
82 j Edwin Brickson, Adrian, Minn.

79




Loans and investment ;
s
in thousands of dollars
NationState
NonTotal
al
* member member
"banks
hanks
banks
$ 1,261 $
1,252

546

638 $
1,208

kk2

3,4p9
2,61*5
1,502
2,64l

352
64s
2,382
2,062
1,236
2,6Ul

—
—
—
*
—
—
—
—
—
_
~
~
—
—
_
—
—
—

553
2,715
2,059
1+6,316
1,161

417
44
546
709
113

553

-

5,682
4,973
2j6l
2,64s
1,155
2,072
756
1,059
595
184
832 1
584
4,254 ! 3,685
7,29S i 7,183
252
1,666
312
3,024
2,378
2,584
1,974
84-9
900
1,007
973
64-2

206 $

Number Sumter
of
of
States cities

2,17^
1.723.
25,200
118

—
-

1,087
-

1
1
1
2
1
1
1
1
1
1
2
2
1
1
1
1
1
2
1
2
2
2
1
1
1

54l
336

1
2

20,029
1,043

4

1,155
1,316

464
184
248
569
115
252
1,354

646
610
51
34
90
1,021

583
266
—

1

8

4
' 4
5
4
9
4
3
3
4
8

3
3
3
6
7
3
4
3
3
17
3
8

6
4
3
6
47
6

Table

II - Chains:

Loans and Investments by Class of Bank and Number of States and Cities
in Which Operating^ 1 ) December 31, I93I (Continued)

Loans and investment s
in thousands of dollars

Chain

Name of chain and location of head office

Nation-

Total

number

(2)
S3
SH
85
86
87
88
89
90
91
92

93
Sk

95
96
97
98
99
100

102
103
104
105
106
107
108
109
110
111
112

al
"banks

, Western Grain (Continued)
John C. Carlson, Hash City, Minn.
L. G. Castle, Duluth, Minn.
Alfred Christopherson, ATbert Lea, Minn.
W. W. Dean, Adams, Minn.
D. W. DuToit et al, Chaska, Minn.
D. M. Sunn, F. E. King, A. King, Grand Rapids, Minn.
Isaac Hazlett et al, Minneapolis, Minn.
L. H. Ickler, St. Paul, Minn.
A. J. Johnson, Granite Falls, Minn.
C. H. Klein, Chaska, Minn.
J. Lampert Company, St. Paul, Minn.O)
Harry Lee, Long Prairie, Minn.
Samuel Lewison, Carl C. Swenson & J. F. Fries, Canby, Minn.
C. H. March, Litchfield, Minn.
T. F. McClure, Litchfield, Minn.
Midway national Company & K. H. Bigelow, St. Paul, Minn v (3)
K. ±tana, Misutme i i n, liii, '?n*-«^t^«_^t^£i_Jty)
Aiiu
W. R. Sawyer, Goodhue, Minn.
/
'
J, G« Schmidt, Nnrthfield, Minn.
Geo. E. Towle et al, Minneapolis, Minn.
A. L. Ward (Estate of), Fairmont, Minn.
H. A. Warner, White Bear Lake, Minn.
F. L. Goodman et al, Grand Forks, N.D.
Peterson, Akin Estate et al, Harvey, U. D.
J. H. Wishek, Ashley, N. D.
M. Plui Beebe, Ipswich, S. D.
G. F. Schneider et al, Rapid City, S. D.
J. A. Bradley, Centerville, Iowa
Brenton Brothers, Des Moines, Iowa
E. T. Dufer, Diagonal, Iowa
KUIUS




spytw^^J

$

1

State
member
banks

17
*1
2,882 $
8,3^7
s,3^7
268
U02
128

762

97^
1,752
2,108

1,855

H,536
1,533

3,993

799

—
2,662
1,012

3,661
2,131
1,871

673

879

856

563

2,01+7
1,786
U,US2
939

1,372
—
3,215

9U3
989
587

J+97
I4-63

1,828

1,828

67U

HSU
—

1,7^6

1,198

271

111

911

1,37s
3,508

2,352
2,282

763

-

~
~
—
~
—
—
_
—
—
—
~
—
—
—
—
-

763 1

Nonmember
banks

$

2,411
—

ksk

572

1,62!+

253
5U3
860
799
999

1,119

992
293
675
1,786
1,267
983

mm

—
—
—
—
—
«
~
mm

1,014
1,510

Number Number

~
-

526
103
—
67U
5Us
160
911
1,378
3,50s
l,33S

772
-

of

I-I-P

Ui

States cities

1
1
2
2
1
1
1
2
2
1
2
1
2
1
1
1
1
1

1
2
1
2
2
1
2
1
1
1
1
1

6
2

5
k
k

7
16

5
3
8
8

6
3
U
3
l
5
2

k

3
h
k

7
3
6
6
6
5
k

3

II - Chains: Loans and Investments by Class of Bank and Number of States and Cities
in Which Operating,(l) December 31, 1931 (Continued)

Chain
Name of chain and location of head office
number

Si
113
114
115
116
117
118
113
120
121
122
123
124
125
126
127
12S
12°
130
131
132
133
13^
135
136
137
13S
139
l40
l4l

7/estern Grain (Continued)
Fred J. Figgf, Calmar, Iowa
3. H. Kaugen, Northwood, Iowa
Johnson, Brush & Annis, Osage, Iowa
E. H. Rich, Ft. Dodge, Iowa
F. L. Sawyers, Centerville, Iowa
James F. Toy, Sioux City, Iowa
R. E. Barber & P. H. Kannow, Kearney, Nebr.
T. F. Birmingham & Associates, O'Neill, Nebr.
C. M. Brown, Cambridge, Nebr.
C. F. Coffee, Chadron, Nebr.
E. F. Polda & Family, Schuyler, Nebr.
C. A. McCloud & Associates, York,Nebr.
P. 0. Southwick & Family, Friend, Nebr.
G . H. Titus, Holdrege, Nebr.
H. A. & E. A. Wiggenham, Ashland, Nebr.
F. L. Ford & Associates, St. Joseph, Mo. (3)
J. M. Kemper et al, Kansas City, Mo.
Alex Rieger et al, Kansas City, Mo.
A. A. Speer, Jefferson City, Mo.
J. J. Benjamin, Cambridge, Kansas
&. D. & H. 0. Benton, Oberlin, Kansas
W. H. Burks, Wellington, Kansas
J. R. Burrow & Family, Topeka, Kansas
C. Q. Chandler & Associates, Wichita, Kansas
R. B. Christy, Scott City, Kansas
J. H. Collingwood & Family, Topeka, Kansas
P. Eresch & Family, Beloit, Kansas
J. P. & F. R. Fair, Mankato, Kansas
F. F. Ffickele & F. M. Harris, Ottawa, Kansas




Loans and investment s
1
Number' Number
in thousands of dollars
NationState
Nonof
of
Total
al
member
member
1
banks
banks
"banks States cities
$

l,06l
1,006 $
3,253
4,252
1,445
12,^96

559
1,353

-

791
1,167 $
—

701
2,926
-

1,230

907

459

2,507
1,556
2,656
i,4n
1,630
1,612
6,601
14,454
4,226
3,92S

2,507

177
S34

-

1,884

S10
1,580
1,013
3,654
3,929

342
3,3S9
-

643

881
1,597
I S,^70 ; 6,686
15,336 i 15,336
736 i
539
2,608
7S3
500 i
1,53S !

664
291

1,367

—
—

$

215
772

_
—
_
—
—
—
~
—
~
~
—
_
-.
—
—
-

•

-

1,011
~
-

l,06l
1,31^

M52
7UU
3,570
559
73
UUs
—

1,556
772
601
50
599
2,947
10,525 ;
3,884 1
539
177
191
716
1,784
—

197
1,597

119
209
171

1
1
2
2
1
3
1
1
1
1
1
1
1
1
2

1
3
1
1
1
1
2
1
3
2
1
1
1
1

3
3
3
7
3
18
4
3
3
*

!

3 '

7
4
4
7
1
10
!
2
4
3
4
3
4
!
5
3
7
3
1 3
!

6

Table

II - Chains: Loans and Investments by Class of Bank and Number of States and Cities
in Which Operating,(l) December 31, 1931 (Continued)

Chain
Name of chain and location of head office
number

(2)
1^2
IU3
ll&
1U5

lU6
Ikf
lUS
1H9
150

151
152
153
15U

155
156

157
15s
159

160
161
162

163
16$
165

166
167
16s
169

Western Grain (Continued)
Linn Frazier, Fowler, Kansas
J. B«, P. 0. & S. I. Gardiner, Wichita, Kansas
& M* Gray & ¥• J. Br/Bofienthal, Kansas City, Kansas
A. D. Jellison, Junction City, Kansas
Leavenworth National Bank, Leavenworth, Kansas
G. W. Lemon, Pratt, Kansas
J, B. Lower, Washington, Kansas
W. A, Miller & ?• 0. Herald, Anthony, Kansas
A. H. Moffett, Lamed, Kansas
E. R, Moses & Son, Great Bend, Kansas
W. H. & J1. E. Myers, Wakefield & Clay Center, Kansas
F. W. Sponable, Paola, Kansas
J. T. Stewart, Wellington, Kansas
W. D. ¥omer & Family, Manhattan, Kansas
Rocky Mountain
Fred A. Wochner, Great Palls, Montana
H. E. Hemmingway, Burley Idaho
J. W. Hay, Cheyenne, Wyo.
C. J, Williams, G. A, Hinman, W. E. Pearson, Powell, Wyo.
M. B. Holland, Denver, Colo.
R. B. & D. E. Holt, Walsh, Colo.-Wheeler, Texas
M. D., J. H. & R. C. Thatcher, Pueblo, Colo.
P. C. Brophy & Associates, Phoenix, Arizona
Chipraan Family, American Fork, Utah
J, E. Cosgriff, Salt Lake City, Utah
Desoret national Bank, Salt Lake City, Utah.
N. B. Jones, Roy, New Mexico
0. G. Bates, Ely, Nevada
: George Wingfield, Reno, Nevada




Loans and investment s
Number Number
in thousands of dollars
NationHonState
of
of
Total
membe r
member
al
banks
"banks States cities
banks

$

U59 $
1,809
4,227
1,745
3,268
1,79^

17S
~
-

S93
2,657
1.U12

1,191
2,331

613
919
65s
367
671
1,660

728

289

2,060

~
~
«
.
~
~
—
—
—
—
—
—

$

1,926

957
1,313

807
670

1,202
4,532
5,352

804
613
599

502 $

h,szk
kSk

498
208

21,417

15,631

l4,i45

M75

1,723
13,079
12,684
1,126
1.389!
19,379

~

12,552
4,687

969
1,187
7,525

M27

852
611
382

3kk
33k
1U9
303
520
671

U39
13^

_

—

281
1,809

3,013
122

_
_
_
—
—
—
—
_
—
—-.,.••. _
.

1
1
1
1
1
1
1
2
1
1
1
1
2
1

5.7S6
9,970
1,723

1
2
1
1
2
2
1
1
1

527

3

7,997

1
1
1
1

1,202
1,017

368
218
115
391

157
202
12,35^

3
k

l

3
2

6
k
6
h
3
3

k
3

k
6
5

h
3
3
U
6
5
k
9
k
k
3
10

Table

II

- Chains:

Loans and Investments by Class of Bank and Number of States and Cities
in Which O p e r a t i n g ^ 1 ) December 3 1 , 1931 (Continued)

Chain
Name of chain and location of head office

number

(2)

170
171
172
173

Pacific Coast
•
C. E. Bingham, Sedro-Wotfley, Wash.
Ufa. C. Butler & Associates, Everett, Wash.
0. A. Eletcher, Yakima, Wash.
F. M. & ]p. W. Roberts, Seattle, Wash.
Mr. & Mrs. W. D. Howard, Pasadena, Calif.
T. A. Work, Monterey, Calif,
E. D. & Helson McCook, San Bernardino & Long Beach, Calif.

Loans and investments
in thousands of dollars
State
NationNonTotal
al
member
member
banks
banks
banks

1,078
$ 1,078
10,93S $ S.539
2,399
2,858
757 $ 2,101
1,008
265
7+
^3
2,025
1,395
3,teo
SU6
175
k,182
5,028
176
6,963
6,963
UNITED STATES
$U3,15U ($355,^
$926,733
$527,735
(1) States and c i t i e s in which head offices of individual banks are located,
(2) On subsequent t a b l e s , t h i s number is used in l i e u of the chain name.
(3) Hot in possession of definite information with respect to method of c o n t r o l .
Control both personal and corporate.




$

Number Number
of
of
States cities

1
1
1
1
1
1
2

3
3
3
U
5
5
3
1

i

- Xll -

Table III - Groups: Number of Banks " y Classes, Number of Banks
b
Operating Branches, and Number of Branches
December 31, 1931
Number of branches
Number
Outside head
In
of "banks
Nation- State Nonhead
office city
operating Total
office In own In other
al
member member "branches
city county counties
Number of banks

Group
number
(i)

,

total

1
i

3

2

12
20

3
4

6
31
7 !

5
6
7

2
3

T~
5
10

.
-

3
7
6

4
3
5
l

5
31
36

2

l

12

—

4
—

3
4
7
—

3
17

2
11

36

-

—

—

—

4
4

1

—

!
!

I
I

2
1

5
14

\

4
2

_
—

_
.
_
-

_
_
-

—
—
-

.
.
«
-

7
15

7
15

~

mm

10

Q ,

l
5

n

3

—

—

3

2

12

•
^

1
1
1

13

-

-

S

1

55
79

~
-

_
—
-

9

i

14

15
16
17

1^
1 4

IS

7
7
7
3
5

19
20
21
22

5
4

23

24

l
i

25
26
27
2S
29
30

31

32
33

3^
35
36
37
3S

- ^

6
15
5

;
i

1

i

3
9
3
3
4
3

2
3 !

3
3
26

39

9

40

27 1




-

i

U

l

1

4
7

-

1

7

2

-

•
7
J

I

l
2
8
2

l

4

7

-

2
2
1

4

-

-

1
1

1
1
3

1

5

-

—

3

7

2

l

l

1

5
7
l

3

2
2
2
2
2
1
1

-

-

—
-

1
1

7
2
1

2
1

1
1

-

2
1
1

12

1
1
—
—
-

S

7

!

!

1

3

2

2

—
-

—
—
—

—
*
—

1

3
4
1
1

3

l

«.

«.
_
-

8
1

s

-

S
12

5

_
—

2
1

7

5

-

3

3

5 1

_
~
-

1

16
io 1

55
79

-

—

1

13

6
l
2

1
l
2

-

1

-

-

5
!

11

1

188 18S

75

75

5

~
—
—
~
—
_
—

5

—
—
—
.
—
—
—
—

1

1

—

1

—
- '

—
—
—
—
—
—
_
-

—
—
—
—
—
—
—
—
•
»
-

mm

-—

.

-

- XI11 -

Table III - Groups: Number of Banks by Classes, Number of Banks
Operating Branches, and Number of Branches
December 31, 1331 (Continued)
Number of franks
Group
number Total Nation- State Honal
member member
(1)
1+1

46

16

4

26

42

10
10

3

l
2
l
l

6
7
6

S
^5

1
1

s

—

46
47

4
5
4

48

11

7

49

6
is
3

3
5

50
51
52

53
54
55
56
57
5S
59
60
61
62

§
65
66
67

6s
69
70
71
72

8
75
7S




2
12

17

5
7
7

s
9
5
5
5
6
3 I

4
4
6
5
6
5
3
1

1^
2

7 i

4

0

—
-

1
—
—
—
-

1
2
—

10 |
3
10
5
3
21
12

1
1
—
-

1

5

2

2

4
2
13
l

5
1

3

1

2

li

3
3
-

2

4
2
1
2

7
9
6
9

7

—
~
—
«
*
—
-

4

3

u
8
15
11

8
10
2

5

5

2
2
1
_
_
_
_
-

22
11
8

3
3

—
~
—
_
_
-

—
—
_
_
~

3
3

3

1

s
_
.
_

6

1

5

2
2

44
6

1
-

9

19

mm

8

—
—
~
~
—
~
—
-

S

—
—
—
—
—
mm

~

2
2
"
•
—
«
.

M

j
1

—

—
»

1
1

mm

-

—
—

—
—
.
.
—
-

_

M

11

4

3

-

-

8

6

1

1
2

-

-

7
7

3
2

6
-

J

24

79

9

1
1

_

SO
2

10

—
—
_
—

9

2

1

3

6
—
—
—
»
«
.

3

_
~
—
-

104
127
8
tf

76
77

1
2

Number of branches _
Number
In
Outside i;ead
of banks
head
office city
operating j
Total
office In ownl In other
branche s I
city 1 county counties

4

M

_
-

-

-

3
3

.
.
—
_
mm

—
«
.
_

3
3

_
~
_
—
- !
i

mm

-

<••

-

1

.
—
*•
*
-

—

-

~

1

M

—

!

—

~
~
*

1

~

1

—

mm

i

1

•
—

-

~

_

1-

1

xiv ~

Tahl e I I I - Groups: Number of Banks "by C l a s s e s , Mriber <3f Banks
Operati ng Branches, and Number of Branches
December 3 1 , 1931 (Continued)
ITumbp] r of "branches
plumber f
Group
In 1 Outside head
T
of "banks
number T o t a l Nation- S t a t e
head 1 o f f i c e c i t y
operating Total
al
of p e e I n ownl In o t h e r
member member t r a n c h e s
(i)
dity 1county c o u n t i e s

lumber of banks

79

27 1

so

5

SI
82

83
90
91
92

a

U
95
96
97

7

10
22

k
3
;

3

3 1
k
11
^

1 U
1 3

I

1

*

5

UNITED
STATES

97S

1 k 69

Wl^

Tabl<3 I

-

-

•>
<
_.

_
—

_
_

— i

_
-

i

2

_
—
—
—
—
—
—
—

...
~
—
>
«•
—
—
_
—

?

i

1

1

-

—
—

~
"
~
-

3

—

-

10
2
1
1

1
-

1
~
—

1

—

tf

'

s
lU

—

7
7

1

[•

—

5

«,

u
2
1
1
2

21

_

12
1
2
1
1

11




k 1

:

mm

—
7
-'

6
U

«3
8k
S5
86
81
88

2

1

i

"
"
"
~
-

;

2

—

3

j
1

2
2

1
i

2
2

6
75

u3u

M

~

2
1
2

£1

—
—
—
—
~
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~
~

!

~~
—

—»

_
—
_
~
—
—
«.

...
—
—
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—
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^,

—

—
—
—

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—
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125

k

30

27
363

|L.219

7Q5

6S

UH£

Uo7 1 V

fC)r names5 r e p r e sjented by g roup rmmders«

- XV —

Table

IV - Chains: Number of Banks by Classes, Number of Banks
Operating Branches, and Number of Branches
December 31» 1931
•

•»

— '

•"

•

i

'

•

•

" •

Number <)f banks
.

•

ifcaaber
Number of branches
Outside head
of 'banks
Chain
^T
N a t i o n - S t a t e Non- ! o p e r a t i n g
office c i t y
hqad
Total
Total:
number
o f f i c e In own I n o t h e r
tranches
member member
al
(i)
c i t y county; c o u n t i e s
i

k

2

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- xvi Table

Chain
number

IV - Chains: Number of Banks by Classes, Number of Banks
Operating Branches, and Number of Branches
December 31> 1931 (Continued)
Number of branches
Umber of "banksi
Number
In
Outside head
|1
of banks
|Nat i o n - S t a t e Nonhead
office c i t y
Total
o f f i c e In own I n o t h e r
al
member Imomber o p e r a t i n g
branches
c i t y county c o u n t i e s

total

Hi

1

3

1*2

12

is
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3
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51
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66
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63
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ITumber of "branches
in
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office city
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- XVI11 -

Table

iv - Chains: Number of Banks " y Classes, Number of Banks
b
Operating Branches, and Number of Branches
December 31, 1931 (Continued)

Sumber of b r a n c h e s
Number
In 1 Outside h e a d
of banks
N a t i o n - S t a t e Nonhead j o f f i c e crvby
number T o t a l
o p e r a t i n g T o t a l | o f f i c e In own 1 n o t h e r
I
al
member member branches
(1)
c i t y county count i e s
Numbefr < af banks

\

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150
151
152
153
154
155

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2
2

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167
168
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3
13

170
171
172
173
174

2
2
2
2

5

6
5
3

UNITED
STATES
1

90s

(1) See Table

—

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156
157
15s
159
160
161
162
163

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3
2
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-

- xix -

Table 7

- Number and Loans and Investments of Banks in Groups and Chains
By Geographic Division, June 30, 1929-December 3 1 , 1931' 1 )

Number
L o c a t i o n of bank
Nonby geographic
A l l nation- S t a t e
division
al
member member
hanks
banks banks b a n k s !
New England
June 30, 1929
Dec. 3 I , 1929
June 3 0 , 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

44

75

82
S7
SS

?3
^

42
^

75

^3
36

104
109
115
113
98

Middle
June
Dec.
June
Dec.
June
Dec,

Atlantic
30, 1929
3 1 , 1929
30, 1930
3 1 , 1930
3 0 , 1931
3 1 , 1931

204
235
245
254
257
222

North
June
Dec.
June
Dec.
June
Dec.

Central
30, 1929
3 1 , 1929
30, 1930
3 1 , 1930
3 0 , 1931
3 1 , 1931

238
299
332
346
276
252

56
78
87
92
S3

33
49
56

Southern Mountain
5
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

^

42
39

95

8
8

6

15 $762,837
25 1,086,597
33 1,266,969
36 1,235,153
37 1,208,114
33 1,030,973

66

$301,843
749,767
883,958
802,551
761,469
63^,577

$362,457
207,4s4
209,548
243,170
245,623
218,84l

$ 98,537
129,346
173,^63
189,432
201,022
177,555

1.066,621
1,085,799
1,253,060
1,192,522
2,788,596

413,125
450,280
501,925
449,101

674,7^5

1,756,576
2,247,424 l
2,327,043
1,891,784
2,073,^75
l,7io,o4o

S93,069
1,261,402
1,379.216
1,353,935
1,280,901
1,465,173

448,581
846,224
842,282
807,973
729,968
251,401

402,966
574,191
617,839
648,111
53^,515
421,695

45
46
46

93

4o

98
84

3,236,322
3.783,503
4,082,033
3.533^07
5,331,810
2,773.689

77

19
28
30
27
21
19

163
193
215
227
172
156

1,744,616
2,681,817
2,839,337
2,810,019
2,5^5,384
2,138,269

14
21
25
20
21
20

l
3
3
2
2
2

18
25
28
21
19
17

153,547
269,520
302,903
184,003
185,363
152,845

108,311
174,661
190,772
127,125
132,457 !
108,673 !

1.345
41,207
39,927
18,136
18,300
17,879

^3,891
53,652
72,204
38,742
34,606
26,293

5
5
4
3

95

288,585
333.219
355,161
361,925
364,161
335,293

!
!

7^

382,430
406,634
432,966
428,635
421,463
399,156

28,929
15,509
10,680
10,197
6,120
14,902

64,916
57,906
67,119
56,513
51,182
4s,96l

162
170
172
124
133
114

293,633
335,662
315,116
275,563
345,651
253,008

206,434
247,128
222,042
199,944
203,616
180,764

38.109
37,171
41,127 ;
33,638
97,51s
37,546 !

49,090
51,363
51,947
41,981
^,517
3^,698

Southeastern
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

l4i
139
15s
151
139
133

4i
48
58

Southwestern
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

272
294
293
235
248
221

104
119
116
107
108
101




6
7
7

All
banks

Loans and investment 0
i n thousands of d o l l sU'S
S t a t e 1 NonNational
member
member
banks
banks
"banks

59
59
57

!*?
46

2
2

6
5

I

I
6

85
91

86 ;

96
89
78

!
1

469,739
388,904

- XX -

Table V - Number and Loans and Investments of Banks in Groups and Chains
By Geographic Division, June 30, 1929-December 31, 193l( 1 ' (Continued)
lIu3Ti"bp.r

L o c a t i o n of bank
Hon- 1
by g e o g r a p h i c
A l l ] Nation-i S t a t e
division
a l \ member member 1
banks
banks "batiks banks

:Joans and investment s
i n thousands of d o l l a r s
NonState j
A l l "1 N a t i o n a l
member
member
banks
banks
banks
banks

Western Grain
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

665
724|
701!
685
675
629

253
296
29 s
2S9
292
282

9
9
10
10
10
9

403
419
393
38b
373
33S

$849,575
1,012,515
936,206!
985,174:
982,701!
9oo,477|

Rocky Mountain
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

167
130
1S7
188
185
167

54
64
63
65
63
56

11
12
12
12
13
9

102
104
112
111
109
102

223,176
265,818
260,142
243,658
235,799
215,123

! 157
! 170
i 175
! 165
161
148

75
81
88
82
81
7S

b
9
10
9
7
5

P a c i f i c Coast
'' June 3 0 , 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931
United
June
; Dec.
June
Dec.
June
Dec.

States
30, 1929
3 1 , 1929
30, 1930
3 1 , 1930
30, 1931
3 1 , 1931

'

:

76
80
77
7U
73
65 j

2,122,107
2,250,775
2,279,975
2,155,142
2,0991 lo'S
1,773,972

$546,126 $109,144
104,136
691,917
674,364
104,723:
106,008
667,897
679,272!
101,190
640,988
93,696
113,686
144,985
137,463
132,528
127,632
116,040

1,437,389
1,646,997
1,669,165
1,310,015
1,761,311
1,661,614 |

$194,305
216,412
207,119
211,269
202,239
165,793

34,725
40,650
39,817
37,072
34,832
31,305

74,765
80,183
32,862
79,058
73,335
67,778

223,124
246,407
260,639
242,394
235,854 1
22,637

406,594
357,371
350,121
102,733
102,023
94,72|

106
1,100 ! 9 , 7 6 8 , 2 4 3 5,012,064 13,007,990 11,748,189
715
854
124
1,187 12,092,841 6,335,875 3,736,262 ! 1,970,70!+
886
126
1,217 12,765,641 6,765,201 13,875,841 |2,124,599
872
121
l , l 6 l 11,355,754 6,648,442 13.390,372 1,816,940
063
lib
1,092 13,355,473 s , 0 9 9 , 4 1 5 13,542,330 1,713.17s
1,006 1 305
9S
983 9,642,512 5,317,367 2,398,247 1,426,39s
,
( 1 ) These figures exclude mutual savings and private "banks. Inclusion of such "banks,
affects 10 States for which figures are given in Table VII with mutual savings
and private banks included.




ll,921
p . 165
2,229
£,154
J2.07/1

-

Table

VI

XXI

-

- Number and Loans and Investments of Banks in Groups and Chains
by S t a t e s , June 30f 1929-Dec ember 31, 193IU)

Number
Location of "bank All Nation- State Nonmember member
al
banks banks "banks "banks

Loaiis and investments in
;;hotf,sands, of dollars
State
NonAll
National
member
member
"banks
"banks
banks
banks
i

New England
Maine
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

1929
1929
193O
I93O
I931
1931

5
13
17
17
is
15

2

5

—

6
6
7

8

3 $
7

53»268 $

11
10
10
10

8k,O33
88,701
9^,250
90,129

10,033
1^,665
16,065
21,160
23,183
20,991

1,173

70,7te

±i

~
—
-

$ 1+3,235

56,077
67,968
67,51+1
71,067
69,138

New Hampshire
Vermont
Dec. 3 1 , 1929

1

1

-

-

1,173

Massachusetts
June 30, 1929
Dec. 31, 1929
June 30, I93O
Dec. 3 1 , 193O
June 30, 1931
Dec. 31, 1931

32
i+s
1+9
50
50
l+i

19
30
30
29
28
2k

5
6
6
7
7
5

12
13
ik
15
12

s

523,289
82k,SOU
959,509
898,565
862,839
707,862

Rhode Island
June 30, 1929
Dec. 3 1 , 1929
June 30, 193O
Dec. 3 1 , 1930
June 30, 1931
Dec. 31, I93I

3
3
3
3
3
3

1
1
1
1
1
1

l
1
1
1
1
1

1
1
1
1
1
1

153,331
151,603
151,100
1^9,889
153,091
139,201

Connecticut
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, I93I
Dec. 3 1 , 1931

l+
10
13
17
17
16

1

-

3
5
8
11
11
10

32,91+9
32,275
72,327
97,99s
97,93*+
93,7S1




5
5
6
6
6

-

-

280,557
719,599
252,877
7^8,125
705,1+22
580,728

$220,3SS
69,202
10l+,2S0
102,81+0
29,1+63

22,3l+l+
37,61+9;
37,1+30
1+6,16Q
51+.577
37,67l :

7,3^
6,825
6,91+9
6,832
6,601+
6,291+

11+2,069
139,928
ll+0,3l+6
138,890
11+2,783
129,37s

3,922
1+.850
3.S05
1+.167
3,70l+
3,529

3,913
7,505
8,067
26,1+31+
26,260
26,561+

—
—
—

67,556

29,036
30,770
61+, 260
71,561+
71,671+
1 67,217

- x:cn
Ta"ble

VI - Number and Loans and Investments of Banks in Groups and Chains
"by States, June 30, 1929-Decemt>er 31, I931O) (Continued)
TiTinr

J Via u c i
M

L o c a t i o n of ' "bank

Middle A t l a n t i c
New York
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 3 0 , 1931
Dec. 3 1 , 1931
New JerseyJune 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

t Nation- S t a t e Nonmember member
al
[banks franks "banks "banks
All

82
104
103
103
104

^5

95

45

1929
64
1929 ! 72
1930 ! 80
1930
87
1931
93
70
1931

Delaware
June 3 0 , 1929
Dec. 3 1 , 1929
June 30, I93O
Pennsylvania
June 3 0 , 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 3 0 , 1931
Dec. 3 1 , 1931

3
3
3
55
56
59
64

60
57

I
52 !
52 1
51
52

31 :
33 ,

1 36
36
36

27

_
—

1

17
19

19

20
33

1 334
,2

18
16
15 !
14
15
15
17
19
15
-

19
19
21
28
25
26

12
12
11
11
11
10

10
25

11 •
19
17
15 1
10

36

35

Loans $X.6L i n v e s t m e n t s i n
1
ihouaands of d o l l a r s
State
! NonAll
1 National
member
1 member
"banks
! "b^nks
banks
banks
[

$ 2 , 0 4 l , 2 6 l $ 576,399 | $1,330,543 1 $13^,319
2,529,214
397,277 1,762,637 ! 169,300
fe,74-5 | 1,863,138 f 154,204
2,674,085 I
547,004 1,380,383 150,637
2,078,024
3,671,90s 2 , i l 4 , 9 7 9 1,324,775 172,154
137,678 1,262,833 127,104
1,527,615 ,

38
28

384,482
424,309
511,313
520,295
682,4l4
383,850

3
3
3

l,l4l
1,152
1,115

24

809,43s
828,828
895,520
935,088
977,488
862,224

19
24
29

34

25 i

27

25 1

24 !
21 !

131,932
133,586
197,485
179,010
182,412
102,538

69,865
108,869
113,008
140,728
295.657
97,095

-

_
—
-

358,284

356,168
375,918
350,902
370,673
393,043
350,112

94,986
97,974
145,786
97,907
93,24o
77,583

339,5^9
598,499!
586,147i
574,7321
541,805'
63,2051

54,340
183,576
188,327
179,577
171,099
134,606

354,936
39M32
4^6,508
491,205
4F,529

182,679
181,854
200,820
200,557
204,345
184,217
i,i4l
1,152
1,115

Maryland
D i s t r i c t of Col.
North C e n t r a l
Michigan
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931




79
118
119
119
102

95 J

25 I
25 !
23 1
23 j

9

53

74
77
79
69
63

415,546
1,098,555
1,099,076
1,071,153
1,036,607
913,720

t

£1,657
3116,480
324,602
316,844
323,703
115 , 9 0 9

-

Table

XX111

VI - Number and Loans and Investments of Banks in Groups and Chains
by S t a t e s , June 30, 1929-December 3 1 , 1931' 1 f (Continued)
Loans and investments i n
thousands of d o l l a r s
SfonState
All
Wa|ti onal
member
member
"banks
"banks
banks
banks

Itfumoer
L o c a t i o n of bank
Hat ion- S t a t e UonAll
al
member member
"banks "banks "banks banks

. .

11

•

• '

Wisconsin
June 30,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,

1929
1929
1930
1930
1931
1931

54
56
67
25
85
82

20
21
27
31
31
29

2
k
k
k

ks

Illinois
June 3 0 ,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,

1929
1929
1930
1930
1931
1931

88
93
103
108
66
55

20
21
22
24
19
15

7
5
7
6
6
6

61
67
74
7S
ki
34

1,065,552
1,205,097
1,297,0U2
1,292,669
1,090,260
8*18,251

671,822
685,902
760,161
725,655
61+8,772
1+47,116

86,741
173,241
167,334
166,682
140,688
171,316

306,929
345,954
369,547
400,332
300,800
229,219

Indiana
June 3 0 ,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

1929
1929
I93O
I93O
1931
1931

17
26
30
24
13
9

r
0

9
9
7
k
3

l
1
l
l
~
*

10
16
20
16
9
6

52,44l
83,605
85,699
78,1+00
45,273
39,130

14,701
45,224
42,153
39,172
29,436
26,44o

22,291
20,667
21,113
20,021
-

15,449
17,71^
22,433
19,207
16,437
12,699

Ohio .
Dec.
June
Dec.
June
Dec.

1929
193O
1930
1931
1931

6
13
10
10
11

2
k
5
6
7

3
3
1
1
-

1
6
k
3
k

23,976
94,513
70,1+12
71,078
61,306

28,441
35,207
33.77S
35,3^
55,1^7

53,817
51,628
28,535
29,794

1,71s
7,678
8,099
5,940
6,159

Southern Mountain
West V i r g i n i a
June 30, 1929
Dec. 3 1 , 1929
June 3 0 , 1930
Dec. 3 1 , 193O
June 30, 1931
Dec. 3 1 , 1931

1
1
1
1
1
1

_
-

1
l
l
1
l
1

31,
30,
31,
30,
31,

Virginia




1

&
35
32
50
50

>

$

1

!
-

211,077 $
210,58^
263,007
297,325
301,566
275,862

1,345
1,260
1,428
1,471 \
1,1+88
1,1+94
I

184,889
125,355
217,093 $
238,1+86
21+3,646
220,561

—
~
—
—
—

-

$ 26,188
25,229
16,060
29,254
18,003
40,896
17,681
40,239
16,880
38,421

i

1,345 ;
1,260
1,428
1,471
i,4ss
1,494

—
—
—
_
—
-

- xziv -

Table

VI - Bomber and Loans and Investments of Banks in Groups and Chains
by States, June 30, 1929-December 31, 193l( 1 ) (Continued)
•vr_«,

iNfumoer
Location of' "bank [All Nation-i StateI Nonmeinbor member
foanks al
"banks "banks banks
KentuckyJune 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930
1931
1931

Tennessee
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30>
Dec. 31,

*

k

-

6
6
6

10
6
3
3
3

1929 | 2S
32
1929
42
1930
1930
1931
35
32
1931

10
11
19
17
18
17

—

13

1 36

U CLXlXi-O

- ;$
1 1
+
5 1

2
2
1
1
1

1 16

All
"ho-nlro

2
2
2
18
21

1

]

Loans and investments ii1
•
thousands of dollars
I Non1 National I State
member
member
1
T*»^"n"U"cj
I
U Ctllxi-O
"banks
j "banks

8,120 $
119,421
121,320
43,229
51,334
45,672

23

100,191
101,648
126,606
106,563
103,413
84,149

144,082
148,839
180,155

19
17
15

8,120 1
73,013 $ 39,947 $ 6,46l
64,166 1 3S,499
18,655
6,062
20,562 | 16,665
29,044
16,812
5,478
24,524
4,763
16,385

139,243
132,541
105,679

—
—
.
.
~

43,891
47,191

53,549
32,680
29,128

21,530

Southeastern
North Carolina
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

l
1
1
1

1
1
1
1

—

—

2,943
3,253

i
!

2,973
2,908

2,943
3,253
2,973

;

2,90s

.
_
-

South Carolina
June 30» 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

2
6
11
11
11
6

1

3
7
7
7
k

—

1
3

3,455
29,735
31,321
32,654
29,79s
26,259

—
~
—
«.
-

12,09!=

2

7,733
39,659
43,415
43,766
4o,24i
35,755

9

k

10
10
10
11
10
10

161,543
170,889
173,334
167,039
163,313
154,312

144,121
150,960
157,172
150,857

13*827

3,595

15,509

4,420
5,482
5,985
5,733
5,570

39

i46,9io
131,245
144,073
123,695
131,509
128,419 1

k
k
k

Georgia
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930
1931
1931

23
25
2S
28
24

2k

13

1

Florida
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930
1931
1931 '

55
kl
53
54
5k
55 1

15
19
22
23

1 j
- 1
-

2k 1

1

25 1

l 1 29 1




10 '

?\

14 \

k 1

lk

3i

*3 !

l i

28

31
31
29

i
!
|
!

152,131 s

10,680
10,197

5,444

135,264

13,484

97,874
110,579
121,462
103,790
112,489
109,029

15,102 j
"
•
—

676 !
i,4is

~
-

4,27s
9,924
11,11$
10,443

9,49l

33,93^
20,666
22,611
19,905
18,344
17,972

Table

VI - Number and Loans and Investments of Banks in Groups and Chains
By States, June 30, 1929-December 31, 193l(1) (Continued)

j L o a n s and i n v e s t m e n t s i n
NumDer
I
thousands of d o l l a r a
NonL o c a t i o n of bank
1 State
[Nation- j S t a t e \ NonAll
All
National
member member
member
al
jmember
hanks hanks hanks 1 banks
banks
banks
banks
. hanks
Alabama
June 30,
Dec. 3 1 ,
June 3 0 ,
Lee. 3 1 ,
June 30,
Dec. 3 1 ,

1929
1929
1930
1930
1931
1931

22
22
26
26
26
24

Mississippi
June 3 0 , 1929
39
Dec. 3 1 , 1929
39
June 3 0 , 193O
39
Dec. 3 1 , 1930
31
June 30, 1931 I 2 3
Dec. 3 1 , 1931
23
Southwestern
Louisiana
June 3 0 ,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,

-

13

13 i
11
11
11
11

-

29,81+2
30,51+3
30,502
30,167
1+2,59^
1+0,51+7

$ 12,852
11,857
12,81+1+
19,699
82,1+21
23,238

2,768
8,994
8,867
14,256
14,956
10,426-

10
10
9
12
8

51,462
51,394
52,213
64,122
139,971
74,211

4 ;
3
3
3

59
60
63
64
66
61

93,306
118,608
115,074
112,028
110,1+10
92,526

68,235
93,996
89,082
85,787
82,572
72,813

H+,117
13,623
13,951
13,939
15,097
ll+,308

10,954,
10,929^
12,04l
12,30$
12,741
11,405

4l,604
1+9,955
38,300
1+,100
ii+,56i+
11,120

15,1+13
20,631+
6,1+23
3,S2l+
11,889
10,868

11,11+0
11,691
ll+,332
—
-

15,051
17,630
17,545
276
2,675
252

107,261
115,705
109,529
95,313
80,706 |
69,151 |

92,91+1+
101,955 1
96,035 j
80,166
66,561

_
—
—
—
—
-

14,317
13,750
13,494
15,147
14,145
12,615

36
3S
39
37
3
?
34

41
4 j

Arkansas
June 3 0 ,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

1929
1929
I93O
1930
1931
1931

10
i4
11

l
l
1

5 1

61
6

13

28
20 1
20 i

99




—
-

1
1
1
1
3
2

i

101
105
104
10s
99

Oklahoma
June 30,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

12,268
11,702
11,821
10,277
9,i4l
7,888

896
81+1+

36
36
36

1929
1929
I93O
I93O
1931
1931

S
18
9

34,481
33,754
33,926
25,790
21.S93
20,327

$

_
—

30,
31,
30,
31,
30,
31,

7

—
•-

3
3
3
3
3
3

6
6
7
8
9
9

lk1

30,867
30,21+3
30,1+1+2
6l,09l+
57,629
53,945

15
15
15

17
17
17
21
21
19

60

31,763 $
31,087
35,269
65,092
61,53*+
57,429 !

- 1
—

1929
1929
1§30
193O
1931
1931

Texas
June
Dec.
June
Dec.
June
Dec.

9 |$
9

9

kS j
59
59 |
3 1
12

—

3

4,827
3,992
3,905
3,^21+

|

22,213
22,052
22,105
15,513
12,752
12,1+39

1

1929
96
1929 102
1930 100
I93O 102
1931 101
1931 J 94 I

52
61

59 1
57
55

44

-

52

-

j

4i
4i

45
46

i

42

56,536 1

~ xxvi Table

VI - Number and Loans and Investments of Banks in Groups and Chains
by S t a t e s , June 30, 1929-December 31, 193l( 1 ) (Continued)
Loans and i n v e s t m e n t s i n
thousands of ' d o l l a r s
NonState
All
N a t i o n a l member
member
"banks
"banks
banks
"banks

IjUBiuex"

Location of t a n k
All
banks
Western Grain
Minnesota
June 30, 1929 j 2U2
Dec. 3 1 , 1929 276
June 30, 193O 232
Dec. 3 1 , 1930 276
June 30, 1931 270
Dec'. 3 1 , 1931 256

nation- S t a t e Nonmember member
al
"banks "banks banks

101+
123
125
120
117
119

2
2
2
2
2
1

136
151
155
154
151
136

27
3s
42

39

—

59
53
54
53
51
kk

4o,68i
52,515
57,590
55,512
54,6so
^8,317

2S,125
1+0,6S1
1+6,111
44,295
l+l+,204
39,769

~
—
-

12,556
11,834
11,1+79
11,223
10,1+76
8,51+8

$

W+,807 $
544,228
527,30U
537,781
539,753
1+96,198

349,992
430,531
410,272
1+14,319
420,582
404,528

$

1,848 $ 92,967
1,894 111,803
1,687 115,345
1,650 121,S12
1,613 117,558
1,087
90,583

North Dakota
June 30, 1929
Dec. 3 1 , 1929
June 30, I93O
Dec. 3 1 , 193O
June 30, 1931
Dec. 3 1 , 1931

86
91
96
96
95
S3

South Dakota
June 30, 1929
Dec. 3 1 , 1929
June 30, I93O
Dec. 3 1 , I93O
June 3 0 , 1931
Dec. 3 1 , 1931

54
60
62
60
57
53

2k
30
33
32
35
33

3
3
3
3
3
3

27
27
26
25
19
17

38,618
44,572
46,773
43,872
44,893
40,202

28,185
33,457
34,946
32,939
35,639
32,290

1,754
1,828
l,66l
i,54o
1,504
1,16s

8,679
9,287
10,166
9,393
7,750
6,744

Iowa
June
Dec.
June
Dec.
June
Dec.

910
S98
922
sso
873
772

19,914
21,392
19,507
19,551
18,1+56
17,067

IS

30,
31j
30,
31,
30,
31,

1929
1929
193O
193O
1931
1931

79
25
70
64
63
61

31
32
26
22
22
22

1
l
1
1
l
1

47
52
43
l+l
1+0
3S

65,439
84,756
79,260
72,342
73,357
67,359

Ui+,665
62,1+66
58,831
51,911
54,02S
49,520

Nebraska
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

1929
1929
1§30
193O
1931
1931

72
77
61
62
62
53

25
29
2S
29
29
27

••
*
~
-

47
ks
33
33
33
26

35,137
66,785
58,973
63,300
63,242
54,867

20,519
50,031
50,1+Sl
54,796
55,309
4S,S17




—
—
—
-

ii+,6is
16,754
8,1+92
8,50i+
7,933
6,050

-

Table

XXV11

-

VI - lfamber and Loans and investments of Banks in Groups and Chains
by S t a t e s , June 30, 1929-December 31, 1931(1) (Continued)
"M11*

JJiUlUUtii.

Hatim- S t a t e I'Jonmember member
al
"banks "banks banks

L o c a t i o n of t a n k
All
[banks
Missouri
June 30,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,
June 30>
Dec. 31>

1929
1929
1930
1930
1931
1931

31
32
31
28
2S
27

Kansas
June
Dec.
June
Dec.
June
Dec.

1929
1929
1930
1930
1931
1931

Rocky Mountain
Montana
June 30, 1929
Dec. 3 1 , 1929
June 30» 1930
Dec. 3 1 , 1930
June 3 0 , 1931
Dec. 3 1 , 1931
Idaho
June
Dec.
June
Dec.
June
Dec.

30,
31,
3Q,
31,
30,
31,

Loans and i n v e s t m e n t s i n
thousands of d o l l a r r
State
NonAnn
All
National
member
member
banks
banks
banks i banks

10
10 ;
9
s !
9
9

2
2
3
3
3
3

19 :$
20
19
17
16
15

101
103
99
99
100
96

32
3^
35
35
36
33

1
l
1
l
l
l

6S
68
63
63
63
62

64,644
67,677
66,289
6i,4S5
60,545
57,390

42,479
45,310
46,776
42,666
42,4il
40,369

1,455
1,405
1,407
1,298
1,350
1,011

20,710
20,962
18,106
17,521
16,784
16,010

28
4l
1+6
46
45
42

9
17
19
19
is
17

3
5
4
4
4
3

16
19
23
23
23
22

44,1+78
79,750
77,552
74,334
69,623
63,548

15,423
42,302
40,762
40,360
38,929
36,249

23,125
28,925
24,817
22,813
21,362
is,970

5,930
S,523
11,973
11,161
9,332
S,329

11
11
9
10
10
10

3
3
3
3
3
3

27
27
32
32
32 j
32 •

36,79S
38,874
39,368
38,417
36,501
34,124

16,731
18,194
15,700
15,905
14,355
l4,285

8,607
9,233
8,822
9,099
8,687
S,27S

n,46o
11,1+47
14,846
13,413
12,959
11,561

l
l
1
2
3
l

16
16
16
15
l4

19,721
20,171
I9,4s4
18,455
18,691
13,642 !

14,456
14,326
13,502
12,356
12,727
10,268

143
115
142
759
977
122

5,182
5,730
5,84o
5,3^0
4,9S7
3,252

30,
31,
30,
31,
30,
31,

1929
1929
1930:
1930 1
1931
1931

4i
i+i
44
45
45
1+5

Wyoming
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

1929
1929
1930 1
1930J
19311
1931

25
25
25
25
25 1
16 |




j

;
j

:
j
j

8
S
S
8
8
6 :

9 I

160,199 $
151,982
150,017
150,876
146,231
136,i44

32,lbl
29,44l
26,947
26,971
27,099
25,695

$103,177 $ 24,861
98,161
24,380
24,024
99,046
100,640
23,265
95,850
23,282
89,65s
20,791

- xxviii -

Table

VI - Number and Loans and Investments of Banks in G-roups and Chains
by States, June 30, 1929-December 31, 1 9 3 1 U ) (Continued)
Loans and investments : n
i
thoiisands o:r dollars

ATiTm"H^ y*
JiJU-ii

Location of tank

Colorado
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930
1931
1931

Uew Mexico
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

Nation- 1 Statei Nonal member member
"banks franks banks banks

All

1929
1929
1930
1930
1931
1931

10
11
11
11
11

15
lb
1

7
*7
^

16

10 I

9
9 !
6
6
5
5

5
5
4
5
4
4

-J
-

banks

$

1
+

—

27,329 $
27,670
27,790
25,252 j
24,211
22,564

2
l
l
1

i,3«9
1,240

Non^
member
"banks

member
"banks

20,687
20,557i
20,771
1S,674|
17,917
16,465

$ 7,l42
7,H3
7,019
6,572
6,294
6,099

-

2,197
2,255
1,465
1,295
1,217
1,023

3,031
3,173
2,099
1,516

4

State f

National
banks

-

1

834
918
634
221
172
157
.

Arizona
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
19^9
193O
I93O
1931
1931

6
6
6
6
6
; 6

l
l
l
l
l
l

—

Utah
June
Dec.
June
Dec.
June
Dec.

30,
31,
30,
31,
30,
31,

1929 ! 27
1929
26
I93O ! 26
193O
26
I931
25
1931
21

6
6
6
6
6
4

3
4
3
3

Nevada
June
Dec.
June
Dec.
June
Dec.

30,
31,
30,
31,
30,
31,

1929
1929
I93O
I93O
1931
1931

16

4

_

16

5

—




5
5
6
6
6
6

All

v
17
^

16

5
5

i

1

5

4

5
5
5
5
5
5

1
+

17,646
17,660
17,525
15,255
14,729

i

I
I

12
12

9,994
9,970

4,735 i

-

4,175

-

50,514

29,248
3i,44i
29,916
2S t 96o
27,285
24,803

52,290
51,232

50,4o4
4s,223
44,592

12

11
12
12

11,213
11,870
12,059
10,772

l4,i45

17
17
16
17
16
15

2

-

5,233
5,790
5,526
5,023

j
!

23,099
26,230
24,426
24,425
22,432
21,26s

1

2,850
2,377

1

9,m
10,120
9,221

9,295
9,367
2,712 !

6,036
4,4oi
3,206

3,935
—
—
—
-

I8,4i6
18,472
15,886
17,043
16,532
15,254

13,928
16,110
14,605
14,530
13,065

1 12,556

-

Table

XXIX

VI ~ Number and Loans and Investments of Banks i n Groups and Chains
by S t a t e s , June 30, 1929-December 3 1 , 1931V 1 ) (Continued)
Loans and investments i n
;housands of d o l l a r s
NonState
All
National
member
member
banks
banks
banks
banks

MffilUCi.-

L o c a t i o n of bank
All
banks
P a c i f i c Coast
Washington
June 30, 1929
Dec. 3 1 , 1929
June 3 0 , I93O
Dec. 3 1 , I93O
June 30, 1931
Dec. 3 1 , 1931
Oregon
June
Dec.
June
Dec.
June
Dec.

•

Nation- S t a t e Hon- ,
member member
al
"banks banks banks

62
7^
79
SO
81
73

2k
28
33
33
33
32

-

3
5
5
5
1
+

s

$

ki
1+2
43
37

$

lh,6ks

-

76,1+52
80,291
13^,393
126,253
12UJ63
122,620

151,035
155,115
155,050
160,835
ii*3,ii*8

$ ll*,087
25,1*10
25,172
25,816
21,761*

$ 16,677
21,716
22,51*3
21,685
21,325
17,850

68,203
70,331+
124,735
117,386
117,395
116,558

91,325
1S6,SSS
203,068
201,907
207,97^
182,76c

2,182
3,231
2,621
2,312
907
873

6,067
6,726
7,037
6,555
6,1*61
5,189

30,
31,
30,
31,
30,
31,

1929
1929
193O
1930
1931
1931

33
36
36
33
29
26

16
18
19
18
18
16

k
5

l*
3
1
l

13
13
13
12
10
9

California
June 3 0 ,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,
June 30,
Dec. 3 1 ,

1923
1929
193O
1930
1931
1931

! 62
60
| 60
i 52
! 51

35
35
36
31
30
30

2
l j
1
1 !
1
*" !
"

225,942
25
1,95^,330 j 1 , 3 ^ , 5 3 8
2k
1,983,596 1,425,578
229,089 i
2
1,9^2,51U i 1,389,315 i 232,658
3
20 1 1,826,982 1 1,537,579
2ll*,910 i
20 | 1.766.U1I9 1,1*83,081 1 209,131 |
1
1,^73,590 ! 1,1*01,908 i
19

k3

I

( 1 ) See f o o t n o t e ( l ) , Table V




383,850
328,929
320,51*1

7M93

7^,237
71,682

Table

VII - Number and Loans and I n v e s t m e n t s of Banks i n Groups and Chains I n c l u d i n g Matual Savings
and P r i v a t e Banks i n C e r t a i n S t a t e s ^ v J u n e 30, 1929-December 3 1 , 1931
—

|
Location
of bank

'All
U C U .IX1.0

Maine
June
Dec.
June
Dec.
June
Dec.

lumber
Mutual P r i r nation- 1 State [Nonmember member s a v i n g s v a t e
al
banks banks banks banks banks

1929
1929
1930
1930
1931
1931

6
i4
18
IS
19
16

2
6
6
7
8
5

_
-

New Hampshire
June 3 0 , 1929
Dec. 3 1 , 1929
June 3 0 , 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

S
8
8
8
8

2
2
2
2
2
2

Massachusetts
June 3 0 , 1929
Dec. 3 1 , 1929
June 3 0 , 1930
Dec. 3 1 , 1930
June 3 0 , 1931
Dec. 3 1 , 1931

3^
50
51
55
55
46

19
30
30
30
29
25

Connecticut
June 3 0 ,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,
June 3 0 ,
Dec. 3 1 ,

4
11
l4
18
18
17

1
5
5
6
6
6




30,
31,
30,
31,
30,
31,

1929
1929
1930
1930
1931
1931

.

,

,,

-

.

.

—

.

.

.

.

• * .

.

—

10,033
14,665
16,065
21,160
23,183
20,991

..

-

66,201
56,412
66,984
67,559
69,626
68,471

6,839
7,206
7,275
7,680
8,5H
7,550

—
—
-

_
-

533,008
834,701
969,924
917,424
881,786
727,495

280,557
719,599
852,877
748,387
705,690
580,994

—
-

32,949
43,768
77,594
103,247
103,092
93,991!

3,913
7,505
S,o67
26,434
26,260
26,564

3
7
11
10
10
10

I
1
1
1
1
1

«.
-

-

2
2
2
2
2
2

4
4
4
4
4
4

-

6
6
7
7
5

8
12
13
15
16
13

2
2
2
3
3
3

—
_
- j

3
5
8
11
11
10 ,

1
1
1
1
1

:

•

.

..

-

—

-

..

— » . .

.,

Loans and i n v e s t m e n t s i n thousands of d o l l a r s
State
UonMutual P r i AH
National
member s a v i n g s v a t e
member
L/di.jLCk.0
UCJ/J..UXO
banks
banks
banks banks
$

54,830 $
72,287
85,591
90,306
95,930
91.S55

$220,388
67,556
69,202
104,280
102,84o
89,463
—
-

$ 4 3 , 2 3 5 $ 1,562
56,077
1,545
67,968
1,558
1,605
67,5^1
1,680
71,067
1,726
69,13S
249
255
251
251
230
24l

59,113
48,951
59,458
59,628
60,885
60,680

22,344
37,649
37,430
52,116
60,596
44,009

9,719
9.S97
10,415
12,641
I2T660
13,029

29,036
30,770
64,260
71,564
71,674
67,217

-..
5,^93
5,267
5,2^9
5,15S
5,2io

~
-

-

-

Table

VII - Number and Loans and Investments of Banks in G-roups and Chains Including Mutual Savings
and Private Banks in Certain States/1)June 30, 19*29-December 31> 193^ (Continued)

L o c a t i o 11
of bank
New York
June 3 0 ,
Dec. 31>
June 3Q.#
Dec. 3 1 ,
June 30>
Dec. 3 1 ,

ITumber
Nation- S t a t e
Eon- Mutual " P r i All
al
member member s a v i n g s v a t e
"banks
banks banks "banks "banks banks

1929
1929
1930
1930
1931
1931

S3
105
io4
io4
105
96

45
52
52
51
52
45

17
19
19
IS
16
15

20
33
32
3'+
36
35

—
-

Pennsylvania
June 3 0 , •1929
Dec. 3 1 , 1929
June 3 0 , 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3-» 1931

59
60
63
6S
64
5S

20
20
22
29
26
26

12
12
11
11
11
10

25
26
2S
26
25
21

— •
—
-

58
74
77
79
69
63
10
16
20
16
9
6

Michigan
June 3 0 ,
Dec. 3 1 ,
June 30 >
Dee^ 3 1 ,
June 3 0 ,
Dec.. 3 1 ,

1929
1929
1930
19301911
1931

91
130
129
12-9
112
105

10
25
25
25
23
23

11
19
17
15
10

Indiana
June 3 0 ,
Dec. 3 1 ,
June 3 0 ,
Dec* 3 1 i
June 3 0 ,
Dec, 3 1 ,

1929
1929
1930
1930
1931
1931

IS
27
31
29
IS
i4

6
9
9
9
6

1
1
1
1
-




'

t—

Q

1
1
1
1
1
:.i

Loans and i n v e s t m e n t s i n thousands of d o l l a r 3
Mutual P r i lionState
AH
National
member
member savings, v a t e
banks
basics
banks banks
banks
banks
$2,0*41,261 $ 576,399 $1,330,543 $134,319
2,529,214
597,277 1,762,637 169,300
2,67^,035
656,743 1,863,133 154,204
547,004 1,380,383 150,637
2,07s,467
3 , 6 7 2 , 3 4 1 2,114,979 1,384,775 172,154
137,67s 1,262,833 127,104
i,52S,019

2
2
2
2
2
1

S13.146
832,701
S99.319
938,849
981,096
863,465

—
-

12
12
10
10
10
10

416,597
1,099,642
1,100,136
1,072,116
1,037,550
9i4,6l6

—
-

1
1
1
3
3
3

1

1
!
;
1

52,503
83,696
85,773
79,817
47,322

!

4o,6os

-

U.S.
l\i • S .
N.S.
$ 443
433
4o4

359,187
355,955
399,828
467,46o
492,o4o
434,529

356,16s
375,918
350,902
370,673
393,043
350,112

96,536
99,573
147,334
99,442
94,763
77,583

-

1,255
1,255
.1,255
1,274
1,250
l,24l

21..657
316,4so
324,602
314,-844 ;
323,703
715,909

339,549
598,499
586,147
574,732
541,305
63,205

54,34o
183,576
188,327
179*577
171,099
134,606

-

1,051
1,087
1,060
963
943
896

14,701
45,224
42,153
40,433
30,701
27,703

22,291
20,667
21,113
20,021
-

15,449
17,714
22,433
19,207
16,437
12,690

-

62
91
74
156
184
215

Table Til - Jfumber and Loans and Investments of Banks in Groups and Chains Including Mutual Savings
and Private Banks in Certain States/?-'June 30, 1929-December 31, 1931 (Continued)
Number
State
Non- Mutual P r i A l l National
member member savings v a t e
"banks
banks banks banks
banks banks

Location
of 'bank

Texas
June
Dec.
June
Dec.
June
Dec.

30,
31,
30,
31,
30,
31,

1929
1929
1930
1930
1931
1931

107
109
113
112
lib
10b

Iowa
June
Dec.
June
Dec.
June
Dec.

30,
31,
30,
31,
30,
31,

1929
1929
1930
1930
1931
1931

SS

9^
80
70

69
67

39

u

ki
1+2

37

3
3
3
U
U

31
32
27
22
22
22

l
l
l
l
l
l

ho

Hi

H* S-.—not shown.
(1) See footnote (l), Table V.




60
61

6U
o5

67

62

H
7
52

kk
hi

i+o
3S

Loans and i n v e s t m e n t s i n thousands o:f d o l l a r s
Mutual P r i State
NonAll
National
member
member savings v a t e
banks
banks
banks
banks banks
banks

_
-

k
k
k
k
k
3

$102,2+20
12S,35S
126,190
121,1+82
120,Hl6
107,337

% 75.605

_
-

9
9

68,339
S7.672
82,215

1+1+.665
62,H66
59,020
51,911
5^,028
1+9,520

s
r
0

6
6

7^,535
75,^96
69,429

101,595
9S.125

93.50U
90,917

so,307

$ iU.117 $ 1 2 , 3 S ^
13,623
12,826
13J^0
13,951
13,725
13,939
14,088
15,097
lH,308
12,697
910
898
922
880
873
772

19,91^
21,392
19,65719,551
18,456
17,067

—

$ 3l*+
31U
311+
31I+
311+

75
2,900
2,916
2,616
2,193
2,139
2,070

- xzxiii -

Table VIII - Number of Group and Chain Systems, " y Geographic Division ( i )
b
June 30, 1929-December 31, 1931
Geographic
division.

Number
of
systems

Haw England
June 30, 19H9
Dec. 31, 1929
June 30, 193O
Dec. 31, 1930
June 30, 1931
Dec. 31. 1931

7
10
11
12
12
11

Middle
June
Dec.
June
Dec.
June
Dec.

4g
5^
56
55
53
^3

Atlantic
30, 1929
31, 1929
30, 1930
31, 1930
30, 1931
31, 1931

North Central

June
Dec.
June
Dec.
June
Dec.

30,
31,
30,
31,
30,
31.

1929
1929
1930
1930
1931
1931

Southern Mountain
June 30, 1929
Dec. 3 1 , 1929

Ho
42
44
42

35
33
5
7

Geographic
division

June
Dec.
June
Dec.

30,
31,
30,
31,

6
5

1930
1930
1931
1931

Southeastern
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Doc. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

21
21

Southwestern
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931

41
39
3S
37
3S
35

Western Grain
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930

109
107
100
96

(DAc cording to location of head office*




Number
of
systems

2

J
2^

Geographic
division

June 30, 1931
Dec. 3 1 , 1931
^ocfcy Mountain
June 30, 1929
Dec. 3 1 , 1929
June 30, 1§30
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931
P a c i f i c Coast
June 30, 1929
Dec. 3 1 , 1929
June 30, 1930
Dec. 3 1 , 1930
June 30, 1931
Dec. 3 1 , 1931
United
June
Dec.
June
Dec.
June
Dec.

States
30, 1929
3 1 , 1929
30, 1930
3 1 , 1930
30, 1931
3 1 , 1931

- xxxiv *..••-

Table

State by
geographic
division
New England
Maine
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

IX - Nuiriber of Group and Chain Systems, "by Stated •*•'
June 30, 1929-Decernber 3 1 , 1931
.Number

of
systems

1929 i
1929
1930 i
1930 1
1931
1931

I

1
2
2
2
2
2

New Hampshire
Vermont
Massachusetts
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

k

6
6
6
6
5

Rhode Island
June 30, 1929
Dec. 31, 1929i
June 30, 1930 i
Dec. 31, 1930;
June 30, 1931!
Dec. 31, 1931)

l
1
l
1
1
1

Connecticut
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

1
1
2
3
3
3

Middle Atlantic
New York
June 30, 1929
Dec. 31, 1929j




State b y
geographic
division

Number

of
systems

Number

of
systems

New York (Cont.)
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 193I

20
20
IS
15

New Jersey
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
193O
1930
1931
1931

16
IS
20
22
2k
IS

Illinois
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930
1931
1931

S
15

Delaware
June 30, 1929
Dec. 31, 1929
June 30, 1930

1
1
1

Indiana
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930
1931
1931

k

Ohio
June
Dec.
June
Dec.
June
Dec.

1929
1929
1930
1930
1931
1931

Pennsylvania
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

Wisconsin (Cont.)
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

lU
ih
15
13
11
10

Maryland
Dist. of Col.

17
21

State by
geographic
division

North Central
Michigan
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

11
10

Wisconsin
June 30, 1929

7

30,
31,
30,
31,
30,
31,

7
7
7
7
7

15
12
11

5
6

k

2
2
2

3
3
3
3
3

Southern Mountain
West Virginia

lU
13
13
13

Virginia

1

KentuckyJune 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930

1
3
2
l

-

Table

State by
geographic
division

IX - Number of Group and Chain Systems, by Stated)
June 30, 1929-December 31, 1931 (Continued)
j Number 1

State by
geographic
division

of
systems

Kentucky (Cant.)
June 30, 1931
Dec, 31, 1931
Tennessee
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
I93O
1931
1931

4
4
4
4
4
3

South Carolina
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

Southwestern
Louisiana
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

Florida
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,
Alabama
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,




l
l
1
1
1
|

7
6
5
5
4
4

1929
1929
1930
1930
1931
1931

1929
1929
1930
1930
1931
1931

1929
1929
1930
1930
1931
1931

!
i
i
1

6
7
7
7
7
7

1 4
4
4
4
4
4

Number j

of
systems

Mississippi
|
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

1
1

Southeastern
North Carolina

Georgia
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

XXXV

|
!
i
1
|
I

1

Texas
June
Dec.
June
Dec.
June
Dec.

0 1

6 i
7 |
5
5

4
4
4

1929
1929
1930
1930
1931
1931

4
4

30, 1929
31, 1929
30, 1930
31, 1930
30, 1931
31, 1931

Arkansas
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931
Oklahoma
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

6

Western Grain
J Minnesota
I
June 30, 1929
|
Dec. 31, 1929

j Number

IS
IS
IS

of
systems

Minne so ta (Cont. )
j
June 30, 1930
Dec. 31, 1930
June 30., 1931
Dec. 31, I93II
North Dakota
June 30, 1929 1
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931
South Dakota
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 193I
Dec. 31, 193I

35
33
33
30
r

b

5
5
5
5
3
6
5
5
5
4
2

17

16
15

Iowa
June
Dec.
June
Dec.
June
Dec.

b

5
4

30,
31,
30,
31,
30,
31,

1929
13
1929
14
1930 ! 1 2
1930
11
1931 f 1 1
1931
10

2

I

4

| 3
.

i
|
1

1929
1929
1930
1930
1931
1931

State by
geographic
division

1

i 3

12
12

14
14
1 13

37
! 36

|

Nebraska
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

Missouri
June 30,
Dec. 31,
June 30,
Dec. 31,
1
June 30,
!
Dec. 31,

1929
1929
1930
1930
1931
1931

14

1 14
I 12
12
12

9

s

S

7
6
6
6

- xxxvi -

IX - Number of G-roup and Chain Systems, by State'1)
June 30, 1929-December 31, 1931 (Continaed)

Table

b
Stats " y
geographic
division
Kansas
June
Dec.
June
Dec.
June
Dec.

30,
31,
30,
31,
30,
31,

1929
1929
1930
1930
1931
1931

Rocky Mountain
Montana
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931
Idaho
June
Dec.
June
Dec.
June
Dec.

30,
31,
30,
31,
30,
31,

Wyoming
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Dec. 31,

1929
1929
1930
1930
1931
1931

1929
1929
1930
1930
1931
1931

Number

of
systems

25
25

2k
2k
25

2k

3
2
2
1
1
1
3
3
3
3
3
3
3
3
3
3
3
2

State by
geographic
division
Colorado
June 30,
Dec. 31,
June 30,
Dec. 31,
June 30,
Doc. 31,

of
systems

1929
1929
1930
1930
1931
193I

New Mexico
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
Dec. 31, 1931

3
3
3
3
3
7

2
2
l
l
l
1

Arizona
June 30, 1929
Dec. 31, 1929 |
June 30, 1930
Doc* 31, 1930
June 30, 1931 j
Dec. 31, 1931 \

l
l

Utah
June
Dec.
June
Dec.
June
Dec.

5
5
5
5
5

30,
31,
30,
31,
30,
31,

1929
1929
1930
1930
1931
1931

<
* • According to 1
• '
acation < head office.
of




Number !

l
l

l
l

^

State hy
1 i/umber
geographic
of
division
systems
Nevada
June
Dec.
June
Dec.
June
Dec.

30, 1929
31, 1929
30, 1930
31, 1930
30, 1931
31, 1931

2
2
2
2
2
2

Pacific Coast
Washington
June 30, 1929
Dec. 31, 1929!
June 30, 1930!
Dec. 31, 193O
June 30, 1931
Dec. 31, 1931

12
12
13
13
13
12

Oregon
June 30, 1929
Dec. 31, 1929
June 30, 1930
Dec. 31, 1930
June 30, 1931
|
Dec. 31, 1931

k
k
k

California
June 30, 1929
!
Dec. 31, 1929
June 30, 1930
)ec. 31, 193O
!
]
t une 30, 1931
I
tec. 31, 1931

8
9
9
9
9
9

<0

7
5

Table

State

X

- Banks in Leading G-roups: Number of Banks, I\fumber of Branches, and Loans and Investments
by Class of Bank and by State, December 31> 1931

Loans and investments
in thousands of dollars
NationNonState
Hation-j State! NonTotal
al
Total
member
member
al | membe r j membe r
banks
banks
banks

classified

Number of banks

according to lavv
regarding
branch banking

Number of branches
Total

Nation- State Nonmember member
al
banks banks banks

St ate-wide Branch Banking Permitted
Arizona
California
Delaware
Dist. of Col.
Maryland
North Carolina
Ehode Island
South Carolina
Vermont
Virginia

_
2

i 3
i

17

-

—

—
D

$1,000,632 $

93S,140

2,079

408

345

409

346

118

IS

$ 62,492

3,337

-

1 2

-

IS

—

7

5,to6

1

25

Total

1

$1,006,04S|$

940,219|

-

j$65tS29j

3raxich.es R e s t r i c t e d As to Location
Georgia
Indiana
Iowa
Kentucky
Louisiana
Maine
Massachusetts
Michigan
Mississippi
Montana
New Jersey
New York
Ohio
Pennsylvania
Tennessee
Total




IS

11

1

6

1 5

4

_
1
1

2

6
5

i

3

12

5
19
15

2

30

14

5
5
3

34

11

S

i

H
26
29

15

2U9

122

3
27

1

21
7
9
20

13

i\
1
ico 1

$

150,561 $

133,^05

3,672

35,730
45,672
22,933
.79,871
692,177
855,971

35,n^
24,524
15,S33
20,991
572,832

616
4,763
2,224
58,830
29,882
109,084j

58,SSI

700,32s

5,247

53A698
61,306
522,763
93,^16

34~664

51,521
55,147
31^,751
79,193
$3,217,979
$2,038,303

93,706
. 6,159 1
49,457
14,223
$377,913

-

s

8
—
40

1
11

3
31
53
263

237

68
11

2
11

20

JM

.
.

^75

330

85

16

57 1
j

Table

State

X

~ Banks in Leading Groups: number of Banks, Number of Branches, and Loans and Investments
by Class of Bank and by State, December 31> 1931 (Continued)

classified

Loans and i n v e s t m e n t s
i n thousands of d o l l a r s
NationState
Total
al
member
banks
banks

Number of banks
l

a c c o r d i n g t o law
regarding
branch banking

S t a t e NonTotal! Natiar>"
j al
member member

Number of branches
Nonmember
banks

Nation- S t a t e j Nonmember member
Total
al
banks banks J banks

Establishment of Branches Prohibited by Law

1
I
i
!

9
5

22
28
1

I

-

6

-

3
5
l

104

63

7

5

i4
3

8

6

36

i

3

2
22

-52
Total

2

150

—
1
—

—

k
3
16
19
ki

k
2

—
1
1

$

48,645

1,463

-

103,863
4,l64
11,217
124,447

3,985

~

922
9,094

5^974
4,339

239Toil

— !

29T394
r 905
6,081
$ 8,278
167,562 217,637
54~576
65,844
3,137
1,351

18,113
137,880

r

8,953
29,923
2,60S
1*19,366
b22
353,261
2,613
33,^56

107,853

\

190,762

16,880

31.363

268,580 $360,205

4,lS4

6 1
13
_2i

A

50,108 $
38,347
30,838
17,027
805,165
522
407,837
71,594
34,307

0

22

307

1
_•

$

-

-

1 1

1

k

1^3 1 $1,963,366

$1,334,581 $

1

6

-

1

i

- |

1

Alabama
Arkansas
Colorado
Connecticut
Florida
Idaho
Illinois
Kansas
Minnesota
Missouri
Nebraska
Nevada
New Mexico
Oregon
Texas
Utah
Washington
T7est Virginia

6

— j

~
*

"*
"

p

2

—

Q

r

Jt

_i |

_1_

14

12

1 j

1

898

688

6

Ho Provision in State Law Regarding Branch Banking
New Hampshire
North Dakota
Oklahoma
South Dakota
Wyoming
Total
UNITED STATES




32
2

31
10
31

93

72

21

67k

362

32,219 $

7
9
3
2

4l

271

46,661
32,^85
i,°7S
$

113,543 $

31,183
39,773;
31,462
102,418

1*

1,036
6,888

1,523

l,o78
$ 11,125

$6,300,936 $4,415,521 $1,070,343 $815,072

86

124

Table

XI

- Banks in Other Groups: Number of Banks, Number of Branches, and Loans and Investments
by Class of Bank and by State, December Jl, 1931
Loans and investments
in thousands of dollars
NationNonState
Total
al
member
member
banks
banks
banks

iedl
state class!fi
Number of banks
according to Inregarding
Nation- State
MO nTotal
branch banking
al
memberl member!
i
'

Number of branches
Total

Nation- State
Nonal
member member
banks banks ! banks

State-wide Branch Banking Permitted

5

—
—

—
8 j$

1
l

1

1
1

—

—

13

1

Arizona
California
Delaware
Dist. of Col.
Maryland
North Carolina
Bhode Island
South Carolina
Vermont
Virginia

2,90s

I

3

—~~

z.

——

10

1

21

Total

458,44o $452,121

139,201
30,339

2,908
6,294 $
24,180

$

129,378

6,319

1,529
>,159

127 ! 125

14
22

- -j

14

17

5

z.

X

j
10 j $

630,888'$485,503!$
1

129,378 $ l6,007|

i6

3

130

14

19

Branches Restricted As to Location
Georgia
Indiana
Iowa
Kentucky
Louisiana
Maine
Mas sachuse 11 s
Michigan
Mississippi
Montana
New Jersey
New York
Ohio
Pennsylvania
Tennessee
Total




_

_

9

3

-

- I

-

6
6

1 3~

1

1

4 s

-

3!

4

3

-

5

1

-

4 I

49

is

14

19

6

1

j 6

| 3S

e

i

5

3

! -J.

2

^

i4o

52

24

\

17

39,130

1 j

$ 26,44o

-

3 Ms
244 $
20,917
10,258

7,456

18,362

5,436

$ 12,690
3,458

3

3

- :

2,3H
10,258
2,020

8

—

5j

-

-

5

3
5

1 I

64
i

1,111

46,950
39,266

90,826
868,328

82,125
21,101

20
101

7
1

94

24o,o4o

95,4oo
^.956

123,770

20,870
7,307

10
11

1
1

7

2
_10

$1,485,042 $220,505 $1,101,286 $163,251

9 i

-

219,901
928,695

17
13

1,813

158

13

112

33

2,924

12,26^

61

7
6

Table

XI - Banks in Other Groups: Number of Banks, Number of Branches, and Loans and Investments
by Class of Bank, and by S t a t e , December 3 1 , I93I (Continued)

State classified

Loans and investments
in thousands of dollars
State
NationNonTotal
member
al
member
banks
banks
banks

Number of banks

according to 1 ;>r
nation- State Nonregarding
rotal
al
member member
branch banking
1
i
1

Number of branches
Nation- State Nonmember member
Total
al
banks banks banks

Establishment of Branches Prohibited by Law

k j$

1

r
O 1
^ i

-

7

21

15
4
10

1
14
3
j

5

36

8
8

55>34
62,595
13,628
4,324

12

3

i,6i4
17,611
51,946
9,374

1,418 i
!
3,310 !

1,680
8,9 SI

a\

14,767
75,252

12,690
55,544

, S73

17 |

29,000

-

37^323
9,231
4,254
1.014

-

- i

-

23,Si4

2

5,ISO

-

~

-

2

8,662

-

5,606

14,102
!
10,569

z_

m

43 !

9

*
"
*

Z. I

86 !$

297,767 $168,102 $

9,769

-

1

2

1,204

1

1

23
138

i$ 1,498

6,860
32,795

9

1
3

—
12

1

3.112 $

1

Total

-

5

1

Alabama
Arkansas
Colorado
Connecticut
Florida
Idaho
Illinois
Kansas
Minnesota
Missouri
Nebraska
Nevada
New Mexico
Oregon
Texas
Utah
Washington
West Virginia
Wisconsin

-

~

-

-

-

143

126

—

54,086 $ 75,579

No Provision in State Law Regarding Branch Banking
New Hampshire
North Dakota
Oklahoma
South Dakota
Wyoming
Total
UNITED STATES




5

2

3 $

1,146 $

501

5

2

3

$

i,i46 $

501

304

107

34

163

-

$

"645

$

645

$2,414,81+3 $874,611 $1,284,750 $255,482

321

5

Table XII- Banks in Chains: Number of Banks, Number of Branches, and Loans and Investments
by Class of Bank and by State, December 31> 1931
State classified
Bomber of banks
according to law
regarding
Nation- S t a t e
i\ionb r a n c h "banking (Total
al
member member!

Loans and i n v e s t m e n t s
i n thousands of d o l l a r s
NationState
NonTotal
al
member member
banks
banks
banks

Number of branches
Total

Nation- State
al
member
banks banks

State-wide Branch Banking Permitted
Arizona
California
Delaware
Dist. of Col*
Maryland
North Carolina
Rhode Island
South Carolina
Vermont
Virginia
Total

6
13

$ M75

.*

-

11,6^7

9,970
2,871

$ 28,663 $ 15,S22

$ 12,841

1
g

19

10

1
2

Branches R e s t r i c t e d As t o Location
Georgia
Indiana
Iowa
Kentucky
Louisiana
Maine
Massachusetts
Michigan
Mississippi
Montana
New J e r s e y
New York
Ohio
Pennsylvania
Tennessee
Total




6

-

k
55
IS
12
21
23

IS

!

6

50

k

1 —

l -

1

1

k

lU
211

1

I
!

70

$

1,859

! 11

31

22,171

i4,4o6

2

\

2
S
2
3
9
15

k $ 3.757

30,361

2k,kl0

$

1,898

-

-

-

2

-

-

5.891

11

8

-

2

16
-

12,993

!

_
_

8,229
57,7^9
^3
17,^03
16
9 !
4,667
11
163,9^9
7
60,222

2,1+60
15,521
6,075
1.585
55,583
46,891

5,769
25,522
11,328
3,082
102,092
12,297

12

_
-

2k
k

9
h

1
-

39, ^ l

24,378

7,256

2

1

-

130 $413,929 $193,293 $32,508 $188,128

95

22

17

2

5

38

Table XII - Banks in Chains: Number of Banks, Number of Branches, and Loans and Investments
by Class of Bank and by State* December 31» 1931 (Continued)
State classified
Number of banks
according to law
Nation-* State Nonregarding
Total
al
member member
branch banking

Loans and investments
in thousands of dollars
NonState
Nat ional
Total
member member
banks _Jrankg_ banks

Number of branches
Nation- State Nonmember member
al
Total
bankg_ banks
banks

Establishment of Branches Prohibited by Law
Alabama
Arkansas
Colorado
Connecticut
Florida
Idaho
Illinois
Kansas
Minnesota
hissouri
Nebraska
Nevada
New Mexico
Oregon
Texas
Utah
Washington
West Virginia
Wisconsin

1 13 1 6
i -i

J lb
25
2
23

142
16
46
16
! 5
60
12
14
1

_§a

0
r

—

4
10
32

•*
1
1
1
_

10
5

55
5

_
-

23
2

2

6

1 1
1 !

-

1

_2

4,20Q §

1

_ 1

22
4
4

~~

530 : 201

Total

_ 1

3,686
10,SbS

$

161465
20
4
12
62
S6
11
24
12
1

i

j

7

21

22
321

34,?Sb
32,762
56 768
81,501
31,755
20,060
21,268
1,240

1^110
26,479
15,222

27,150
2,243
444
27,150 $
1,011
39,7%
1,027
%,5S7

523
r 252
6,099

—
—
1
_
—
2
—

—
—
—
—
1
—
—
—

3!

1

157

36,851

—
•

1,226
11,168
16,010
30,827

1,083
206
3,013
2,101
1,494

~
~
*
-

„.

17,65^
4,69?
12,556

13,105
13,525
10,039

—
—
-

7,236

15,361
2,712

14,101

—
—

5,799
9,280
3,71+2
.7,052

$427,51S $282,6761$ 9,356 $135,486

—
—
—
1

- 1

—
.
~
_
—
—
—

I

No Provision in State Law Regarding Branch Banking
New Hampshire
North Dakota
Oklahoma
South Dakota
Wyoming
Total
UNITED STATES




1

—

40
75
14

6

—

42
2

34

3

11 i

$ 14,952 $ 8,025
16,763
22,490
7,217
S2S $ 1,168
122
11.964J
10,262

6,867

5,727
5,221
1,574

JL

__1

148

6
56

4

28

$ 56,623 $ 3 5 , 9 ^

$ 19,329

' 908

336

23

549

$926,733 $527,735

$355,244 101

25

17

59

- xliii Table XIII - Number and Loans and Investments of Banks in Two-bank Affiliations
by States, December 31, 1931
Loans and investments
i n thousands of d o l l a r 3
State [ NonAll
1 National
member
membe r
banks
banks
banks
banks

^iTl VtTlT"* *"* "*»

S t a t e by
geographic
division
New England
Maine
New Hampshire
Vermont
Massachusetts
Rhode I s l a n d
Connecticut

•iMuiD

A l l Uation-1 S t a t e 1 I o n al
member member
banks
'banks banks "banks
!

42
4
12 1
11
6
-

23

9

4

Middle A t l a n t i c
New York
New J e r s e y
Delaware
Pennsylvania
Maryland
D i s t . of Col.
North Central
Michigan
Wisconsin
Illinois
Indiana
Ohio

3
6
6

ii

7

152
36
3S
-.
78
129
15

Southern Mountain
West V i r g i n i a
Virginia
Kentucky
Tennessee
Southeastern
North C a r o l i n a
South C a r o l i n a
Georgia
Florida
Alabama
Mississippi
Southwestern
Louisiana
Texas
Arkansas
Oklahoma




!
-

109
1 10

1 k
64

1
1 31

65,565

60

r

1

!

1

319,498
115,747
39,093
164,658
-

314,4s6
21,479

81,626
15,451

12,282
280,725

13,769
24,65s
2i,4o5
6,343

35

-

6S
7
12
16
26
7

665,723
62,525
15,052
109,760
70,535
407,851

269,611
25,595
1.283
72,820
49,130
120,783

174,814
27,182
52,842
5L792

105,726
14,881
20,279
41,955
28,611

s

17
-

'

1
-

24
2
k
S
10

2
1
1
-

28
1

1
1
-

IS 1
9 i
5 1
2

3

k

3
7
2
2
1
1

7|
10 !
10 1

i

\
i

1 23

i

1

~
4

-

1
l

k

65
5
36
l

1

ko

1
i
\
I

5

2k
3
81

36,99S
45,737
25,678
12,736
2,639
—
3.^52
1,232
281,995
78,421
139,014 1
3.107 ;
61,453 !

$ 53,229
l,6l6
12,439
5,532
13,554
20,688

-

1,410,263 $321,107
1,130,143
11,183
77,116
77,487
—
203,004 232,437
-

2,050,SbK
1,257,073
193,696
—
600,099
-

1

1

is

4
2
2

5

53
5
2
13
22
11

20

s

2j
-1

75,801
3.285
11,680
9,494
6,465
~
44,877

s

^

22

32
16

6
51

129,630 $
4,901
24,119
15,026
20,019
—

9

3 I
-

l4
30
US
54
4
12

19
2
S
-

3

26
x

19 $
1

-

26,216
19,06s
2,996
2,134
1,444
574

39,235 ! 29,253
11,182 1 1,119
9,910
28,653
~
9,837
8,387
~
707
I

707
M

-

224,676
45,438
118,128

1,629
59,481

-

2,5^5
~
2,545
~
i

"**

18,814
6,610
9,033
505
—
2,008
65S
54,774
32,983
18,341
1.478
1,972

« xliv *
Table XIII - Number and Loans and Investments of Banks i n Two-bank A f f i l i a t i o n s
by S t a t e s , December 3 1 * 1931 (Continued)
S t a t e by
geographic
division

u,, m,

•NumuKj-

;

ITonA l l Natio ri- S t a t e
al
me nib e r meniber
banks
"banks "banks "banka

ffestern
Grain
Minnesota
North Dakota
South Dakota
Iowa
Nebraska
Missouri
Kansas

164 !
12 I
6
2
50

Rocky Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Nevada

2k
2
-

P a c i f i c Coast
Washington
Oregon
California
UNITED STATES




kk
20
30

r
0

,

6
6 |

31

7
3

1
21
25
8
16

l4
l
-

3
5

3

2
2
-

l
l
-

1 90

^3
l

; 2
1 12 1

5
2
- .
1
2

5
3

l
27
19
11
12

9

51U.914 $
10,479
3,023
2,325
72,312
77,181 1
324,103
25,^91 1

1
«.
1
«.
-

-

3

44

3411,303

l
4
39

3,967

| 76

36

2
1

796

389

^3

6

78 $

Loans and investments
i n thousands <jf d o l l a r s
State
NonAll
National
member
member
banks
"banks
banks
"banks

l
-

3

3

l
l
-

95,923
559
5,329
50,840
13,755 |
2,568
22,372
-

5,105
335,231

324,939 $134,149 $ 55.S26
,1,392
9,087
2,292
731
—
471
1,85^
22,688
21,817
27,307
6,187
70,99*+
21,138
197,757 105,208
1,134
4,090
20,267
66,577
450
5,031
38.783
10,679
2,438
9,196
-

12,057
12,057
_
-

19^,557
3,281
2,569
18SJ07

17,289
109
—
798
3,076
130
13,176
-

io,S73

13S.S73
686
1,005 ;
1.531
9,868 136,656

361+ $^,303,907 $2,696,366 ;$S35,759 $769,722

- xlv Table XIV - Number of Suspended Banks in Groups and Chains,
by States and by Years
State by
1926 1927 1^28 1929 1930 1931 Total
geographic division 1921 1922 1923|1924 1925

l

Southwestern
Arkansas
Oklahoma
Texas
Western Grain
Minnesota
North Dakota
South Dakota
Iowa
Missouri
Nebraska
Kansas
Rocky Mountain
Montana
Idaho
Wyoming
Colorado
Arizona

Utah
Pacific Coast
Washington
Oregon
UNITED STATES




9
9

10

l
2

New England
Massachusetts
Vermont
Middle Atlantic
New Jersey
New York
Pennsylvania
North Central
Michigan
Wisconsin
Illinois
Indiana
Southern Mountain
Kentucky
Tennessee
Southeastern
Georgia
Florida
Alabama
Mississippi

-

1

13
k
3
6

15
k
U
7
ks
13

l
l
—
-

-

-

-

-

-

-

1
1

-

3
-

1+1+
12
2

29

3
5
3

*
.

2

~
~
- !
- 1

-

Ill
80

7
2

30

5

-

-

-

—

—
-

.
-

1
1

- |
- j
- !

-

-

17

-

2
2
~
-

-

~

-'
-

~
..

27

-

-

-

9
3

2

12

3

-

12

1

-

3

0

—

1

-

5
k

28
1

17

11

31

15

-

_

-

2

~

1

~
_

17

16

k

6

3

-

~
-

-

-

1

17
3

-

3

7

3

•
»
_
—
-

k

—
—
—
—
«
*

M

1

-

1
-

1

6

1
2
l
«.
—
-

k

-

-

2
2

7
1

8
1

l
1

-

.
—
—
-

—
-

*
~
-

k
3

—
—
—
—
-

«
•
~
~
—
—
-

mm

~

—

_

mm

1

.
—

-

-

-

-

-

-

1

-

7

- ! 21

2k

19 im

33

~
-

3
1
1

1

6

1

1

1

3

13
-

15
l
l

k
9
60
56
2^

7
3

3
4
U
6

—

l

3

6
-

_
—
—
—
—

1
l

1
-

9

2

29
U
5
3
2

6 167
2 86
63
1
5
3 13
11 103
8 72
20
11
35 168
12 IS
11 71
2 10
3 31
2 13
5 15
10
1
2

3
2
—

28
8
2

—
_
_
.
»
-

-

1

t<
l

1
1

k
k

7
6

-

-

1
_
mm

7
4
6

l

53 112 125 551

Table XV

- Loans and Investments of Suspended Banks in Groups and Chains,
'by State and by Year0

1
State by
geographic division ! 1921 \ 1922

1923

:

New England
Massachusetts
Vermont
Middle A t l a n t i c
New Jersey
New York
Pennsylvania

( i n thousar .ds of d o l l a r s )
19 2U
1926
1927
1925

r

"*

6

j

-

[.

~

-

-

-

-

-

Southern Mountain
Kentucky
Tennessee




-

1930

-

-

$
!

-

-

-

707
707

89,004
12,224
10,727
66,053

79,5^0
7,682
552
71,077
229

83,626
8,389
552
71,077
3,608

-

85,293
59,120
26,113

-

-

-

3,379
••

""
"

-

«*
-

—m

-

-

-

~

$40,502
16,517
23,621

.

8,422
175
2,2^7

„_

-

mm

$28,510
S3
28,1+27

364
$ -951
951!
1

: 1

100
-

!

-

100

3,950! $4,095
1,189; 1,814
2,761!
2,281:

2,500
2,500

Total

40,59s
i 12,224
10,253
\ ^7,932 18,121
48,4o6

3,379
-

1931

:• $1,139 $ 60,795 1$ 61,93^
j 60,795
60,795
|. 1,139
1,139
1

-

Southwestern
Arkansas
Oklahoma
Texas

1929

•

-

North Central
Michigan
Wisconsin
Illinois
Indiana

Stftitheastern
Georgia
Florida
Alabama
Mississippi

-

-

-

-

i

- 1928

25,293
59,180
26,113
9,253
173
1,3^2
2,231+
6,104

2,072
160
89
1,823

89,359
17,10s
61,637
2,323
8,291

30,372
29,823
139
4i6

2,579
2,035
13s
406 i

44,553
35,812
5,538
3,203

Table XV

- Loans and Investments of Suspended Banks in Groups and Chains,
" y States and " y Years (Continued)
b
b
(in thousands of dollars)

State " y
b
geographic division 1921
Western Grain
Minnesota
Worth Dakota
South Dakota
Iowa
Missouri
Ifehraska
Kansas
Rocky Mountain
Montana
Idaho
Wyoming
Colorado
Arizona.
Utah
Pacific Coast
Washington
Oregon
UNITED STATES




$

1922 ' 1923
.
,
,

131
-

131
—

2f96S
_
-

2,968
—

1

1925

1926

-

527

162
933

-

-

-

1,000

8,310

2,926

1,037

3,366

-

-

-

—

83s

-

~
—

2,765

2,286

_
—

-

1*1 i

—
~
—

2,224

2,697

7,95^

2b0

119

281

1,964

_

~
—

2,57S

-

—

^,569
3,104

—
—

—
—

_
—

—

$4,485

-

1927

192s

$2,765 $2J27 $ 2,564 $13,809 $ 4,657 $
-

—
*
»

^35
U35

192^

—

:

i

—

7^
7^
—
—
—

494

320
917
—
_
—
—
~

M

311

-

-

311

1929

3S9 $ 1,384 $

206
119
64

-

—

-

3S8

388

—
—

~
—

—
—

~

672
379
333
—

1930

1931

Total

5,882 $ 11,496 $ 45,804
5,352
3,9^7
S37
10,811
527
2,357
1,496
276
777
1,676
15,462
1,550
256
5,639
539
2,984
1,652
5,289
1,755

I83
183

1,046

204
—

—
-

—
—
-

846
846

997
997

—

-

842

17,53^
1,121
1,964
3,420
4,569
6,072

388
2,589

2,278
311

$4,989 $5,424: $10,518 $54,485 $18,047 $4,872 $32,394 $185,359 $199,123 $519,696

<
?

Table XVI-Number of Suspended Banks in Groups and Chains, hy State
State by
geographic
division

^nder
$150

Size g r o u p — l o a n s and investments in thousands of dollars
'
$150- \ $250- • $500$750- $1,000- | $2,000- $5,000- ' $10,000- J$50,000
and over
2,000
10,000
750 , 1,000
5,000
250
500
50,000

k

Sfew England
Massachusetts
Vermont

_
-

-

Middle Atlantic
Hew Jersey
New York
Pennsylvania

_
-

_
-

-

Iflorth Central
Michigan
Wisconsin
Illinois
Indiana

3

k

7

2

2
1

l
l

_
""
"

-

—
-

1
-

6
3

-

1
I

r

\

0

1
1

-

-

3

l

1

3

3

2
2

-

J
1

3

"2
J

10
-

9

1

—
.

3

1
1
l

.

—
—
-

15
U
k
1

-

1

2
l

10

7

7

3

1

2
-

-

-

~
—

1

-

1

l

ks

5
3

-

5

5

6

3

1

1

k

5

1

-

-

1

-

1

-

-

_
—
-

_
-

_
-

_
~
-

«
.
-

»
»
-

_
-

1
1

4

«,,

-

_
-

2
2

-

63

36

11

12

j

1

1

2k
8

27
12
12

11

19
*
8

-

-

-

-

-

11

1

—

-

3

-

2

~

—
-

_
_
_
-

167
86
63
5

k

10
1
1

1

—

10
1

1
2

3
3
50

Southeastern
Georgia
Florida
Alabama
Mississippi




-

Total

-

Southern Mountain
Kentucky
Tennessee

Southwestern
Arkansas
Oklahoma
Texas

and "by Size of Loans and Investments

19
13

17
13
l

8
8

2
1
1

—
-

1
1

_
-

103
72
20
11

2

}
ik
«

k '

3'
3

3

1

2

u

—.

-

-

_
-

6
4
1
1

-

—
-

13
2
29

k

2

13

Table XVI - Number of Suspended Banks in Groups and Chains, by State- and by Size of Loans and Investments (Continued)
State by
geographic
division

Size . gr
ov.y—loans and investments in theusands of dollars
$250- $500$750- i $i,ooo- $2,000- $5,000- $10,00010,000
1,000 1 2,000
5,000
50,000
250
500
750

$150Under
$150

31

72
5
k
k

7
5

1
—

_

—

2
2
1
1

2

k

~
—
-

—
~

1
1
1
-

6

3

3

3

2

_
~

—
i
i
i
-

-

k
2

U

» • *

k
2

l

—

-

—
-

-

1
~

-

2
1
1
1
2
1
1

.
.
~
"

—

_
"
~

91

38

30

42

2
—
-

1
1

Pacific Coast
Washington
Oregon

—

_
~

UNITED STATES

198

108

3
3

1

1

,

Total

3

—

7
5

Eocky Mountain
Montana
Idaho
Wyoming
Colorado
Arizona
Utah




k

l

2
10

k

6

3

3

9

20
2
3
2

5

10

k

^

hi

Western Grain
Minnesota
North Dakota
South Dakota
Louisiana
Missouri
Nebraska
Kansas

$50,000
and over

2
-

3
-

2
2

168
18
71
10

—
—
—
-

—
—
—
~
—
—
-

—
_
_
-

„.

„.

-

«.
,
—.
.
.
~
—
-

—
~
~

_
—
-

_
*
"
*

..
.
—

_
—
'

|

7

—

1
1

6
l

26

9

9

-

:

1
1

31
13
15
10
28
8
2

7
U
6
l

551

\

Table XVII - Loans and Investments of Suspended Banks in Groups and Chains, by State
and by Size of Loans and Investments, 19^1-1931
State by
geographic
division

Under
$150

$150250

Hew England
Massachusetts
Vermont

-

Mi ddle Atlantic
New Jersey
Uew York
Pennsylvania
North Central
Michigan
Y/isconsin
Illinois
Indiana
Southern Mountain
Kentucky
Tennessee

tivestmenJ;s in thousands c)f dollars
Size, group—loan 3 and i:
$250$500$750- $1,000- $2,000- $5,000- $10,000- $50,000
1,000
500
750
50,000 and over
2,000
5,000 10,000

-

-

760

$

760

8,286
3,^9
3,078
1,799

8,759
3.^93

io,94l
2,549

-

~474

-

$

$

474

-

268 $
233

772
337
206

2,846 $ 3,735
39S
1,379
346
2,356
2,102

229

35

4,336
930

-

-

-

5,949
4,766
768
175
24o

6,486
4,279
1,458

9,775
4,073
4,823

"749

879

Southwestern
Arkansas
Oklahoma
Texas

3,985
2,391*
1,350
24l

3,330
2,671
506
653

6,277
4,838
388
1,051

6,808

—

6,257
551

9,477
9,477

4,904
4,9o4
-

10,478

21,074

-

47,932

8,815

7,175

-

10,478

5,084

47,932

23,189

22,205

10,911

8,392 20,775 22,205
2,4i4

10,911

2,l42
2,142

83,151
57,038
26,113

—

Southeastern
Georgia
Florida
Alabama
Mississippi




$ 5,790 $11,232 $16,428 $ 28,484
28,484
4,651 11,232 16,428
1,139

-

17,024
13,986
1,597
1,441
7,284
4,838
1,188
1,258

—

-

89,oo4
12,224
10,727
66,053

552
71,077
3,608

—

85,293
59,180

26,113

5,005

13,722

3,990
6,i4i

5.005

13,722

-

13,783
13,783

-

4,982

-

$ 61,934
60,795
1,139

83,626
8,389

15,113

4,490
2,384
2,106

Total

89,359
17,108
61,637
2.323
8,291
44,553
35,812
5,532
3,203

Table XVII - Loans and Investments of Suspended Banks in Groups and Chains, by State
and by Size of Loans and Investments, 1921-1931 (Continued)
S t a t e by
geographic
division
Western Grain
Minnesota
North Dakota
South Dakota
Iowa
Missouri
Nebraska
Kansas

Under
$150

$150250

Size group?— l o a n s and investments i n thousands of d o l l a r s
$50 o$250$750- $1,000- $ 2 , 0 0 0 - $5.ooo~ $10,000- $50,000
500
750
1,000
2,000
5,000 10,000
50,000 and over

$ 6,584 $ 8,609 $10,450 $ 5,S67 $ 2 , 5 9 1 $ 4,779 $ 6,924
781
—
510
1,685
956 1,420
-.
530
3.798 3,680 2 , 8 0 3
502
615
379
U14-3
1,252
1,810
1,627
4,779 2,120
3,^31
1,577

393

360
SIS
7S9

707

S18

1,95^
2S1
722
301
262
388

258
680

Rocky Mountain
Montana
Idaho
Wyoming
Colorado
Arizona
Utah

-

—
246
206
-

P a c i f i c Coast
Washington
Oregon

2U2
2H2
—

_
—

UNITED STATES




~

kfk
233

366

6o4
-

746
435
311

1,082

745
573
1,686
—

549
1,137
_.
-.
—

2,U65
_
_
2,465
—
1,601
1,601
—

^,783
—
1,415
—

i,4oi
1,967
_
—

$ 45,804

2,362
2,442
-

—
-

5,121
—
—
2,621
2,500
-

_
~
~
—
-

_
_
—

Total

_
—

—
-

—
-

5,352
10,811
1,496
15,462

5,639
5,289
1,755

—
—
—
-

_
~
«.
—
-

17,53^
1,121
1,964
3.420

_
—

_
—

2,529
2,278
311

mm

$17,735 $20,515 $32,522 $23,000 $25,653 $58,887 $78,689 $6U,712 $197,983

-

4,569
6,072
3S8

$519,696

- t" ~ i'v i i* -

Table
State " y
b
geographic
division

Disposition of Suspended Banks in G-roups and Chains
1921-.1930(1)

XL
'

In process
Disposition Completely Total number
Eeopened Taken!of liquidation not recorded liquidated
suspended
over

Hew England
Ve rmont

mm

1

—

Middle Atlantic
New York
Pennsylvania

1

_
m

~
~

~

Nortil Cental
Michigan
Indiana

1
—

.
~
-

Southern Mountain
Kentucky
Tennessee

1
1
-

~

5U

1
!
j

-

j

1
22
1
20

Western grain
Minnesota
North Dakota
South Dakota
Iowa
Nebraska
Missouri
Kansas

20
l

l

5
•?

«•

1
~
1

:

|
j

3

—
-

k

S

5
3

~

2

26
23

161

1

3

8k

3

%

-

10

6

«
.
—
—
-

92
9

—

10
l
1
1

Q\

17

133
6
60

2

7
6
7

3
3

_
~
—
—
—
-

12

9
4

25

l

2

7

g

5

28
10
11
10

u
1

2
!

19

—

—

6
6

3
l

—

—
-

ij

—

6

i

""
*

-

2
1
1

~

_
~

76
32
32

2

4

-

95
5
50
S

—

2
1
1

—
"

I

2
2

1

_
-

1
1

-

l
2

Ik

_
_
~
-

-

-

«
.
-

37

k

l
1

mm

1

-

2
l

„.

k

2

-

2
1
1

s

1

1

-

59

3
1

-

5

_

11

_

-

«
.

3

_

1
1

~

26
27

Southwestern
Texas
Arkansas
Oklahoma

Pacific Coast
Washington
Oregon

1

1

Southeastern
Georgia
Florida
Alabama
Mississippi

Rocky Mountain
Montana
Idaho
Wyoming
Colorado
Arizona
Utah

1

r

i

j

i

i

|

3

1

i

1

l

2
1

1

UNITED STATES

103

11

252

53

2
.

U26

'!) Disposition at the time the schedules were prepared during the latter half of
1930 and the first naif of 1931.




-

If;;

-

- lviii ~
"POSSIBLE CONTROL OF ELECTIONS OF FEDERAL RESEfiVE B A M DIRECTORS
BY GROUP B A M S IN NI33TH FEDERAL RESERVE DISTRICT

"For purposes of election of class A and class B directors of Federal
reserve banks, member banks in each Federal reserve district are divided into
three groups, each electoral group consisting as nearly as possible of banks
of similar capitalization. Each group of banks is permitted to elect one
class A and one class B director. Each member bank certifies its first,
second, and other choices for a director of class A and class B, respectively.
Only one choice for any one candidate may be voted. A candidate having a
majority of first choice votes is declared elected. In case no candidate
has a majority of first choice votes, the first and second choice votes are
added together and if any candidate then have a majority of electors voting
he is declared elected; if not, the first, second, and other choice votes
are added and the candidate then having the highest number is declared
elected,
"In the ninth Federal reserve district the electoral groups of member
banks are as follows: Group 1 consists of banks having a capital and surplus
of $400,000 and over, Group 2 of banks having a capital and surplus of from
$60,000 to $3991999» a n & Group 3 of banks having a capital and surplus of less
than $60,000. At the end of 1929, there were 6S3 member banks in the Minneapolis district, of which 30 were in Group 1, 299 i n Group 2, and 35^ i n Group 3"The number of member banks in the ninth district belonging to the
Northwest Bancorporation group and in the First Bank Stock Corporation group,
together with the percentage of the number of banks in each of these groups
to the total number of banks in each electoral group are shown below:

Member banks in the ninth Federal reserve district, by electoral groups,
December 31, 1929
j All
member
banks
All member banks
First Bank Stock Corporation:
Number
Per cent of total in group
Northwest Bancorporation:
Number
Per cent of total in group
First Bank Stock Corporation and
Northwest Bancorporation combined:
Number
Per cent of total in group

6S3

Ifamber of "banks in G-roup i G-roup Group

1

2

30

_1_
35U
299

65

7

^7

9-5

23.3

15.7

11
3.1

1^
^3.3

30

12

8.1

10.0

3^

120
17.6

20
66.7

77
25.8

23
65
.

55

i
(l) Includes 1 bank which joined the group in January, 1930*




_hV -

"It will he noted that the First Bank Stock Corporation and the
llorthwest Bancorporation together control bb.7 per cent of the member hanks
Group 1, the group of largest hanks, in the Minneapolis Federal reserve
district; and it is manifest that acting together these two corporations
could easily control the elections of class A and class B directors in this
group hy having the memher hanks which they own vote for a particular candidate. On the "basis of their present holdings, therefore, these two corporations "oy their combined action would he able to place upon the hoard of
directors of the Federal Reserve Bank of Minneapolis a class A director and
a class 3 director from Group 1. Moreover, the First Bank Stock Corporation
and the Northwest Bancorporation together control approximately 25 per cent
of the hanks in Group 2 in the Minneapolis district. While this number is,
of course, not sufficient to control absolutely the elections of class A
and class B directors in the district, it is obvious that by acting jointly,
they could give to any specified candidate a large number of votes and with
some additional votes from independent banks might bring about the election
of the desired candidate. This would be more easily accomplished in an election where there were several candidates in the field, in which case control
of a plurality of the votes might be sufficient to elect. Under some circumstances, therefore, on the basis of present stockholdings, the two corporations acting together might conceivably succeed in electing a class A
and a class B director from both Group 1 and Group 2 in the Minneapolis district, a total of four directors.
"Acting separately, the northwest Bancorporation, owning as it does,
approximately U3 per cent of the member banks in Group 1, could probably control the election of class A and class 3 directors in that group in many
cases, unless the opposition were united on one other candidate. The First
Bank Stock Corporation, however, owning about 23 per cent of the member banks
in Group 1, would probably find it difficult to compel the election of any
candidate in the group unless it were able to obtain the support of at least
some of the banks owned by the northwest Bancorporation, It is doubtful
whether either the First Bank Stock Corporation or the northwest Bancorporation could, acting separately, control the elections of class A or class B
directors in Group 2, as their separate holdings in this group are only about
lo per cent and 10 per cent, respectively.
u

As shown in the above table, the holdings of these two corporations
in member banks in Group 3, the group of smallest banks, are relatively small
and it is very doubtful, on the basis of the present holdings, that much influence could be exerted by these two corporations on elections of class A
and class B directors in this group, unless it be noy moral suasion or some
method other than direct control of votes.
"T/hile the above shows the possibility of the control of elections
of Federal reserve bank directors by group hanking systems, I wish to point
out that there would be no likelihood of similar control of such elections
in the case of branch banking. A parent bank and all its branches constitute but one corporate entity and, accordingly, a member bank with any number




- w-

of "branches v/culd he entitled under the lav/ to only one vote in elections
of class A and class 3 directors* For ezample, if the Northwest Bsncorporation v/ere a memher "bank with a large number of "branches instead of a holding
corporation ov/ning stock in a large number of individual hanks, it would
have only one vote in elections of class A and class B directors, whereas
it now controls a large number of votes as indicated above."

(Source: United States Congress, 71st, 2nd Session, Hearings "before the
House Committee on Banliing and Currency on Branch, Chain, and G-roup Banking
under H. Res. lUl, February 27, 1930, jyp. 125,126.)







_

I VI -

APPENDIX B
Digest of State Laws Relating to the Purchase of Corporate
Stocks by Banks and Trust Companies

) VJ| _

]>34
DIGEST OF STATE LAWS RELATING TO THE PURCHASE OF CORPORATE
STOCKS BY B A M S A1ID TRUST COMPANIES.
(Superseding X~SftOS)

On page 456 of the Federal Reserve Bulletin for July, 1930,
there was published a. digest of State laws relating to the power
of "banks and trust companies to invest in or purchase stocks of
other corporations, including stocks of other hanks and trust companies, which was prepared by the Counselfs office of the Federal
Reserve Board with the assistance of the Counsel to the various
Federal reserve "banks, and which showed the status of the State
legislation dealing with this siibject as of March 1, 1930. The
following digest of the laws of the several states, which was also
prepared by the office of the BoardTs Counsel with the assistance
of the Counsel to the various Federal reserve "banks, supersedes the
digest published in the Federal Reserve Bulletin for July, 1930,
and shows the status of th$ State legislation dealing with the purchase of or investment in corporate stocks " y hanks and trust companies
b
as of August 1, 1932. The digest does not cover permission granted
to banks and trust companies to invest in or purchase stock in municipal or other public corporations, Federal reserve banks, joint
stock land banks, corporations engaged principally in foreign banking operations, safe deposit companies, or similar institutions affiliated in some respects with the business of banking.




ALABA1IA.
Barks and trust companies doing a banking business - Purchase
of stocks permitted, "but amount of stool: in bank limited*

The laws of this State provide that banks and trust
companies doing a banking business "may * * * buy and sell * * *
bonds, stock, * * *."

(Civil Code of Alabama, sec. 6365; Com-

bined Banking Laws of Alabama, 1928, sec. 6365, p. 29). However,
"Ho bank shall subscribe for or own exceeding ten per cent of
the capital stock of any other bank, or invest or have invested
an amount exceeding in the aggregate 25 per cent of its own paid
in capital stock in the capital stock of any other bank or banks.
Any bank acquiring capital stock in any other bank in the usual
course of business in payment of an indebtedness owing to it,
must sell such portion of said stock as is in excess of the
amount which it is permitted to hold and own as herein provided
within one year from the time the same is acquired."

(Civil

Code of Alabama, sec. 6355; Combined Banking Laws of Alabama,
1928, sec. 6355, p. 25.)

ARizom.
Purchase of corporate stocks permitted.
Under the laws of this state, "No ban];, trust company or
loan association, may purchase, own, hold, or sell or otherwise
dispose of the shares of the capital stock of any other corporation, unless, such purchase shall be authorized ^oy the executive committee or approved by the board of directors; and if
the purchase is of stock in a bank the approval of said purchase
must also be had from the superintendent,"




-

l/tf—6-w-

L-34

(Revised Code, 1928, sec. 224),
The term "bank" as used above includes savings banks (Rev.
Code of 1928, sec. 209); but, in another provision of the laws of this
State which enumerates investments that may be made by savings banks,
it is provided that "It shall be "unlawful for any savings bank to invest or loan any of its capital or any of the money of its depositors,
in the shares, stocks or bonds of any mine or mining company or oil
company * * *,"

(Laws of 1929, ch. 32-)
ARKANSAS.

Banks ~ no specific statutory provisions*
There do not appear to be any statutes in this State specifically
authorizing banks to purchase the kinds of corporate stocks covered
by this digest.

However, the laws provide that "no bank shall employ

its moneys, directly or indirectly, in trade or commerce by buying and
selling goods, chattels, wares and merchandise, nor be the purchaser or
holder of its own capital stock, unless such security or purchase shall be
necessary to prevent loss upon a debt previously contracted in good
faith; and stock so purchased or acquired shall, within twelve months
of its purchase, be sold or disposed of at private sale; after
the expiration of said twelve months any such stock shall not
be considered as part of the assets of any bank. Provided, that
it may hold and sell all kinds of property that may come into its
possession as collateral security for loans or any ordinary collection or debts, in the manner provided by law. Provided, further




-

/ * -

1^34

that any goods or chattels coming into its possession as aforesaid shall he disposed of as soon as possible, and after twelve
months from the date of acquirement shall cease to he reckoned
as a part of its assets. rt (C. & M. Dig., sec. 695; Banking Laws,
1931, sec. 28, p. 24.)
Trust Companies - Purchase ^ stocks permitted.
Trust companies are authorized "to "buy and sell all
kinds of * * * stocks, and other investment securities.

n

(Act

of April 13, 1903, sec. 2, p. 228, as amended " y Acts of 1923f
b
Act 627, sec. 10; Banking Laws, 1931, sec. 163, (9), p. 131.)

CALIF0B1TIA.

Banks - General power to purchase corporate stocks denied.
The Bank Act of California provides that tfNo "bank shall,
except as otherwise provided in this act, purchase or invest its
capital or surplus or money of its depositors, or any part of
either, in the capital stock of any corporation unless the purchase
or acquisition

of such capital stock shall be necessary to pre-

vent loss to the bank on an obligation owned or on a debt previously contracted in good faith. Any capital stock so purchased
or acquired shall be sold by such bank within six months thereafter if it can be sold for the amount of the claim of such bank
against it; and all capital stock thus purchased or acquired must
be sold for the best price obtainable by said bank within three




- /*)-

L-34

years after such purchase or acquisition unless the superintendent of hanks shall extend the time of its sale for a period not
to exceed two years,

(California Bank Act, 1931, sec. 37.)

Exception - Stock in one trust company«
However, with the previous written consent of the superintendent of hanks, a commercial bank "may purchase or otherwise
acquire and hold the whole or any part of the capital stock of
not more than one trust company organized and existing under the
laws of this state, and doing business in the same county in which
the principal place of business of such bank is located; provided,
however, that not more than an amount equal to twenty-five per
centum of the capital and surplus of any such bank may be at any
one time invested in the capital stock of such trust company or
such other corporation."

(California Bank Act, 1931, sec. 37).

Savings banks are authorized to make investments of their
funds only in such stocks as are enumerated in the California
Bank Act, and there is not included in this enumeration the kinds
of corporate stocks contemplated by this digest.

(California Bank

Act, 1931, sees. 61, 62 and 145.)
Trust companies - Investment in corporate stocks prohibited*
Trust companies are not authorized to purchase corporate
stocks of the kinds contemplated by this digest for the reason
that investments of their funds are made subject to the provisions




—

/yi! -

-*-$-*
governing the investment of funds by savings banks.

Ir-34
In this connection,

the California Bank Act provides that "every trust conxpany shall invest its
capital and surplus * * *, in accordance with the laws relative to the investment * * * of funds deposited with savings banks, * * *."

(California

Bank Act, 1931, sec. 105.)
C0L03AP0.
Banks may not purchase corporate stocks.
The laws of this State prohibit a bank from purchasing "the
stock of any other corporation, except such as it may necessarily acquire in the protection or satisfaction of previously existing
loans made in good faith."

(Compiled Laws of Colorado, 1921, sec.

2683; Banking Law Pamphlet, 1928, sec. 33, p. 19.)
Savings banks are authorized to make certain investments*
but corporate stocks of the kinds contemplated by this digest are
not included in the classes of authorized investments.

(Compiled

Laws of Colorado, 1921, sec. 2685; Banking Law Pamphlet, 1928, sec*
35, p. 20.)
Trust Companies authorized to buy and sell stocks.
Trust companies "incorporated ijnder the provisions of
this act" are authorized
stocks * * * "•

"To purchase, invest in and sell

(Compiled Laws of Colorado, 1921, sec. 2765;

Banking Law Pamphlet, 1928, sec. 128, p. 66.)




,
— /X!l! -

Ir-34

(X)MECTICUT.
Purchase of corporate stocks permitted up to certain amount.
Banks and trust companies, under the laws of this State,
"may purchase and hold corporate securities of any description, provided the total amount at the purchase price invested in corporate
stocks shall at no time exceed ten per centum of its combined
capital, surplus and undivided profits, and provided its investment
in the stock of any one corporation shall exceed neither five percentum of the stock of that corporation nor three per centum of
such combined capital, surplus, and undivided profits, except that
such corporate stocks as were owned on April 1, 1931, may be retained * * *.n

(General Statutes of Conn,, sec. 3885, as amended

by P. A, 1931, sec. 508a; Banking Law Pamphlet, 1931, sec. 3885,
p. 17.)
Savings banks and banks and trust companies maintaining
savings departments, may make limited investments of their savings
deposits in the stock of certain banks and trust companies located
in the State of Connecticut and in Boston, Mass., New York, N. Y., and
Philadelphia, Pa.,

(Oeneral Statutes of Conn., Revision of 1930, sec*

3908; and sec. 3995 (26); Banking Law Pamphlet, 1931, sec. 3908, p.
28; and sec. 3995 (26) p. 77.)




-—li—•

L~34

DELAWAKE,
Banks and Trust Companies may purchase stocks*
The laws of Delaware provide that "No bank or trust company shall invest more than twenty-five per centum of its total
capital, surplus and undivided profits in the stock, * * *
of any one corporation * * * .^

(Act of March 31, 1931, sec,

13; Banking Laws, 1929, p. 26,)
The term ""bank?1 as used above includes savings banks•
(Act of March 31, 1921, sec. 1; Banking Law Pamphlet, 1929, sec#
1, p. 14.)
FLORIDA.
Banks and Trust Companies may not purchase stocks.
It is unlawful "for any bank or trust company organized
under the laws of this State and doing business in this State, to
directly or indirectly invest any of the f-unds of said bank or trust
company in stock of any incorporated company in this State or elsewhere * * * .«

(Compiled G-eneral Laws of Florida, 1930

Supp., sec*

6084.)
Savings Banks may purchase bank stocks.
The capital and deposits of a savings bank and the income
derived therefrom may be invested "in the stock of any bank incor-




porated under the authority of this State, or the stock of any "banking association incorporated under the authority of the United States
* * *".
Law

(Compiled General Laws of Florida, 1927, sec. 6120; Banking

Pamphlet, 1930, sec. 4179, p. 35)

Trust Companies may purchase stocks.
A trust company in this state "shall have power: * * *
to purchase, invest in and sell stocks, * * *.,T

(Compiled General

Laws of Florida, 1930 Supp., sec, 6126 (10))
NOTE:

It will be observed that there is an apparent
conflict in the laws of this State and it is understood that none of the statutes above referred to has
received judicial construction.
GEORGIA.

Banks may not purchase stocks.
Under the laws of this State "No bank shall subscribe for,
purchase

or hold stock in any other bank * * * nor in any other cor-

poration, unless the same shall have been transferred to it in satis-*
faction of a debt previously contracted

or shall have been purchased

at a sale under a power contained in a note or other instrument by
which it was pledged to the bank or under a judgment or decree in its
favor, and all such stock shall be disposed of by the bank within six
months, unless the Superintendent of Banks shall extend the time for
good cause shown,r?

(Amendments to Banking Act of Georgia approved

August 25, 1927, sec. 10)




The term "bank* as used above includes

- Ixvt —iSr*
savings banks.

3>34

(Banking Act of Georgia, 1919, as amended, 1925,

Article 1, sec. 1.)
Trust Companies operating as investment bankers may deal in stocks
and bonds.
"Trust companies, operating as investment bankers, and
maintaining departments for the purchase and sale of securities,
may purchase for resale whole issues or parts of issues of stocks,
bonds and debentures of industrial, railroad and public service corporations and other investment securities, and may resell and deal
in the same, under such regulations as may be prescribed by the
Superintendent of banks."

(Trust Company Act of 1927, sec. 5A)
IDAHO.

Purchase of bank stocks prohibited.
The laws of this State prohibit a bank from purchasing
"any shares of * * * any other bank wherever organized, or
situated * * * unless such * * * purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and stock so
purchased * * * shall within six months from the date of acquirement be
sold or disposed of at public or private sale; after the expiration of six
months any such stock shall not be considered as a part of the assets of
such bank. »

(Laws of 1925, ch. 133, sec. 29; Banking Law Pamphlet, 1931,

sec. 29, p. 19.)
Savings banks are empowered to make certain investments of
their deposits; but they do not have the power to invest in the kinds
of corporate stocks contemplated by this digest.

(Laws of 1929, ch.

54, p. 73; Banking Law Pamphlet, 1931, sec. 2, p. 53.)




M-44-*

Ir-34

The term "bank" as used in the Idaho laws includes trust con>*
paiiies . (Laws of 1929, ch. 192, p. 353; Banking Law Pamphlet, 1931,
sec, 2, p. 5.)

There is also an express provision providing that trust

companies are authorized to purchase, invest in and sell such securities
as are permitted in the case of commercial banks•

(Laws of 1929, ch*

192, sec* 2; Banking Law Pamphlet, 1931, sec. 5, p. 7.)
ILLINOIS.
Bo Statutory provisions.
The statutes of Illinois do not appear to ^contain any provisions authorizing or prohibiting banks or trust companies to purchase corporate stocks*

IWIMA.
Commercial "banks or trust companies - llo specific statutory provisions*
The statutes of Indiana contain no provisions specifically
authorizing or prohibiting commercial banks or trust companies to
purchase corporate stocks*
Savings banks not permitted to purchase corporate stocks contemplated by this digest»
Savings banks may "invest the money deposited therein" only
in such bonds, notes, etc., as are specifically enumerated, and there
is not included in this enumeration aay corporate stocks of the kinds
contemplated by this digest,

(Acts of Extra Session of 1869, p. 104,

sec. 19, as amended by Acts of 1875, p. 129, Acts of 1893, p. 273, Acts
of 1903, p. 211 and Acts of 1917, p. 416.)




-^^t&^

L-34

IOWA.
Investment in corporate stocks of the kinds contemplated by this
digest prohibited*
The laws of Iowa provide that banks and trust companies
shall invest only in such stocks, bonds, and securities as are specifically enumerated therein, and there is not included in this
enumeration any stocks of the kinds contemplated by this digest,
(Banking Laws, 1931, ch. 413; sees- 9183, 9183-CI; ch. 415, sees.
9269, 9271; ch. 416, sec. 9284; ch. 416-A1, sec. 12772).

These

laws also provide that "Ho state bank, savings bank, or trust company
shall make any loan or discount on the security of the shares of
its own capital stock, or be the purchaser or holder of any shares,
unless such security or purchase shall be necessary to prevent loss
upon a debt previously contracted in good faith; and stock so purchased or acquired shall be sold at public or private sale, or
otherwise disposed of, within one (1) year from the time of its
purchase or acquisition unless the time is extended by the superintendent of banking."

(Banking Laws, 1931, ch. 413, sec, 9184.)
KANSAS.

Banks may not purchase Corporate Stocks*
A bank "shall not invest any of its funds in the stock of any
other bank or corporation * * *."

(Laws of 1897, ch. 47, sec. 11, as

amended by Laws of 1915, ch. 88, sec. 1; Laws of 1921, ch. 70, sec, 1;
Laws of 1927, ch. 88, sec. 2; Banking Law Pamphlet, 1931, sec. 30 r p. 12.)




«-«r-

L-34

The term "bank" as used above includes savings banks. (Laws
of 1897, ch. 47, sec. 35, as amended by Laws of 1907, ch. 64, sec, 1;
Banking Law Pamphlet, 1931, sec. 43, p. 16#)
Trust Companies authorized to purchase stocks.
A trust company in this State may "buy and sell all kinds of
* * * securities and stocks: Provided, that the total investment of
any such trust company in bank stock shall at no time exceed one-fourth
its paid-up capital stock; * * * Provided, that the total investment in
bank stock held by any trust company in excess of one-fourth of its capital
shall be disposed of within two years from the passage of this act.u

(Laws

of 1901, ch. 407, sec. 2, as amended by Laws of 1903, ch. 528, sec.l; Laws
of 1907, ch. 425, sec. 1; Banking Law Pamphlet, 1931, sec. a36(8).4 p. 42,}
KENTUCKY
Ho statutory Provisions.
The laws of Kentucl^y contain no specific provisions with reference to the purchase by banks and trust companies of the kinds of corporate stocks contemplated by this digest* With reference to banks, the laws
do provide that no bank shall employ its moneys, directly or indirectly,
in any enterprise or business except as authorized by law; but the right
to purchase corporate stocks does not appear to be authorized by law*
(Carroll's Kentucky Statutes, 1930, sees. 579, and 582; Banking Law
Pamphlet, 1930, sees. 579 and 582.)




- /x x 7.-34

Trust companies are not authorized expressly to purchase
corporate stocks, hut the laws do

provide that "the capital stock

of a trust company, and the funds in its possession, not held in
a fiduciary capacity, may he invested in such manner as the directors deem prudent and safe; * * *.»
utes, 1930, sec.

(Carrollfs Kentucky Stat-

614; Banking Law pamphlet, 1930, sec, 614).

LOUISIANA.
Purchase of any Corporate Stocks Permitted.
Banks and trust companies are empowered "to receive, hold,
purchase, acquire and convey, "by and under their corporate name,
such property, real and personal, including loonds, stocks and securities ;of the United States, or of any of the United States, or
of any corporation, "board or "body, public or private thereof, as
may he necessary, proper or convenient to the objects of the association, and to exercise in relation thereto, all the direct and
incidental rights of ownership.

t
!

(Laws of 1902, Act. No. 45,

sec, 1 (2) and sec. 7, as amended hy Act No. 238 of 1910, and Act
No. 179, as amended; Banking Laws, 1928, sec. 1 (2), p. 26, sec. 7,
p. 30, sees. 1 -32, pp. 3-21)

MAINE.

"Trust and hanking companies" - No specific statutory provisions*
"banking
The/laws of Maine do not contain any provisions expressly
authorizing "trust and hanking companies" to purchase corporate




-

,X

*>

-

1-3.

stocks, hut the laws dc give such companies the power Hto hold and
enjoy all such estate, real, personal and mixed, as may " e obtained
b
n

oy the investment of its capital stock or any other moneys and funds

that may come into its possession in the course of its "business and
dealings, and the same sell, grant and dispose of; * * *•"

(Public

Laws, 1923, ch. 144, sec. 61; Banking Laws, 1931, sec, 61, p. 30.)
Savings "banks may invest in stock of certain corporations and banks. ~
Ano"unt of investment limited,
With reference to savings batiks, the laws provide that they
"may hereafter invest their funds as follows, and not otherwise:
* * * * * * * * * * * * * * * * * * * * * * * * *

"SIII ***

(a)

In the stock of any Maine corporation, other than a

banking corporation, actually conducting in this state the business
for which such corporation was created, provided such corporation
has for a period of three years next preceding the investment earned
and received an average net income equivalent to at least six per cent
upon the entire outstanding issue of the stock in question,
"(b) The aggregate of all investments made by any bank in
stock shall at no time exceed five per cent of its deposits,
and not more than one per cent of the deposits of such bank
shall be invested in the stock of any single corporation.
I o such bank shall hold by way of investment or as security
T
for loans, or both, more than one-fifth of the capital stock




— I *X ! —
/
"of any corporation; "but this limitation shall not apply to assets
acquired in good faith upon judgments for debts or in settlements to
secure debts,"

(Public Laws, 1923, ch. 144, as amended, sec. 27;

Banking Law Pamphlet, 1931, sec. 27, pp. 9 and 18.)
H

XX. **

In the capital stock of any "bank in this state in-

corporated under the laws of this state or the United States; and in the
capital stock of any "bank in any of the other states of New England or
in the state of New York incorporated under the laws of any of those
states or the United States and located in a city having a population of
not less than two hundred and fifty thousand; provided, that any such
bank located outside of this state shall be a member of the Federal Reserve
Bank System and shall have a capital and undivided profits of not less than
ten million dollars.
"A savings bank shall not hereafter acquire bank stock, both by
way of investment and as security for loans, which, together with its
present holdings, shall be in excess of seven and one-half per cent of its
deposits; nor shall hereafter acquire stock in any one bank which, together
with its present holdings shall have a book value of more 1 h a one per
*.n
cent of its deposits; nor shall hereafter acquire bank stock, which,
together with its present holdings, shall exceed ten per cent of the
capital of any one bank."

(Banking Lav; Pamphlet, 1931, sec. 27, p. 19#)
MARYLAUD.

Purchase of Corporate Stocks permitted to Trust Companies.
A trust company is given the power nto exercise, by its directors,
duly authorized officers or agents, all such powers as shall be usual in
carrying on the business of "banking * * * by purchasing, investing in and
selling stocks, * * * and other securities * * * M .




(Laws of 1910, ch. 219,

«- 19- a
•

-

L~34

as amended "by Laws of 1931, ch. 429, sec. 46; Banking Law Pamphlet, 1931,
sec. 46 (9), p. 25.)
Banks ~ Ho specific statutory provisions.

x

There do not appear to he any provisions in the laws of Maryland
specifically authorizing or prohibiting hanks to purchase corporate stocks.
MASSACHUSETTS.

Purchase of Corporate Stocks ~oy Trust Companies permitted.
A trust company nay "invest its money or credits, whether
capital or general deposits, in the stocks, honds or other evidences of
indebtedness of corporations or of associations or trusts, * * * M
(General Laws, Ch. 172, sec. 33; Trust Company Pamphlet Laws, s e c 33,
p. 21.)




_ /AX\ V -

L-34

Limitation upon Purchase of Stocks in other Trust Companies.
The laws provide, however, that " T trust company shall
Io
hold more than ten per cent of the capital stock of any other
(General Laws, Ch. 172, sec. 43; Trust Company

trust company".

Pamphlet Laws, sec. 43, p. 23.)
Savings Banks may Purchase Certain Bank and Trust Company Stocks**
Amount limited.
Savings "banks may invest their deposits and income derived therefrom

r,

In the stock of a trust company incorporated under

the laws of and doing "business within this commonwealth, or in the
stock of a national hanking association located in the New England
States and incorporated under the authority of the United States,
which has paid dividends of not less than four per cent therein in
cash in each of the five years next preceding the date of such investments and the amount of whose surplus is at least equal to fifty
per cent of its capital; hut a savings hank shall not hold, "both
hy way of investment and as security for loans, more than twentyfive per cent of the stock of any one such company or association,
nor shall it hold hy way of investment stock of such companies
and associations having an aggregate initial cost in excess of
fifteen per cent of the deposits of such savings hank, or stock of
any one such company or association having an initial cost in excess
of one per cent of the deposits aforesaid."

(General Laws, ch. 168,

sec, 54, (7th), as amended hy Acts of 1929, ch. 315; Savings
Banks Pamphlet Laws, sec. 54 (7th), p. 39.)




_ / XX V -

L~34

MI CHI GAIT.

Purchase prohibited of hinds of corporate stocks contemplated by
this digest*
The laws of Michigan provide that " a ? s and trust
bni
companies may only purchase certain specifically enumerated stocks,
bonds and other securities, and this enumeration does not include any
of the stocks contemplated hy this digest.

(Laws of 1919, Act. ITo.

94, sec. 1; Laws of 1929, Act No. 6S, sec. 4 and Act No. 67, sec.
24; Laws of 1931, Acts Ho. 14 and Ho. 238.)
MEfcTESOTA.
Purchase of corporate stocks contemplated by this digest not permitted.
The statutes of Minnesota provide that "banks and trust
companies may only purchase or invest in such stocks, bonds, etc.,
as are specifically enumerated, and there is not included in this
enumeration any of the stocks contemplated by this digest. (G-.S.
1923, sees. 7649 and 7663; sec. 7714, as amended by Laws of 1927, ch.
368 and ch. 422, and hy Laws of 1931, ch. 296; and sees. 7716, 7735,
7738, 7740 and 7810).
MISSISSIPPI.
Purchase of hank stocks prohibited.
f
The laws of this State provide that tl o part of the stock
T

of any bank * * * shall he owned hy any hank under the provisions
of this act. Any such stock owned hy any bank at the time this act




!

L-34

takes effect shall he disposed of within twelve months after such
time.

In cases where such stock is taken as collateral and the

purchase thereof shall " e necessary to prevent loss upon a
b
debt previously contracted in good faith, then in such cases
such stock shall " e sold hy the bank within twelve months from the
b
time that it was required."

(Laws of Mississippi, 1922, Chap. 172,

sec. 49; Brown1s 1925 Miss, and Federal Statutes pertaining to
Banks and Banking, P. 71.)
The term "bank" as used in the banking laws of Mississippi
includes trust companies and savings banks.

(Laws of Mississippi, 1914,

chap. 124, sec. 66; Brown1 s 1925 Miss, and Federal Statutes pertaining to Banks and Banking, p. 72.).
MISSOURI.
Purchase by Trust Companies of Corporate Stocks permitted but amount
limited.
A trust company in this State is authorized "To buy, invest
in and sell all kinds of * * * stocks or other investment securities.,?
(Rev. Stats, of Mo., 1929, sec. 5421).

The laws provide, however, that

such a company "shall not invest or keep invested in the stock of
any private corporation an amount in excess of fifteen per centum of
the capital and surplus fund of such trust company; nor shall it purchase or continue to hold stock of another bank or trust company
if by such purchase or continued investment the total stock of such
other bank or trust company owned and held by it as collateral will
exceed fifteen per centum of the stock of such other bank or trust
company:

Provided, however, that this limitation shall not apply

* * * to the ownership by such trust company or its stockholders of




a part or all of the capital stock of one bank organized under the
laws of the United States or of this State."

(Paragraph 9, sec. 5429,

Rev. Stats, of Mo., 1929)
There are no statutory provisions in this State governing the
purchase by "banks of the kinds of corporate stocks contemplated by this
digest.
MONTAITA.
Banks prohibited from -purchasing stocks.
A commercial or savings bank is prohibited from purchasing
or investing "in the capital stock of any corporation, unless the
purchase or acquisition of such capital stock shall be necessary to
prevent loss to the bank on a debt previously contracted in good faith.
Any capital stock so purchased or acquired shall be sold by such bank
within six months thereafter, if it can be sold for the amount of the
claim of such bank against it; and all capital stock thus purchased or
acquired must be sold for the best price obtainable by said bank within
one year after such purchase or acquisition."

(Laws of Montana, 1927,

Chap, 89, sec. 39; Banking Laws, 1927, Sec. 39, p. 32.)
Trust Companies authorized to purchase stocks.
The laws of Montana authorize the organization of a trust
company which may invest in corporate stocks and other securities,
and also provide that:

"The board of directors of any such corpora-

tion is authorized to invest the capital and assets of said corporation
* * * in * * stocks and bonds of corporations * * *."

(Laws of Montana,

1927, Chap. 89, sec. 4(c) (8), and sec. 26; Banking Laws, 1927, sec. 4
(c) (8), and sec. 26.)




7

L-34

Investment Companies may purchase stocks.

The laws of Montana authorize the formation of investment
companies with the power to receive deposits.

These companies are

authorized to buy and sell stocks as well as other securities,
(Laws of Montana, 1927, Chap. 89, sec. 4(d); Banking Laws, 1927,
sec. 4(d).)

lTS3HASiq>
Banks - Purchase of Corporate stocks prohibited.
The laws of this State provide that no "bank "shall * * *
he the purchaser or holder of * * * the shares of any corporation, unloso

such * * * purchase shall he necessary to prevent loss upon

a deht previously contracted in good faith; and such stock so purchased or acquired shall, within six months from the time of its
purchase " e sold or disposed of at public or private sale; or in
b
default thereof, a receiver may he appointed to close up the "business
of the hank: Provided, in no case shall the amount of stock so
held exceed ten per cent of the paid-up capital of such "bank."
(Comp. Stats, of Nebraska, 1929, sec. 8-137; Banking Law

Pamphlet, 1931,

sec. 8-137,p. 11.)
Savings banks are not permitted to purchase corporate stocks*
(Comp. Stats, of Nebraska, 1929, sec. 8-155; Banking Law
sec. 8-165,p. 14.)




Pamphlet, 1931

L~34
_

/ X Xffi ~-g4=ar—

NEBRASKA.

Trust companies - Except for stock in other trust companies and
certain corporations, may purchase corporate stocks.
Trust companies in this State have the power

,f

To "buy,

hold and own and sell * * * stocks, * * * and other investment
securities, * * * except * * * stocks of any corporation that
have not earned annual dividends of at least four per cent

per

annum for at least three years just prior to the date of such
purchase and stock of any corporation organized under this article"
(trust company).

(Comp. Stats, of Nebraska, 1929, sec. 8-206;

Banking Law Pamphlet, 1931, sec. 8-206, p. 27.)




KEVADA.
Purchase of corporate stocks prohibited*
Under the laws of this State, n!To bank shall * * * invest
any of its funds in the stock of any bank or trust company or
corporation. * * * •"

(Comp. Laws of 1929, sec. 662; Banking Law

Pamphlet, 1931, sec. 13, p. 8.) the word ""bank" as thus used includes
savings banks and trust companies.

(Comp. Laws of 1929, sec. 724;

Banking Law Pamphlet, 1931, sec. 75, p. 24.)

HEW HAMPSHIRE.

Purchase of Corporate Stocks permitted.
Trust companies are authorized and empowered "to negotiate,
purchase and sell stocks, bonds and other evidences of debt; to do
a general banking business; and to conduct a savings department.M
(Public Laws, ch. 265, sec. 31; Banking Law Pamphlet, 1931, sec. 31,
p. 46.)
Limitation upon such purchase.
The laws of this State provide, however, that "The total
liabilities of a person, firm or corporation, including in the
liabilities of a firm the liabilities of its several members,
for money "borrowed of the commercial department of a trust com-




i

L~34

pany or other corporation of a similar character, whether organized
under the provisions of this chapter or otherv/ise, shall at no time
exceed ten per cent of its capital stock actually paid in and surplus, nor shall such corporation purchase or hold, " y "way of investb
ment, the stocks and "bonds of any corporation to an amount in excess
of said ten per cent.1'

(Public Laws, ch. 265, sec. 37; Banking

Law Pamphlet, 1931, sec. 37, p. 47.)
Savings Banks and Savings Departments of Banks and Trust Companies.
Subject to- certain conditions, savings banks and savings
departments of banking and trust companies may make limited investments in the capital stock of banks, trust companies and certain other
corporations.

(Public Laws, ch* 260, sec. 16; ch. 262, as amended by

ch. 39, Laws of 1927, ch. 122, Laws of 1929, and ch. 96, Laws of
1931, sees. 1, 7, 8, 9, 12, 13, 14, 15; Banking Law Pamphlet, 1931,
sec. 16, p. 8, sees. 1, 7, 8, 9, 12, 13, 14, 15, pp. 21, 25-32.)
HEVT JERSEY.
Banks (other than savings ba.nks) and Trust Companies authorized to
purchase Corporate Stocks.
Banks (other than savings banks) "in addition to the power
and authority now conferred wpon then, shall be authorized to
purchase, invest in and sell stocks of corporations'1.

(Laws of

1927, ch. 12, Banking Law Pamphlet, 1932, sec. 10, p. 58.)




L-34

- 29 =~
Trust companies are authorized "to purchase, invest in
and sell stocks * * * and other securities; * * *»t#

(Laws of

1899, ch. 174, sec. 6 (10); Banking Law Pamphlet, 1938,fi-cc,S (10),
p. 79,)
Savings banks may only invest in certain specifically
enumerated securities, and there is not included in this enumeration any of the corporate stocks contemplated by this digest.
(Laws of 1931, ch- 167.)
mm MEXICO.
Commercial banks and trust companies - Ho express statutory provisions.
There do not appear to be any provisions in the banking laws of
New Mexico expressly permitting or prohibiting commercial banks
and trust companies to purchase stocks in other corporations.
Trust companies, however, are authorized ,!* * * to purchase,
invest in and sell all kinds of * * * investment securities'1.
(1929 New Mexico Statutes Annotated, sec. 13-303, paragraph 7;
Bank Code, 1929, sec, 60(7)t p. 22); and, with reference to
banking
commercial banks, the/laws of New Mexico provide that » * * *
no bank shall at any time have invested more than thirty per
cent of its unimpaired capital and surplus in the notes, bonds:
or other securities of any person, firm or corporation * * * n .
(1929 New Mexico Statutes Annotated, sec. 13-137; Bank Code,
1929, sec. 36, p. 15.)
Savings banks may only invest their deposits in certain
specifically enumerated securities, and there is not included




-

/ X JX * M >

-

—&8-

L-34

in this enumeration any of the corporate stocks contemplated " y
b
this digest*

(1929 New Mexico Statutes Annotated, sec. 13-201;

Bank Code, 1929, sec. 56, p. 20.)

NEW YORK.
Trust companies permitted to purchase stocks.
Trust companies have the power "to purchase, invest in
and sell stocks * * * and other securities; * * *".

(Banking

Law, sec. 185 (9).)
Limitation upon purchase of corporate stocks.
A trust company "Shall not invest or keep invested in the
stock of any private corporation an amount in excess of ten percenfruin of the capital and surplus of such trust company; nor shall
it purchase or continue to hold stock of another moneyed. cor~
poration if Dy such purchase or continued investment the total
stock of such other moneyed corporation owned and held " y it
b
as .collateral will exceed ten per centum of the stock of such
other moneyed corporation, * * * ' » .

(Banking Law, sec, 190 (9).)

Banks ~ Ho statutory provisions, "but purchase generally of
corporate stocks held prohibited.
Banks proper and savings banks are permitted to purchase
certain classes of corporate stocks, but none of these stocks
is of the type contemplated by this digest.
106 and 239.)




(Banking Law, sees.

—29-^.
The banking department of the State of New York has held
that banks have no authority to buy stocks other than those
classes above referred to, and the courts in this State have
rendered decisions to the effect that banks can not purchase
stocks of other corporations for the purpose of selling at a
profit, can not become stockholders in a railroad corporation,
and can not purchase State stocks to sell at a profit.

NORTH CABOLIIIA..

Purchase of Corporate Stocks permitted, but amount of purchase
limited.
"No bank shall make any investment in the capital stock
of any other State or National bank; Provided, that nothing
herein shall be construed to prevent the subscribing to or purchasing of the capital stock of * * * central reserve banks,
having a capital stock of more than one million dollars; by
banks doing business under this chapter, upon such terms as may
be agreed upon.

To constitute a central reserve bank as con-

templated ^oy this chapter, at least fifty per cent of the
capital stock of such bank shall be owned by other banks."
(Dode of North Carolina, 1931, sec. 220(c); Banking Laws,
1931, sec. 220(c), p. 20.)
Limitations upon Furchase of Stocks.
"The investment of any bank in the capital stock of
such central reserve bank * * *, shall at no time exceed ten




L

-

/ X * * • v' -

L-34

~-«e—
per cent of the paid-in capital and permanent surplus of the
hank making same, Uo "bank shall invest more than fifty per
cent of its permanent surplus in the stocks of other corporations, firms, partnership, or companies, unless such stock is
purchased to protect the hank from loss. Any stocks owned or
hereafter acquired in excess of the limitations herein iiijposed
shall he disposed of at public or private sale within six
months after the date of acquiring the same, and if not so disposed of shall be charged to profit azid loss account, and no
longer carried on the bocks as an asset.

The limit of time in

which such stocks shall be disposed of or charged off the books
of the bank may be extended by the commissioner of banks if in
his judgment it is for the best interest of the bank that such
extension be granted."

(Code of North Carolina, 1931, sec.

220(c); Banking Laws, 1931, sec. 220(c) p. 20.)
Commissioner of banks may suspend limitations on amount may purchase.
"The board of directors of any bank may, by resolution
duly passed at a meeting of the board, request the commissioner
of banks to temporarily suspend the limitations on loans and
investments as same may apply to any particular loan or investment, which said bank desires to make in excess of the provisions
of sections 220(b), 220(c), * * * . Upon receipt of a duly
certified copy of such resolution, the commissioner of banks
may, in his discretion, suspend the limitations on loans and
investments in so far as it would apply to the loan or investment




which such bank desires to make."

(Code of ITorth Carolina, 1931,

sec. 220(e); Banking Laws, 1931, sec. 220(e), p. 21.)
Purchase of Stock of Corporation Owning Laaid or Building used by Bank,
A bank may invest "fifty per cent of its unimpaired capital
and permanent surplus in the stock or bonds of a corporation owning
the land, building or buildings occupied ^oy such bank as its banking home11 and a bank may not be compelled "to surrender or dispose
of any investment in the stock or bonds of a corporation owning
the lands or buildings occupied "oy such bank as its banking home,
if such stocks or bonds were lawfully acquired prior to the ratification of this Act; Provided further, however, that the commissioner of banks may, in his discretion, authorize banks located
in cities having a population of more than five thousand, according to the latest United States census, to invest an amount
greater than fifty per cent of its unimpaired capital and permanent surplus in the stocks or bonds of a corporation owning
the land, building or buildings occupied by such bank as its
banking home."

(Code of ITorth Carolina, 1931, sec. 220(b);

Banking Laws, 1931, sec. 220(b), p. 19.)
Definition of term "bank".
"The term ^ank* shall be construed to mean any corporation,
partnership, firm, or individual receiving, soliciting, or accepting money or its equivalent on deposit as a business: Provided,
however, this definition shall not be construed to include building and loan associations, Morris -olan co moanie s, industrial banks




-r~3g^
or trust companies not receiving money on deposit."

L~34
(Code of North

Carolina, 1931, sec. 216(a); Banking Laws, 1931, sec. 216(a), p. 3.)
NORTH DAKOTA.
Piirchase of Corporate Stocks " y Banks prohibited.
b
Except for the authority to invest in the kinds of corporate
stocks not contemplated by this digest, the laws of North Dakota
provide that

"No "bank, except as in this section specifically author-

ized, shall * * * employ or invest any of its assets or funds in the
stock of any corporation, bank, partnership, firm or association, nor
shall it invest any of its assets in speculative margins of stocks,
bonds, * * *.w

(Laws of 1931, ch. 96, sec. 33, p. 145.)

The above prohibition is expressly made applicable to savings
banks.

(Laws of 1931, ch. 96, sec. 49 (i) , p. 1590
OHIO.

Banks (other than savings banks) not permitted to purchase
corporate stocks of kinds covered by this digest.
Banks, other than savings banks, are authorized to make certain
investments of their capital, surplus, undivided profits and deposits
in certain securities, stocks and bonds, but apparently they are not
authorized to make investments in the kinds of corporate stocks
contemplated by this digest.

(Throckmorton1s Code of 1930, sees. 710-

111, 710~llla, 710-121; Banking Law Pamphlet, 1931, sees. 710-111,
710-llla, 710-121.)
Savings banks - purchase of bank stocks forbidden, but "stocks
of companies" may be purchased*
A savings bank is empowered to invest its funds in
"stocks of companies, upon which or the constituent companies




comprising the same, dividends have been earned and paid for five
consecutive years next prior to the investment and stocks of companies taken on a refinancing plan involving an original investment, which was legal at the time it was made: provided, every
such investment shall be authorized by an affirmative vote of a
majority of the board of directors of such savings bank"; but "No
purchase or investment shall be in the stock of any other corporation organized or doing business under the provisions of Section
710-41 (concerning incorporation of commercial and savings banks
and trust companies) or Section 710-180 (concerning special plan
banks) of the General Code or of the National Banking Act of the
United States",

(114 Ohio Laws, p. 153, sec. 1, amending Throck-

morton's Code of 1930, sec. 710~140(b); Banking Law Pamphlet,
1931, sec. 710-140(10, P*

59

)

Trust Companies - Purchase of bank stocks prohibited, but other corporate stocks may be purchased.
"A trust company may invest in * * * stocks and bonds of corporations when authorized by the affirmative vote of the board of
directors, or of the executive committee of such trust company" but
the prohibition against savings banks purchasing b n - or trust comalc
pany stocks is also imposed upon trust companies.

(Throckmorton's

Code of 1930, sec. 710-1665 Banking Law Pamphlet, 1931, sec. 710-166,
p . 680)

OKLAHOMA
Banks - Purchase of any kind of corporate stocks prohibited.
A bank "shall not invest any of its funds in the stock of
any other bank or corporation * * *•"




(Oklahoma Statutes, 1931,

w-S4r3-

L-34

sec* 9135; Banking Laws, 1926, sec. 11, p. 15.) The Constitution
of Oklahoma also provides that "No trust company, or bank or banking company shall own, hold or control in any manner whatever, the
stock of any other trust company or bank or banking company, except
such stock as may be pledged in good faith to secure bona fide
indebtedness, acquired upon foreclosure, execution sale, or otherwise for the satisfaction of debt; and such stock.shall be disposed
of in the time and manner hereinbefore provided,"
months from the date of acquisition).

(within twelve

(Constitution of Oklahoma,

Article 9, sec. 41#)
Trust Companies ~ May purchase any kind of stocks, except in a
bank or in another trust company.
Trust companies are given the power "to buy and sell * * *
all kinds of * * * stocks, and other investment securities".
(Oklahoma Statutes, 1931, sec, 9206; Banking Laws, 1926, sec,
119(9), p. 64.)
In view of the above provision of the Oklahoma Constitution
prohibiting a trust company to "hold or control in any manner
whatever, the stock of any other trust company or bank or banking
company", it would seem that the power given to trust companies to
"buy and sell * * * all kinds of * * * stocks, and other investment
securities", is restricted in so far as the provisions of the
Oklahoma Constitution are arrolioable,

03EG0N,.
Purchase of corporate stocks prohibited^




Except for the authority to -ourchas\ certain classes of

corporate stocks not contemplated by this digest and except for stock
acquired or purchased to save a loss on a preexisting debt, the laws
of Oregon provide that "Hereafter no bank or trust company shall invest any of its assets in the capital stock of any other corporation".

In case stock is purchased or acquired to save loss

on a preexisting debt, such stock must be sold "within 12 months
of the date acquired or purchased, or within such further time
as may be granted by the superintendent of banks".

(Oregon Code,

1930, sec. 22-911; Banking Law Pamphlet, 1930 sec. 22-911, p.46)
Savings banks and savings departments of banks or trust
companies are not authorised to invest funds in the kinds of
corporate stocks contemplated by this digest.

(Oregon Code, 1930,

sec. 22-1109, as amended by Laws of 1931, ch. 278, p«454.)
PENNSYLVANIA.
Banks (other than savings banks) and trust companies permitted
to purchase corporate stocks„
The laws of Pennsylvania provide that "any corporation
created by general or special laws, may purchase, hold, sell,
assign, transfer, mortgage, pledge, or otherwise dispose of, the
shares of the capital stock of * * * any other corporation or
corporations, public or private, of this or any other State * * *
and while the owner of said stock may exercise all the rights,
powers and privileges of ownership, including the right to vote
thereon".

(Act of July 2, 1901, Public Laws, p. 603, as amend-

ed by Acts of Inarch 27, 1929, Public Laws, p* 74, and April 18,
1929, Public Laws, p. 544*)




There are no statutory limitations in Pennsylvania upon the
right of State banks, other than savings banks, and trust companies
to purchase stocks of other corporations, and it has been considered that such institutions have the right, under the provisions of
the Act of July 2, 1901, as amended, to purchase

such stocks.

Savings banks, however, do not possess the right
their funds in

stocks of other corporations.

t t invest
c
Such banks,

by the provisions of Section 17 of the Act of May 20, 1889, P. L.
246 (Westls Penna. Statutes, 1920, sec. 19770), are permitted to
invest money derived from deposits only as specified in the Act
of May 20, 1889, and, as there are no provisions in this act or
in amendments thereto (Act of June 28, 1923, P. L. 884, and Act
of Jmie 22, 1931, P. L. 600) permitting such banks to invest
their funds in stocks of other corporations, it has been considered that they are without this power.

RHODE ISLAND.
Banks proper and trust cojQnggjtige ~ No specific statutory provisions.
The laws of Rhode Island do not contain any express authority
for banks proper and trust companies to purchase corporate stocks\
but a trust company is authorized" * * * to invest its capital
stock and moneys in its hands in such bonds, obligations, or property,
real, personal, or mixed, as it may deem -orudent, * * *

n

(General

Laws, 1923, ch. 271, sec. 4; Banking Laws, 1929, sec. 4, p. 16).




L~34

Savings "banks and banks and trust companies receiving savings
deposits - purchase of steam railroad and bank stocks permitted.
Deposits in savings banks end in the savings departments
of banks and trust companies, and, in the case of savings banks,
the income derived from investments held, may be invested, subject to detailed limitations, in the capital stock of banks and
trust companies and certain steam railroad companies.

(General

Laws, 1923, sec. 1, Clause IV, Clause VII, as ajnended by Laws
of 1927, Ch. 1034, Clause XIV, Clause XV, as amended by Laws of
1925, Ch. 653 and Laws of 1927, Ch. 1034; Banking Law Pamphlet,
1929, sec. 1, p. 22, Clause IV, p. 30, Clause VII, p. 37, Clause
XIV, p. 43, Clause XV, pp. 44-45.)
SOUTH CAROLINA
Banking Corporations and trust companies may purchase corporate
stocks.
Sec. 4301 of the 1922 Code of this state provides that "Two
or more persons desiring to form a corporation for any purpose
or purposes whatsoever" (except for certain purposes not of a
banking or trust company character) may do so upon filing "a
written declaration" setting forth certain required information;
and, if certain other prescribed condtions are met, the Secretary of State will issue a charter.
Section 4319 of this Code

(Banking Law Pamphlet, 1930,

sec. 10, p. 7) provides that "Every corporation chartered under
this Article shall have the following powers, to wit:

* * 5.

To make contracts, to loan money, to acquire and to transfer
property, both real and personal, including shares of stock in




L-34
.»—££--fit--*"

other corporations, possessing the same powers in such respects
as individuals now enjoy."
Section 3992 of the Code (Banking Law Pamphlet, 1930, sec.
71,

p» 33) provides that "Every banking corporation may * * *

deal in * * * public and other securities, and stocks of other
corporations; * * * may purchase and hold such * * * personal
property * * * as may be deemed necessary or convenient for the
transaction of its business, and may sell and dispose of the
same at pleasure; * * *•"
Additional authorization to trust companies to purchase corporate stocks a
Trust companies are also specifically authorized "to buy,
* * * invest in and sell all kinds * * * of stocks or other
investment securities «"

(Banking Law Pamphlet, 1930, sec 9(10)

p. 158)
Limitation on amount trust company may_ invest in stock of any
corporation*
A trust company, however, "Shall not invest or keep invested
in the stock of any one private corporation an amount in excess
of twenty-five per centum (25%) of the capital and surplus fund
of such trust company; nor shall it purchase or continue to
hold stock of another bank or trust company if by such purchase




- y^lV -

L-34

or continued investment the total stock of such other bank
or trust company owned or held by it as collateral will exceed twenty-five per centum (25%) of the stock of such other
bank or trust company;

Provided, however, That this limitat-

ion shall not apply to the * * * ownership by such trust company, or its stockholders, of a part or all of the capital
stock of one bank organised under the laws of the United
States or of this State, nor to the ownership of a part or
all of the capital of one corporation, organized under the
laws of this State, for the principal purpose of receiving
savings deposits

:c
;

* * or investing in other securities in

which trust companies may invest" under the laws of this H
State.

(Banking Law Pamphlet, 1930, sec, 12(7), p. 164*)
SOUTH DAKOTA

Banks prohibited from purchasing corporate stocks»
No bank shall "invest any of its funds in the stock of
any other bank or corporation, nor make loans or discounts on
the security of the shares of its own capital stock, nor be
the purchaser or holder of any such shares unless such security or




Xc v •

purchase shall " e necessary to prevent loss upon a debt preb
viously contracted in good faith; stocks so purchased or acquired shall, -within six months of the time of its purchase,
be sold or disposed of at public or private sale; ami after
the expiration of six months any such stock shall not be considered as part of the assets of such bank*"

(South Dakota

Revised Code, 1919, sec, 8983; Banking Law Pamphlet, 1932,
sec. 8983, p. 33.)
Trust Companies prohibited i?rom Purchasing Corporate
Stocks.
No trust company shall "invest any of its funds in the
stock of any other trust company or corporation, nor make any
loans or discounts on the security of the shares of its own
capital stock, nor be the purchaser or holder of any shares
unless such security or purchase shall be necessary to prevent
loss upon a debt previously contracted in good faith; and
stock so purchased or acquired shall, within six months of
the time of its purchase, be sold or disposed of at public
or private sale; and after the expiration of six months any
such stock shall not be considered as a part of the assets
of any trust company*"

(South Dakota Revised Code, 1919, sec.

9050; Banking Law Pamphlet, 1932, sec* 9050, p. 82.)




— Xdv/ -

L~34

TENNESSEE.
Banks and trust companies authorized to deal in stocks.
Section 3887 of the new Code of Tennessee, which "became
effective January 1, 1932, authorizes hanks and trust companies
to "deal in * * * "bonds, stocks, or other securities generally,
* * * and have and possess all other rights which appertain and
belong to a hanking institution, except the power to issue notes
for the purposes of currency, which power is withheld,"

EEUS.
Purchase of Corporate Stocks Permitted.
In this State hanks (other than savings hanks) and trust companies
may purchase, invest in, and sell stocks and other securities, (Rev,
Stat., 1925, Articles 396 (9) and 1513; Banking Laws, 1932, Article
396 (9), p. 14, and Article 1513, p. 74.)
Limitation upon purchase of "bank stocks*
It is -unlawful for any State hank or trust company
"to own more than ten per cent of the capital stock of any other
hanking corporation, or to make a loan secured hy the stock of
any other hanking corporation, if ^oy the making of such loan
the total stock of such other hanking corporation hold hy it as
collateral will exceed, in the aggregate, ten per cent of the
capital stock of such other hanking corporation, unless the
ownership or the taking of a greater percentage of such capital
stock as collateral shall he necessary to prevent loss upon a




_ ydVMf-

The above-quoted provision of the laws of Utah is made
applicable to savings banks,

(Compiled Laws of 1917, sec* 1016;

Banking Laws, 1927, sec. 1016, p. 15*)
VERMONT.
Purchase of certain bank or trust company stocks permitted.
Banks and trust companies are empowered to invest their
assets "in the stock of aay national bank in the New England
States or the state of New York, or in the stock of any banking
association or trust company incorporated under the authority
of and located in such states, or in the stock of any bank incorporated under the authority of and located in the Dominion
of Canada; but a bank shall not hold bank stock both by the
way of investment and as security for loans in excess of ten
per cent of its assets, nor, in any one bank, more than five
per cent of its assets, or more than two hundred thousand dollars, or more than ten per cent of the capital stock of any one
bank1-'*

(General Laws, sec. 5363, par. (a), subdivision VI, as

amended by Acts of 1929, Act No. 90, sec. 5.)
VIRGINIA
Purchase of corporate stocks permitted.
Banks and trust companies in this Stat& are empowered to
purchase and sell "all stocks and bonds".

(Acts of 1928, ch, 507,

sees, 1 and 12; Banking Laws, 1929, sees. 4149(1), 4149(13),
pp. 24 and 30,)




TCASHDTGTOff.
Purchase of corporate stocks prohibited.

The laws of this State provide that a bank or trust com~
pany shall not "subscribe for or purchase the stock of any other
banking house or trust company, or of any domestic or foreign
corporation of any character, * * *; Provided, That such "bank
and/or trust company may purchase, acquire and hold shares of
stock in any other corporation which shares have been previously
pledged as security to any loan or discount made in good faith
and such purchase shall be necessary to prevent loss upon a debt
previously contracted in good faith and stock so purchased or
acquired shall be sold at public or private sale or otherwise
disposed of within two years from the time of its purchase or
acquisition".

(Laws of 1929, sec, 5, p. 101; Banking Laws,

1929, sec. 46, p. 26.).

The laws also provide that corporations

doing a trust business may not invest trust funds in corporate
stocks.

(Laws of 1929, ch. 206; Banking Laws, 1929, sec. 77,

p. 37.)
Savings banks are covered bjr the above excerpt from the
laws of Washington.

(Laws of 1917, sec. 14, p. 275; Banking

Laws, 1929, sec. 24, p. 11•)




-CL~

L-34

WEST VIRGINIA
Mo Statutory Provisions,
There do not appear to be any provisions in the laws of
the State of West Virginia authorizing banking institutions,
which term includes trust companies, to purchase corporate
stocks,
WISCONSIN
Mutual savings banks prohibited from purchasing corporate
stocks - No statutory provisions covering other banking
institutions,
Except for mutual savings banks, the banking statutes of
Wisconsin contain no provisions with reference to the purchase
of corporate stocks by banks and trust companies. The provision with reference to mutual savings banks provides that f,No
mutual savings bank shall invest any part of its deposits in
the stock of any corporation * * *.w

('Wisconsin Statutes,

1929, sec, 222,15, as amended by Laws of 1931, ch. 27, p. 42;
Banking Law Pamphlet, 1932, sec, 222.13, p. 109,)
WYOMING
Purchase of corporate stocks prohibited.
The laws of the State of Wyoming provide that not State
bank shall invest any of its assets in the capital stock of any
other corporation/1 except for such stock t!as it may acquire
or purchase to save a loss on a pre-existing debt, and stocks
so acquired or purchased shall be sold within twelve months from
the date acquired or purchased; provided, that




- O

-

a further time may be granted by the State Examiner.1'

L

(1931

Wyoming Revised Statutes, sec. 10-133.)
The term "State bank" as used in the above excerpt from
the laws of Wyoming includes every individual, firm or corporation doing a banking business, and a banking business is engaged in

"where credits are opened by the deposit or collec-

tion of money or currency or negotiable paper subject to be
paid or remitted upon draft, receipt, check or order".

(1931

Wyoming Hevised Statutes, sec. 10-110.)
The statutes of Wyoming contain n© provisions authorizing
trust companies not doing a banking business to purchase corporate stocks.







CLfl

-

APPENDIX C
Digest of State laws Relating to the Purchase or Ownership
of Bank Stock " y Holding Corporation^
b




. cm -

X-7258

DIGEST OP STATE LAWS RELATING TO THE PURCHASE
OR OWNERSHIP OF EMIK STOCK BY HOLDING
CORPORATIONS.
(Superseding X-6392)

There is given "below a digest of the laws of
the several States relating to the purchase or ownership
of the stock of hanks " y holding corporations-. This
b
digest has heen prepared hy the Office of the General
Counsel to the Federal Reserve Board, with the assistance
of the Counsel to the various Federal reserve Panics, and
shows the status of the State legislation dealing with
this subject as of August l-9 1932.
The States not mentioned in this digest apparently have no legislation affecting this subject
directly or indirectly.

X-7258

- ew ALABAMA.,

There does not appear to " e any legislation in this State
b
specifically authorizing a holding corporation to purchase or own
hank stocks; hut Section 7015(10) of the Code of Alabama, which relates to the powers, rights and duties of corporations in general,
authorizes a corporation "to subscribe for, acquire, hold, and dispose of the stock, bonds or other evidence of indebtedness of any
other corporation of this or any other State or foreign countries,
and while owner thereof to exercise the rights, privileges, and
powers of ownership, including the right to vote, subject to the
limitations of such rights in this chapter contained; * * *•

w

A2IZ0KA.

There do not appear to be any statutes in this State
specifically dealing with this subject.

In these circumstances, it

may be that holding corporations are authorized to purchase bank
stocks under the provisions of Section 579 of the 1928 Revised Code
of Arizona, which became effective July 1, 1929. . This section relates
to corporations in general and provides that any corporation shall
have power "to make contracts, acquire and transfer property, possessing the same powers in such respect as private individuals now enjoy.




X-7258

ABICANSAS.

There do not appear to he any statutes in this state specifically authorizing or forbidding a holding corporation to purchase or own bank stock, hut Section 3 of Act No. 252 of the 1931
Acts of Arkansas, approved March 31, 1931, provides that "any
person or persons, and/or any company, co-partnership, corporation
or other legal entity in which such person or persons own or control
a substantial interest, owning either singly or jointly an aggregate
of fifty (50) per cent or more of the capital stock of three or more
hanks and/or trust companies, thus forming a chain or group of haiiks
and/or trust companies, shall be, and are herehy prohibited from
"borrowing from, or "becoming indebted to, such hanks and/or trust
companies, thus owned and controlled, in any amount or in any mannertf; and this would seem to recognize by implication the right of
holding corporations to own hank stocks.

CALIFORNIA.
There does not appear to he any statute in this State
which specifically authorizes a holding corporation to purchase
or own hank stocks* However, the General Corporation Law enacted
by the 1931 Legislature of this State (C.C. 341), provides that
"Every corporation heretofore or hereafter organized has power
* * * (10) To acquire, subscribe for, hold, own, pledge and otherwise dispose of and vote shares of stock, bonds and securities of
any other corporation, domestic or foreign.u




X~7258

IDAHO
There does not appear to te any statute in this State
specifically dealing with the purchase or ownership of hank stock
by holding corporations; hut Section 10 of Chapter 262 of the 1929
laws provides that a corporation formed under the general corporation law may "acquire, purchase, guarantee, hold, mortgage, own,
vote, sell, pledge and/or otherwise dispose of and deal in shares
* * * of other corporations, domestic or foreign11.
There is also no double liability against stockholders
of State banks in this State, but the banking law requires that
stockholders at the time of the organization of such banks must
produce satisfactory evidence that they have a net worth over
and above all liabilities and exemptions of at least three times
the amount of the capital stock taken by them in the process of
such organization.

(Sec. 12(e), Bank Act of 1925).

ILLINOIS.
The General Corporation Law of this State provides that
corporations organized thereunder may

,
r

own, purchase or otherwise

acquire * * * stocks, * * of any corporation, domestic or foreign."
The statute contains some restrictions, such as forbidding the
holding of stock in a building corporation, but there is no express
prohibition therein upon the right of a corporation to own stock in
a bank, although there may be an implication to that effect.

(See

Section 2, page 743, of the Illinois Revised Statutes of 1931, (Smith
and Hard) prohibiting the organization of a corporation under the




_

d v// —

X—7258

(Illinois - continued)
provisions of the general corporation law for the purpose of engaging
in a "banking business and the case of Central Life Securities Company,
v. Smith, 236 Ted. 170). Moreover, Section 6 of the Illinois Banking
Act, " y referring to stockholders cf hanks " y the use of the prob
b
nouns "he" or "she", may create the implication that it was intended
that such stockholders should " e natural and not artificial persons.
b

TSDIKKk.
There do not appear to be any statutes in this State
specifically authorizing or forbidding corporations to own bank
stocks; but section 4 of an act of the Indiana Legislature approved
March 2, 1931, provides in part that, "The shareholders in any
corporation formed under the provisions of any law of this State
for any purpose whatsoever, and the shareholders in any corporation
formed under the laws of any other State or country and admitted to
do business in this state, shall be held individually responsible
for all contracts, debts and engagements of any bank, the shares of
which are held by any such corporation, each to the amount which the
said shareholder's interests in said corporation, as represented
by his shares of capital stock in the same, bears to the total
amount necessary to be collected from the holders of shares of
stock in any such bonk, * * *"; and this would seem to recognize
by implication the right of holding corporations to own bank stock.




On the other hand,, section 2 cf chapter 215 of the 1929

(Indiana - continued)
*
Acts of Indiana provides that, "corporations may he organized for
pecuniary profit under this act for any lawful "business purpose or
purposes, except * * * corporations for the conduct of a hanking, * *,
trust * * * business"*

Section 3 of this chapter also authorizes such

corporations "to acquire, guarantee, hold, own and vote and to sell,
assign, transfer, mortgage, pledge or otherwise dispose of the capital
stock, bonds, securities or evidences of indebtedness of any other
corporations, domestic or foreign," but provides that, "Ho corporation
shall, by any implication or construction, be deemed to possess the
power of carrying on the business of receiving deposits of mone:,r,
bullion or foreign coins, or of issuing bills, notes or other evidences of debt for circulation as mono;/'."
It thus appears that the provisions of the 1929 statute proh:i>\
the organization and operation thereunder of a corporation to do a
banking business; and, in these circumstances, the provisions might'
be construed as prohibiting a holding corporation from owning a controlling interest in the stock of a bank, since such an interest
would permit the corporation to control the operation of the bank and
thereby enable it to accomplish indirectly what the law prohibits it
from doing directly,
IOWA.
Section 7940 of the 1927 Iowa Code, which authorizes corporations to hold stock in railway corporations, and Section 8434 of
this Code, which recognizes the right of holding corporations to own
stock in a public utility, contain the only provisions of the Iowa Laws
relating to the ownership by corporations of stock in other corporations.
However, Section 9 of Article VJII of the Iowa Constitution, which fixes




~. t-\ A

~~

X-7258

(I owa - c ontigaQd);
the liability of stockholders ofbanks and refers to such stockholders
by using the pronouns "he" or "she", may "by implication require stockholders in "banks to he natural and not artificial persons,
KilHSiS.
There does not appear to be any legislation in this State
expressly authorizing or forbidding a holding corporation to own bank
stock; but it would seem that the right of corporations to own bank
stock is recognized by implication by reason of a statute enacted in
the year 1931 (Laws of 1931, ch. 83). This statute authorizes the
bank commissioner or his assistants to examine "aziy investment or
holding company or corporation which is affiliated with any bank or
trust company".

The "bank commissioner is also authorized T*to exam-

ine any copartnership, corporation or association", domestic or foreign, "holding as much as twenty-five per cent of the capital stock
of any bank or trust company doing business in Kansas: Provided, That
the bank commissioner may require the deposit of bonds of the United
States, state of Kansas, or of some county, school district or municipality of the state of Kansas, with the state treasurer to secure
the shareholders1 liability on said stock held by it: And provided
further, That if any such copartnership, corporation or association
shall fail or refuse to secure such shareholders1 liability as required,
of it by the bank commissioner, said copartnership, corporation or
association shall have no power to vote its stock at a shareholders1
meeting nor can said stock thereafter be represented on the board of
directors of said bank or trust company",




KENTUCKY.
There is no law in this State limiting the power of cor-

_

&y*'~

X-7258

(Kentucky - continued)
porations to hold bank Stock unless it "be Section 567 of Carroll^
Kentucky Statutes, which read as follows:
"ITor shall any corporation directly
or indirectly, engage in or carry on in any
way the "business of "banking, or insurance of
any kind, unless it has "become organized
under the laws relating to hanking and insurance * * *",
A double liability is imposed upon stockholders of "banks
for all contracts and liabilities of such banks by Section 595 of
Carroll! s : Kentucky Statutes.
•
LOUISIANA.
There are no laws in this State dealing specifically
with this subject. .Although subdivision II (e) of Section 12, (P. 417),
Act No.. 250 of the 1928 Acts of the Louisiana Regular Session, permits corporations "to acquire * * * and to hold, * * * shares * * * of
any other corporation, domestic or foreign", it is not clear whether
this subdivision is an authorization to holding corporations to acquire
or hold shares of "banking institutions in view of certain other subdivisions of Section 12, namely, I and II, Sections 1 (P. 409) and
2 (P, 411) of the aforesaid 1928 Acts and Sections 1 (P. 1196) and
5 (P. .1203) of Volume 2 of the 1920 Constitution and Statutes of
Louisiana.
MICEIGAfl. There do not appear to be any laws in this State specifically
authorizing a holding corporation to purchase or own "bank stocks; but
Section 10 of Act No. 327 of the 1931 Public Acts authorizes corporations in general "to guarantee, purchase, hold, sell, assign, transfer,
mortgage, pledge or otherwise dispose of, the shares of the capital
stock of, or any bonds, securities or evidence of indebtedness created




_

d.XT \

-

X-7258

(Michigan ^ continued),
by, any other corporation or corporations of this state or any other
state, country, nation or government, and while the owner of the
same, to exercise all the rights, powers and privileges of ownership
including the right to vote thereon if such right he an incident of
the same:.- * * *"
Section 9968 of the 1929 Compiled laws of Michigan also
provides that a corporation "shall have power in furtherance of the
objects of its existence,, to purchase and hold shares of stock or
memberships of its own or other corporations organized under the laws
of this or any other state (j'orisdiction or sovereignty)"; and section
9969 of these laws provides that "when any such corporation shall "be
a stockholder in any other corporation, as in this subdivision provided,, its president and other officers or any of its directors shall
he eligible to the office of director of such corporation,-the same
as if they were individually stockholders therein, and the corporation
holding such stock shall possess and exercise in respect thereof, all
the rights, powers, privileges and liabilities of individual owners
or holders of such stock",
MINNESOTA.
There do not appear to he any laws in this State dealing
specifically with this subject • With reference to the liability of a
stockholder in a corporation, Section 1 of chapter 210 of an act
approved April 18, 1931 (Mason's Minnesota Statutes, 1931 Supplement,
Section 7465-1) provides that "except as provided "by Section 7465,
Mason!s Minnesota Statutes of 1927,-no stockholder or member of any
corporation or of any cooperative corporation or association, however
or whenever organized, except a stockholder in a hanking or trust




~~ d-X//

-

X-7258

(Minnesota « continued)
r
corporation or association, shall " e liable for any debt of said
b
corporation, cooperative corporation or association".

Section 7465 of

Mason1s' Minnesota Statutes of 1927 to which the act of April 18, 1931,
refers, provides that "Every stockholder sliall be personally liable for
corporate debts in the following cases: I. .For all unpaid installments
on stock owned by him or transferred for the purpose of defrauding
creditors.

2. For failure by the corporation to comply substantially

with the provisions as to organization and publicity.

3. For per-

sonally violating any of such provisions in the transaction of any corporate business as officer, director, or member, and for fraudulent or
dishonest conduct in the discharge of any official duty*.
MISSOURI.
There do not appear to be any laws in this State relating
specifically to this subject, although trust companies may purchase or
hold stock in other banks or trust companies.

(Paragraph 9, Section

5429 of the 1929 Revised Statutes of Missouri.)
FiDYAJA.
There does not appear to be any statute in this State relating
directly to the subject of this digest; but the General Corporation
Law (Comp. Laws of 1929, Sec. 1608, as amended by the Laws of 1931,
Ch. 224, sec. 6) provides that every corporation shall have power
"to guarantee, purchase, hold, sell, assign, transfer, mortgage.




(Nevada - Continued)

»1V

X-7258

pledge or otherwise dispose of the shares of the capital stock of
* * * any other corporation or corporations of this state, or any
other state or government * * *Jf

Ml JERSEY.
There does not appear to " e any statute in this State
b
prohibiting absolutely the ownership of "bank stock " y holding
b
corporations. However, section-3 of Chapter 273 of the 1928
laws prohibits corporations that own more than ten per cent of the
stock of any bank or trust company in the State from purchasing after
the date the statute became effective more than ten per cent of the
stock of any other bank or trust company doing business in the State,
This statute does not require corporations to dispose of any bank stock
that they may have owned before the law became effective and certain
institutions (enumerated in Section 14 of the laws above referred to)
are specifically exempted by Section 3 from its provisions, Section 3
reads as follows*:




,r

3. Any corporation, other than corporations
specifically exempted from the provisions of this
act, which now or hereafter owns mere than ten
per centum of the number of shares of the capital
stock now or hereafter at any time issued and outstanding of any bank or trust company or national
bank, now or hereafter doing business in this
State, shall not purchase more than ten per centum of the number of shares of capital stock at
any time issued and outstanding of any other bank
or trust company or national bank, now or hereafter doing business in this State.11

(New Jersey - continued)
Section 14, wniciri enumerates the specifically exempted institutions referred to in Section 3> reads as follows:
"14. The provisions of this Act and the penalties thereof shall not apply to the following corporations, viz.: Banks and trust companies organized
under the laws of this State and national "banks doing "business in this State, nor to such "banks, Trust
companies and national "banks while acting in a fiduciary capacity representing any individual or
individuals or the estate of any individual; nor
to any other corporation the entire capital stock
of which is owned " y or held in trust for the
b
shareholders of any hank or trust company organized under the laws of this State or any national
hank doing "business in this State, in the same relative proportion as the stock held in said hank, trust
company or national "bank."
Under the laws of New Jersey, stockholders of New Jersey
hanks and trust companies are not subject to a double liability,
as are stockholders of national hanks and of hanks and trust companies
in other States; nor do these laws impose such a liability upon
stockholders of holding corporations,
NEW MEXICO,
There apparently are no laws in this State dealing specifically with the subject of this digest; but Section 32-301 of the 1929
Annotated Statutes of New Mexico authorizes corporations in general
to "purcliase, hold, * * * the capital stock of, * * * any other corporation or corporations, of this or any other territory or state
* * * ", and no limitation is placed upon the amount of such stock
that may be so purchased or held.




X-7258

ITORTK DAKOTA.

There do not appear to he any statutes in this State
expressly authorizing or forbidding a holding corporation to purchase
or own "bank: stock; hut section 21 of Chapter 96 of the 1931 Session
Laws, which, among other things, pertains to the transfer of the
capital stock of a State hank, recognizes that a stockholder in such
a hank may he a corporation as well as a natural person. This section
provides that "every person or corporation becoming a shareholder by
such transfer shall in proportion to his shares succeed to all rights
and liabilities of prior holders of such shares existing by reason of
ownership thereof•" A double liability is also imposed upon stockholders in banks by section 22 of these laws.
OHIO.
There do not appear to be any laws in this State dealing
specifically with this subject. Stockholders in barjkinff corporations
are subjected to double liabilities for debts of the bank (General
Code of Ohio, Section 710-75).




_ <J~*v# -

X-7258

0XLAH0I1A,

There do not appear to be any laws in this State dealing specifically with this subject and it may be that holding corporations
may purchase and hold stock in banking institutions.
Section 9725 of the 1931 Oklahoma statutes provides that
"All corporations organized for any of the purposes authorised by
this section shall have the power to own and hold stock of other
corporations, except as prohibited by the Constitution of this State11 .
Section 41, Article 9 of the Constitution of Oklahoma,
forbids corporations to own or hold stock in other competitive
corporations engaged in the same kind of business and banks or
trust companies to own or hold stock in other banks or trust companies, except in those cases where such corporations or banks or
trust companies have acquired such stock to secure or satisfy a
bona fide indebtedness, and in such cases the stock must be disposed
of within twelve months*
Section 12802 of the 1931 Oklahoma Statutes makes it
unlawful for corporations to combine to place the control of
corporations in the hands of a trustee or a holding corporation,
if the intent and purpose of such combination is to restrict or
restrain trade.
In view of the a,bove quoted provision of Section 9725
of the 1931 Oklahoma Statutes, and since neither the prohibitions
of the Constitution referred to therein, nor the provisions




_

<kX*" ~

X-7258

Oklahoma, continued
of Section 12802 of the 1931 Oklahoma Statutes appear to be
specifically applicable, in that the Constitution prohibits
only banks or trust companies from owning or holding stock in
other banks or trust companies and does not purport to prohibit corporations in general from owning or holding stock
in other corporations, if the latter are not engaged in the
same kind of business as, and do not compete with, the purchasing corporations, and Section 12802 of the statutes only
affects combinations in restraint of trade, it may be that
holding corporations may purchase and hold stock in banking
institutions.
OREGQIT;
Under the provisions of a# Act of this State approved
March 9, 1929

(Chapter 444, General Laws of Oregon, 1929;

Oregon Code, 1930, sec. 25-502) any corporation

"now or here-

after organized in this state, or licensed to do business herein"

may own, hold or control the stock* of any bank or trust

company and while so owning, holding or controlling such stock
the corporation is subject to the following restrictions:.




(l) It shall not borrow money ot otherwise
secure credit directly or indirectly, from such
bank or trust company, unless the loan or credit
is adequately secured by collateral other than
stock or evidences of indebtedness of any corporation which it controls*.

_

<!LX V»tl -

X-7258

Oregon, continued
(2.) It shall not sell any stock, securities or other evidences of indebtedness of any
other corporation which...it controls, to or through
the bank or trust company in which it owns or holds
stock; nor can it use such bank or trust company
as an agent for the purpose of selling or otherwise disposing of such stock, securities or other
evidences of indebtedness without first obtaining
permission from the Oregon Corporation Commissioner.
(3) It shall not carry as an asset any expenses incident to organization or to the sale of
stock after organization.
Penalties are prescribed for violations of this act by
corporations or their officers or employees, and all corporations heretofore organized under the laws of Oregon or licensed
to do business therein must bring themselves v/ithin the provisions
of this act within six months after the date it became effective.
There is no provision in this act imposing upon the
stockholders of corporations owning or holding stock in banks or
trust companies the liability imposed upon the stockholders of
such banks or trust companies.
PEMSYLVAI7IA.
There do not appear to be any provisions in the statutes
of this State specifically covering the purchase or ownership
of stock in institutions engaged in a banking business. However,
under Section 1 of an Act of July 2, 1901

( P - L. 603, as
.

amended by an Act of April 18, 1929 ), and Section XX of paragraph
5598 of West!s 1920 Pennsylvania Statute Law, it might be held




£-*<Y

_

X-7258

Pennsylvania, continued,
that corporations are authorized to exercise this power*
Section 1 of an Act of July 2, 1901 ( P. L. 603, as
amended by an Act of April 18, 1929), provides that " * * * any
corporation created "oy general or special laws, may purchase,
hold,

* * * the shares of the capital stock of

* * * any other cor-

poration or colorations of this or any other State, and while the
owner of said stock may exercise all the rights, powers and privileges of ownership, * * *•

u

Section XX of paragraph 5598 of West*s 1920 Pennsylvania
Statute Law provides that a corporation may "be formed,. "For any
lawful purpose not specifically designated "by law, as the purpose for which a corporation may be formed."
There does not appear to he any statute in this State
expressly providing that stockholders of corporations owning stock
in "banks are subject to a stockholders1

liability similar to the

liability imposed upon stockholders of "banks. Section 1184 of the
Pennsylvania Statutes imposes a double liability iproon stockholders
of "banks and it has "been held that stockholders of trust companies
are not subject to a double liability.
Pratt,

(1909),

(See cases of DeHaven

72 Atl, 1068, 223 Penn. 633, and

v,

Gordon, Secretary

of Banking v. TCirmeberger, (1932) 16 District and Ocunty 506 )•




- *-*•** ~

X-7258

TEMESSEE,

There do not appear to he any provisions in the statutes of
this State directly covering the purchase or ownership of stock in
hanking institutions by holding corporations; hut

section 4084

of the new Code of Tennessee, which became effective January 1, 1932,
provides that

"All private corporations for profit organized under the

laws of Tennessee for the transaction of any lawful "business, or to
promote or conduct any legitimate object or purpose, shall have the
right, power, privilege, and immunity to purchase, hold, own, sell,
transfer, assign, vote, mortgage, pledge, a.nd otherwise deal in stocks,
bonds, or evidence of indebtedness of other corporations in the same
manner and with all the rights, powers, privileges, and immunities of
individual owners, except that this statute shall in no way be construed
to give corporations power to create unlawful monopolies, trusts, or
combinations in restraint of trade".

TEXAS.
There do not appear to be any statutes in this State dealing specifically with this subject; and, in view of the following, it
is not clear whether or not holding corporations may purchase and hold
stock in banking institutions*
Article 513 of the 1925 Hevised Statutes forbids banks
or trust companies "to own more than ten per cent of the capital
stock of any other banking corporation^




* * * " unless the ownership

-

CJ*-XJ ^

X-7258

Texas, continued

of such excess stock

"shall " e necessary to prevent loss upon a
b

debt previously contracted in good faith;

* * * " , and in such

cases the stock must not " e owned for a longer period than six
b
months.
Article 1302 of the 1925 Revised Statutes permits
private corporations to "purchase, * * * hold,
of capital stock, * * *

own, * * * shares

of foreign or domestic corporations

not competing with each other in the same line of "business;
provided the powers and authority

* * * conferred shall in no

way affect any provision of the anti-trust laws of this State".
Article 7426 of the 1925 Hevised Statutes
trust to be

defines a

"a combination of capital, * * * " y two or more
b

persons, firms, corporations, *

*

* : To create, or which may

tend to create, or carry out restrictions in trade or commerce
*

*

*

or to create or carry out restrictions in the free pur-

suit of any "business authorised or permitted " y laws of this
b
State"

or "To prevent or lessen competition in aid0 to com-

merce,, *

*

* ."

Article 7427 of the 1925 Revised Statutes

states

that a monopoly exists when two- or more corporation^ combine
or consolidate to bring the

"direction of the affairs"

of

such corporations "under the same management or control for







^ _ &J##)t

~~

X-7258

Texas, continued
the purpose of producing, or where such common management or control tends to create a trust", or where "any corporation acquires
the shares * * * of stock

* * * of any other corporation or cor-

porations, for the purpose of preventing or lessening, or where
the effect of such acquisition tends to affect or lessen competition,
whether such acquisition is accomplished directly or through the
instrumentality of trustees or otherwise11.

UTAH,.
There do not appear to be any laws in this State dealing
specifically with this subject and it may be that holding corporations are authorized to purchase and own bank stocks under the
authority granted to corporations in general by Section 869 of
the 1917 Compiled Laws.

This section provides that

poration * * * shall have power to * * * buy*

"the cor-

use, mortgage, sell,

or otherwise dispose of personal property * * *".

There are no laws in this State expressly prohibiting
the ownership " y holding companies of the stock of banks but
b
there is a provision prohibiting holding companies from holding
or acquiring stock in other corporations*

Section 4925 of the

1917 General Laws of Vennont contains this prohibition and reads
as follows:




_ _ <1X#UJ "

X-7258

Vermont, continued
"She corporation shall not he permitted to
acquire or hold stock in other corporations to
such an extent that its primary business is the
holding of such stock. A violation of this provision shall he cause for the dissolution of
the corporation under the provisions of Section
4944."
There are no laws in this State imposing upon stockholders
or holding companies a stockholders1 liability similar to that
imposed upon holders of bank stock.

WASHINGTON.
There do not appear to be any provisions in the laws of
this State expressly authorizing the purchase or ownership of
bank stocks by holding corporations; but section 3810 of Remington's 1922 Compiled Statutes provides that

"any corporation here-

tofore or hereafter organized under the laws of this state or of
any other state or territory of the United States and doing business
in this state shall have power and authority to subscribe for, acquire
by purchase or otherwise

and to own, hold, sell, assign and

transfer shares of the capital stock of any other corporation * * *."
During the 1929 Regular Session of the Legislature of this
State, a bill known as "Substitute House Bill Ho. 72" was introduced
to restrict the ownership of bank or trust company stock "by cor-*
porations, to. twenty per cent of the capital stock of such bank
or trust company; but this bill did not pass»




ci~*LV*v —

X-7258

ffsstf fiaaiNiA.
Under date of February 23, 1929, an Act was passed " y the
b
Legislature of this State affecting the purchase or ownership of
stock in hanking institutions " y firms, associations or corporations.
b
(Section 9, Chapter 23, Acts of 1929).

Section 9 of this Act pro-

vides in part as follows:
"It shall be "unlawful for any firm, association or
corporation to purchase and hold stock in any hanking
institution organized or authorized to transact business
hereunder for the purpose of selling, negotiating or
trading participation in the ownership thereof either
for the purpose of perfecting control of one cr more
such banking institutions or for the purpose of inducing
other persons, firms or corporations or the general public to become participating owners therein. Nothing
herein shall prevent the ownership of stocks in any such
banking institution by any corporation for investment
purposes.*
With reference to the liability imposed upon stockholders
in banks, Section 9 provides as follows:
"Each stockholder of any banking institution organized
under the laws of this state, in addition to the liability
imposed upon him as stockholder of a corporation under the
provisions of the general corporation laws shall be liable
to the creditors of the banking institution, on obligations
accruing while he is a shareholder, to an amount equal to
the par value of the shares of stock held 'by him."
WISCONSIN.
In 1929 legislation was enacted in this State regulating the
ownership of stock in banks and trust companies.

(Chapter 445,

Wisconsin Laws of 1929 - Published, August SO, 1929).

Relevant

provisions of this act are summarized briefly as follows:
No corporation organized under the lavfs of Wisconsin is permitted to hold more than ten per cent of the stock of any bank or
trust company, unless seventy-five per cent of the stockholders of
both corporations vote in favor thereof at a meeting especially

~'35"^

X-7258

Wisconsin, continued*
called for that purpose*
Ho State hank or trust company may vote to authorize a foreign
corporation to purchase stock in such State "bank or trust company,' unless such foreign corporation shall have qualified to do business in
Wisconsin*
Whenever the ownership or control of a majority of the stock
of any State or national hank doing business in Wisconsin is held by
any foreign corporation which has not qualified to do business in
the State, such "bank shall be disqualified to act as a depositary
for any public fpnds of the State or any subdivision thereof, or
as a depositary for reserve funds of State banks until such foreign
corporation shall have qualified to do business in the State,
Domestic corporations and foreign corporations authorized
to do business in the State which own or control the stock of a
State bank or trust company shall be held liable for any assessment
made against the stockholders of such bank or trust coinpany to the par
value of the stock so owned or controlled; and such holding corporations
are required to dexoosit y/ith the State Treasurer securities equal to
fifty per cent of the par value of the stocks qf State banks or trust
companies owned or controlled by such holding companies*, except that
the aggregate amount of such securities shall not exceed the largest
amount required to be deposited by Wisconsin tru$t companies.
If the stockholders*' liability of any £uch holding company is
not fully paid,, the stockholders of such holding) company are liable for
an assessment sufficient to cover the deficit.







—

<L * > V 1 —
!

APPENDIX D
If this report is printed, it is suggested that
the answers to the questionnaire from eight leading groups
" e reproduced in fall. The Marine Midland Corporation,
b
Buffalo, New York; Guardian Detroit Union Group, Inc., Detroit, Michigan; Wisconsin Bankshares Corporation, Milwaukee, Wisconsin; First Bank Stock Corporation, Minneapolis,
Minnesota; Northwest Bancorporation, Minneapolis, Minnesota; First Security Corporation of Ogden, Ogden, Utah;
Marine Bancorporation, Seattle, Washington; and Anglo
National Corporation, San Francisco, California,have given
the Committee permission to make such reproductions. It
would take from 75 ^o 100 single spaced mimeographed pages
to reproduce the answers from these eight groups.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102