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BRANCH BAMIUG IN THE UNITED STATES

1st edition - October 1, 1936
2nd edition - May 20, 1937
3rd edition - July 29, 1937

CONTENTS

Pa^e
Summary
Definition
Evolution of Branch Banking in the United
States
State Laws and Branch Banking, June 1936
Growth and Distribution of Branch Banking
Suspensions of Banks Operating Branches
Evaluation of Branch Banking As a Type of
Banking Structure
Problems in the Extension of Branch Banking
Chapter I

1
1
1
3
J
5
5
6

Problem of the Structure of American Banking
Development and Recent Changes in Banking
Structure
Forces Influencing the Development of Banking Structure

11

Chapter II

Evolution of Branch Banking in the United States
Branch Banking Before the National Bank Act
Branch Banking Under the National Bank Act
Branch Banking by State Banks After 190Q
McPadden Act of 1927 and- Branch Banking
Banking Act of 1933 811(1 Branch Banking

l6
16
20
22
22
2^

Chapter III

State Laws and Branch Banking 19^6
State Branch Banking Statutes Over TwelveYear Period, I92U-I936

27

Chapter IV




Growth and Distribution of Branch Banking:
Growth of Branch Banking, 1900 to 1935
Branch Banking of State and National Banks
Branches Outside and in Head Office City
Branches and Banking Offices
Distribution of Branch Banking, December 31, 1935
Proportion of Banks with Branches to Total Banks
Geographic Distribution of Branch Systems
Loans and Investments, and Deposits
Types of Branch Systems
Location of Branches or Offices
Important Branch Banking States
Distribution of Branches and Banks by Size of
Town
Distribution of Branches and Banks by Size of
Banks
Classification of Branch Systems
Method of Establishing Branches
Branch Banking Over Twelve-Year Period, 192*4-1935

10

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Page
Chapter X

Chapt er VI

Chapt er VII




Experience with Banks Operating Branches
Suspensions of Banks Operating Branches, 1Q21-193S
State and National Banks
Location of Branches
By Number of Localities
Size of Suspended Banks Operating Branches
Individual Branch-Operating Bank Suspensions
Experience with Branch Banking in Canada and
England
Evaluat ion of Branch Banking As a Type of Banking
Structure
A Century of Banking and Economic Evolution
Advantages Claimed for Branch Banking
Safety and Mobility of Funds
More Uniform and Lower Money Rates
Banking Services
Banking Facilities
Diversification of Loans and Deposits
Better Bank Management
Economies in Operation
Administration of National Monetary and Credit
Policies
Substitutes for Chain and Group Banking
Disadvantages of Branch Banking
Monopolistic Tendencies
Branch Banking and the Federal Reserve System
Suspension and Failure of Banks with Branches
Personnel and Management Problems of Branch
Banking
Unwholesome Competitive Practices
Problems in the Extension of Branch Banking
Problems in Connection with Legal Status of
Banking
Relation of Existing Independent Unit Banks
to Branch Banks
Extent of the Area for Operation of Branches
Considerations with Respect to Various Branch
Banking Areas
Conditions Under Which Individual Banks Should
Be Permitted to Operate Branches
Present Capital Requirements
Effect of Present Requirements
Possible Modifications in Capital Requirements of Federal Law
Methods of Establishing Branches
Attitudes Toward Extension of Branch Banking

8k
87
89
90
91
92
92

100
100
104
10k
105
lOo
113
119
120
121
122
123
124
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127
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1U9

£age
Appendix I,




Federal and State Laws Relating; to Branch Banking
Provisions of the National Bank Act, 1927-1935?
and of different drafts of the Glass .Bill,
1932-1933, and Banking Act of 1933
Summary of State laws requiring or not requiring
that bank branches or offices be established
only by consolidation or in places without
another bank, June 1, 193&
Summary of State laws regarding size of place
in which bank branches or offices may be
established, June 1, 193^
Summary of State laws regarding minimum capital
requirements for establishing bank branches
or offices, June 1, 193^

ii

ii

x

II

Statistics of Branch Banking

xii

III

Ratio of Loans to Deposits of Unit Banks and
Branch Banks by Counties in California,
December 31, 1933, 193^, and 1935

xxx

IV

Statistics of Suspensions of Branch~Qperating Banks

xxxii

V

Opinions of Bankers and Gthers Regarding Extension
of Branch Banking

xxxix

SUMMARY

Definition* - Branch banking is on© of several methods or combina*tions of methods by which the same interests operate a banking business
at more than one office©

Group banking and chain banking are other such

methods and branch banking is sometimes found within group or chain sys~
terns* Branch banking may be defined as a type of bank organization whereby a bank as a single entity operates more than one banking office, each
such office being a part of the same legal entity*

Group banking desig-

nates that type of multiple office banking in which the majority stock
of two or more independently incorporated banks with or without branches
is owned or controlled by a corporation, business trust, association, or
similar organization*

The term chain banking, on the other hand, desig-

nates that type of multiple office banking in which an individual or an
unincorporated group of individuals owns and controls the majority stock
of two or more banks*

A unit bank, as contrasted with all of these forms

of multiple office banking, maintains only one office and is independently owned and controlled*
Evolution of Branch Banking in the United States* - There are four
distinct periods in the history of branch banking in the United States:




(1) Before the National Bank Act, 1863
(2) IS63 to 1900
(3) 1900 to 1927

(U) 1927 to the present time.

~ 2 ~

Before the National Bank Act branch banking was not uncommon in the
United States*

It existed in different States of the South and West up

to 1863 and there were two examples of Nation-wide branch banking*

In

the free-banking l/ States of the North and East branch banking was prohibited after about iSkO largely as a by-product of the regulation of
bank note issues©

Use of the free-banking statutes of the Northern and

Eastern States as a model for the National Bank Act resulted in preventing branch banking by national banks for more than oO years*
Prom 1863 to 1900 branch banking by national banks and by State
banks was practically non-existent in the United States*

During the

quarter century 1900-1926, growth of city-wide branch banking by State
banks in certain metropolitan areas, development of State-wide branch
banking in urban and rural areas in California, and in rural areas in
certain Southeastern States brought agitation for the extension of branch
banking privileges to national banks*
In 1927 and again in 1933 the National Bank Act was amended to give
national banks additional powers to operate branches on a basis conyparable with State banks*
period 1927 to 1935

so

State statutes were also changed during the
to extend branch banking privileges of State

banks in several States®

i/ Free banking derived its name from the fact that it developed out
of dissatisfaction with the original practice of authorizing banks
by special charter only* In New York the issuance of special charters was discontinued by the adoption of the Act of April IS, 1838,
which provided that rfany person or association of persons formed
for the purpose of banking * should be authorized1 to establish
offices of discount, deposit, and circulation*"




~ 3~

State Laws and Branch Banting, June 13369 - On the basis of the
statutes as they stood in June 193^, the States may be divided into
three general groups according as the operation of branches or additional offices is (1) authorized, (2) prohibited, or (3) not specifically covered by provision in State laws*

Thirty-four States and the

District of Columbia specifically authorize branch banking; 9 States
specifically prohibit it; and 5 States have no statutory provision regarding branch banking*

Of the 3^ States authorizing branch banking 17

permit the operation of branches on a State-wide basis and 17 restrict
branches to limited areas*
Since 192^, when the first intensive analysis of branch banking was
published in the Federal Reserve Bulletin, the number of States authorizing branch banking has increased from 16 to 3^, and the number of
States either prohibiting or without provisions regarding branch bank>~
ing has declined from 32 to

Moreover, the areas to which the operas

•tion of branches is restricted have been widened©

Only two States per-

mitting branch banking now limit by statute the operation of branches to
the city of the head office*

In general, changes in State laws during

the period 192*1 through 1929 tended to restrict the operation of branches
but after 1929 and during the depression years the changes tended to
liberalize the statutes*
Growth and Distribution of Branch Banking* - Accompanying the liberalization of Federal and State laws regarding branch banking since I92U,
there have been substantial increases in branch banking, both in absolute
terms and in relation to the total number of banks, as well as an extension




of branches over wider areas®

At the end of 1935 there were S04 commer-

cial banks operating 3,llU branches® l/ Moreover, 17 percent of all banking offices were branches at the end of 1935 compared with 7 percent in
192^*

Operation of branches by banks in smaller places increased, branches

were extended outside the city of the head office to rural areas more rapidly than within the c;tyf and the number of branch-operating banks in smaller
places increased at a faster rate than those in the larger centers®
The number of branches outside the city of the head office in 1935
was practically double the number in 192*+, indicating that the area over
which branches are being operated is increasing and is wider now than
12 years ago®

It also indicates that the establishment of branches out-

side the city of the head office in smaller places is increasing and that
rural areas are being provided with banking facilities to an increasing
extent by the establishment of branches*
In 1 9 ^ banks in 29 States and the District of Columbia were operating branches, and in 1935

number of branches in 20 of these States

and in the District of Columbia was larger than in 192*4®

In 8 States

the number of branches declined between 192*+ and 1935 and in 1 the number remained the same®

In 11 additional States branches were established

between 1 2 4 and 1935 ^ ^ in 1 State which had branches in 192*+ there
9*were no branches in 1935*

At the end of 1935 branches were being operated

in 39 States and the District of Columbia®

There were in operation at the

l/ During 1936 the number of branch offices increased by 121® At this
time (July 1937)» material is not yet available for analyzing the
branch situation in detail for the end of 193& a s
teen done in
this volume for the end of 1935®




~ 5~
end of 1935 more than 100 branches or additional offices in each of the following States:

Massachusetts, California, New York, Ohio, Michigan, Iowa, 1/

New Jersey, and Wisconsin* Xt

These States account for two-thirds of all

branch offices in operation in the United States*
Suspensions of Banks Operating Branches, 1 9 2 1 - 1 - During the years
1921-1929, when bank failures were numerous, U5 branch operating banks with
£6 branches suspended*

In the following 5 years, 1930-193^* 33^ banks with

1,201 branches suspended*

There were no suspensions of branch-operating

banks during 1935 and. 193&*

Two-thirds of all branches of suspended banks

in 1930^193^ were head office city branches*
Evaluation of Branch Banking As a Type of Banking Structure* - As a
form of bank organization branch banking as compared with independent banking has definite advantages and disadvantages to the banking public and to
the banks that operate branches*

Experience thus far with branch banking in

the United States has been too limited, however, to test these contentions
adequately*

Experience abroad and theoretical analysis, nevertheless, are

helpful in evaluating them*
The advantages that are claimed for branch banking may be summarized
as follows:

(l) greater safety and increased mobility of funds; (2) more

uniform and lower money rates; (3) more efficient banking services, including greater availability of bank credit to borrowers and to local communities;

more flexible banking facilities; (5) possibilities for better

bank management; (6) greater opportunities for diversification of loans
and deposits; and (7) economies in operation*
Some advocates of branch banking also believe that, if many of th®
small banks were branches of larger institutions, administering monetary

l/ Additional offices with only limited powers are permitted by statute*




and credit policies would be simpler and transferring the funds of large
widely spread corporations would be facilitated*

Opportunities for branch

operation represent ah alternative to the development of chain and group
banking organizations*
Branch banking also has its disadvantages*

Arguments that have been

advanced by opponents from time to time and used effectively in preventing
its extensive development in the United States may be summarized as follows:
(1) it is "monopolistic1*; (2) it would result in a concentration of banking
resources; (3) it would tend to restrict loans, particularly character loans,
in the territory served by branches and local credits would be controlled by
persons not familiar with local conditions; (U) it would siphon funds out of
small communities into financial centers; (5) managements of large branch banking organizations are likely to be too complex and bureaucratic; and (6) oacpensions and failures of banks operating widely distributed branches would be
disastrous*
Problems in the Extension of Branch Banking;* - There are important practical problems that must be considered in connection with the extension of
branch banking in the United States*

These arise in connection with (l)

the multiple jurisdiction of banking in the United States; (2) the relation
of existing independent unit banks to banks with branches; (3) the extent of
the area for the operation of branches;

the conditions under which a

bank should be permitted to establish branches; and (5) the attitudes of
bankers and others toward the extension of branch banking*




Various suggestions have "been made from time to time as to the
area within which a national bank should be allowed to operate "branches

regardless of State laws governing the operation of branches by

State banks.

Among the suggested branch banking areas are the fol-

lowing, or combinations of some of them:




(1) The entire country.
(2) The Federal Reserve district.
(3) The territory assigned to the head office of a
Federal Reserve bank or to a branch thereof,
as the case nay be.
(H). The State.
(5) Adjoining counties , regardless of State or Federal Reserve district lines. Some suggest a
proviso that the aggregate population of the
head office county and of the adjoining counties must not exceed a given number of persons,
e.g., 100,000, 250,000, etc*
(6) The head office county.
(7) Any point not more than a given number of miles
from the head office of the national bank, regardless of county, State,, or Federal Reserve
district lines. The distance suggested by
some is 50 niles and by others 100 miles.
(8) The "trade area" of the head office city, the
"trade area" being left for determination by
the Federal banking authorities in the case
of each application for the establishment of
a branch,
(9) A statutorily defined "trade area," such as the
area which is nearer to the head office city
of the national bank than to any other city
with a given population, e.g., 100,000,
50,000, 25,000, etc.
(10) Any point, regardless of State or Federal Reserve district lines, within such a distance
from the head office of the national bank that
the counties completely included in the circular area represented by the head office as a
center and the branch as the outer point would
not have an aggregate population in excess of a
given number of persons. The population mentioned in this connection is sometimes 100,000,
sometimes 250,000, etc.

~ g ~

Federal and State statutes recognize that "banks establishing and
operating branches should have capital funds adequate to meet their
responsibilities and stipulate minimum capital requirements for such
banks®

As they stand, however, at the present time, the statutes are

defective in several respects®

If the Federal Government continues its

policy of permitting each State to define the extent to which national
banks may operate branches within its borders, a solution to the present
situation for national banks would seem to be to substitute for the present statutes the legal requirements:

(l) that a bank having branches

shall have capital adequate in relation to its deposit liabilities and
other corporate responsibilities, the amount to be determined with the
approval of the Federal supervisory authorities; and (2) that such capital shall not be less in any case than the amount required by State law
for State banks operating the same number of branches in the places where
the national bankfs branches are located®
A limitation of the area within which supervisory authorities may
permit the establishment of branches should be stated in the statute®
Detailed rules and methods with respect to the establishment of branches
might well be left to the supervisory authorities under general legislative instructions that branches should be established only with t i c
&f
regard to the needs of the community for banking facilities anfcacjco:r&
ing to the method most appropriate and sound at the time and place*
The attitude of bankers toward the extension of branch banking
been modified from time to time. At present it appears on the basis




- 9-

of statements made over the past five or six years that metropolitan
bankers are less opposed to the extension of branch banking than formerly and that opinion of country bankers is divided but their opposition
appears somewhat less violent than in the past*

Majority opinion among

groiip bankers appears to favor branch banking as preferable to group
banking*




CHAPTER I
PROBLEM OT Tm STRUCTURE OF il.SRICM BAMING
In modern highly developed exchange economies the banking system
is required to perform two major functions.

On the one hand it is re-

quired to provide facilities for effecting exchange, including the
making of payments and the settling of debts.

On the other it is re-

quired to distribute the available funds of the community among the
users in such a way that the Nation's well-being will be enhanced.
In broad terms, the first of these may be referred to as the monetary
function and the second as the credit supplying function of modern
banking.
In performing these functions individual institutions render
specific services to individual customers locally, and through these
services to individuals

social services are rendered to the national

economy by the banking system as a whole*

Specific services to indi~

viauals include nailing loans, receiving deposits, supplying cash, and
others.

As a consequence of these, media of exchange and facilities

for transferring funds are provided for the oconony as a whole, and
arrangements for testing and maintaining the convertibility of credit
are established.
These services are all essential to the smooth functioning of
the economy and the primary problem of the structure of banking is
to provide an

efficient mechanism to handle then.

When it is re-

alized that more than 90 percent of the volume of payments in the
United States is made through the use of bank credit and that an
interruption in the flow of payments, such as that which occurred




- 10 -

- 11 -

in 1931-33 when large numbers of "banks suspended, paralyzes all economic activity, the importance of an efficient and sound structure
of banking to provide these services becomes still clearer.

By

analogy, the banking system plays the same role in transferring
funds that the transportation system plays in transferring commodities to*and from markets, and an interruption in the flow of
payments is equally as destructive to economic processes in an
cconomy using bank credit as media of exchange, as is a breakdown
in the movement of goods.
Development and Recent Changes in Banking Structure. -

Two

general types of banking structure have developed in modern exchange
economies to perform the functions and render the services thus described,

One of these is a system of branch banking and the other

is a system of independent unit banking.

Branch banking as it is

known at the present time may be defined as a type of bank organization whereby a bank as a single legal entity operates more than
one banking office, each such office being a part of the same legal
entity.

Independent unit banking, as contrasted with branch banking,

is a type of bank organization whereby each bank maintains only one
office.

Branch banking has developed and is typical of banking abroad,

and independent unit banking has developed and prevails generally in
the United States.

In recent years, however, this country has experi-

enced a growth of branch banking in certain areas side by side with
independent banking

and the organization of independent banks into

chains and groups through common ownership of shares of stock.

As

a result of these recent developments, the structure of banking in




- 12 -

the United States is "being reshaped somewhat, but independent banking still prevails as the predominant type of structure®
The unit banking system of this country in order to provide complete facilities

or serving the national economy in transferring funds

has developed an elaborate system of correspondent relationships among
the independent banks®

In widespread branch systems such ao exist in

England and Canada correspondent relationships are not as necessary,
nor would they be in this country if all banks were members of the
Federal Reserve System*
The correspondent system appears at times to work fairly smoothly but in times of stress the full provision of banking facilities may
be disrupted by the failure of large banks holding the cash reserve
balances of many smaller banks®

Failures have not characterized banks-

ing in Canada and England in recent decades and disruptions have
been avoided®

It has often been contended, however, that local loans

are extended more liberally under independent banking in the United
States than in other countries*

The greater losses to depositors in

the United States, however, must be balanced against the claimed greater liberality in loans*
American banking has undergone extensive changes during the past
quarter of a century but they thus far have been patch-work improve-




- 13 -

ments rather than fundamental alterations in the structore itself®
The first and most important change was the erection of the Federal
Reserve System in ±913-191^ on top of the existing banking structure
to perform central banking functions and to improve some of the services of the unit banks0

The Federal Reserve System, however, was

superimposed upon the existing system comprising a great number of
independent banks which had grown up under the idea of "free banking," and the weakness of which was once more demonstrated in the
difficulties of 193X-1933®
Partly as a result of the experiences of 1931-1933* another in>portant change was made when deposit insurance was adopted to protect
the community against future disruptions in local as well as Nationwide banking services*

Whether this experiment will be satisfactory

in the long run remains for the future to determine*
To mitigate the weakness of the banking structure and to improve
the organization of credit, branch banking has been advocated as a
substitute for independent banking and it has developed in some areas
side by side with independent banks*

It remains to be seen whether

branch banking is a cure for the banking difficulties of this country*
The extent to which branch banking has developed and some of the problems involved in its extension are discussed more fully in the following chapters.




- lU -

Forces Influencing the Development of Banking St rue ture. - As in
the case of other countries many forces have influenced the development of the structure of banking in the United States.

Among those

that have "boon particularly powerful are those that developed from
the legal situation governing the granting of ban!1: charters.
dual responsibility for chartering banks —

The

that of the Federal

Government for chartering national banks and that of the individual
States for chartering State banks — has resulted in the development
of a competitive situation that preserved and supported the existing
banking structure with all of its weaknesses, hindered experiments
with genuine branch banking, and prevented the development of a sound
unified banking system capable of serving all sections of the country
economically and efficiently. Efforts upon several occasions to give
national banks power to operate branches were defeated in Congress
through the political influence of established institutions antagonistic to branch banking ,and similar efforts in different States to
give State banks branch banking powers were often thwarted by independent bankers opposed to branch banking.

Throughout the history

of the controversy between independent banking and branch banking
the opposition appears to have been due to a large extent to the
antagonism on the part of local independent banks to the operation
of banks with branchesf

Underlying this opposition has been the

"undoubted fear that competition of branch banks would be destructive
to local independent banks.
Senator Carter Glass, in commenting on the opposition to branch
banking as he had witnessed it in his long experience with banking




- 15 -

legislation in Congress, recently pointed out that the opposition was
seldom voiced " y the customers of "banks. Insofar as opposition has
b
"been expressed by others than "bankers, i.e., by consumers or users of
banking services, it has reflected a feeling that under a system of
branch banking the individual would not receive the sane liberal treatment with reference to loans as under independent banking. At no point
in the history of the controversy does it appear that the interest of
the depositor in the safety of his deposits and the interest of the
economy as a whole in efficient banking services have received much
consideration in the debates relative to the merits of branch b an3ri.ng
and independent banking as types of banking structure for the United
States.




CHAPTER II
EVOLUTION OF BRANCH BANKING IN EHE UNITED STATES
As the hanking structure in the United States has evolved, the
term "branch banking has been used to describe two types of banking
organization - (l> banks with several offices and (2) systems comprising several banks.

It is important to distinguish clearly be-

tween these in studying the evolution of branch bankings
A modern branch banking organization in this country and abroad
is a bank with several offices*

Under this type of organization a

bank operates one or more branches or branch offices, each such office being a part of one single entity*

A system comprising several

banks was an important type of banking organization in several States
before the National Bank Act*

It was an organization the head office

of which functioned only as a board of control, transacting no banking
business itself*

There was a head office or board of control, and

usually each banking company or branch operating under the supervision
of the board of control was locally organized with its own capital and
stockholders*

TJao authority, however, of the board of control over

the branches was very broad*

Outstanding examples of branch banking

organizations of this type were the State banks of Indiana, Missouri,
Ohio, and Iowa, organized in IS3U, 1837* 1^3, and 1858, respectively*
Branch Banking Before the National Bank Act* - The first important
examples of banks with branches were the First and Second Banks of the




-16 -

~ 17 ~

United States*

The First Bank (1792-lSll) established $ offices in 0

cities l/ outside its head office city, Philadelphia, and the Second
Bank (1816-1836) established a maximum of 29 offices and agencies,
one in practically every important city within the existing settled
area Of the United States® gj Forces resulting in the termination
of the First Bank were not based upon the fact that it had branches
and the hostility bringing about the end of the Second Bank appears
to have been due to a variety of economic, political, and social
factory among which the fact that it operated branches was not an
issue*
It should be pointed out, however, that the operation of branches
by the First and Second Banks presented troublesome problems of management and supervision because of the difficulties of communication and
transportation*

Alexander Hamilton foresaw these difficulties and

because of them advised against the establishment of branches*

In

the case of the First Bank, they did not prove to be serious, but
in the case of the Second Bank, which had branches over a more extensive area, they were very serious and contributed to the failure
of the bank to keep the branches under control and thereby to the
weakness of the entire organization*

In commenting upon this point,

l/ Cities in which branches were established included Boston, New York,
Baltimore, Norfolk, Charleston, Savannah, Washington, and New Orleans.
&f In IS25 cities in which branches were operating included New York,
Baltimore, New Orleans, Charleston, Boston, Cincinnati, Washington,
Richmond, Louisville, Lexington, Pittsburgh, Norfolk, Savannah,
Middletown, Hartford, Fayetteville, Chillicothe, Providence, arid
Portsmouth*




- 18 -

with, reference to the Second Bank, Oatterall says in his exhaustive
history of the institution:

^

"The defects of the system were, however,
great and perilous. In the last analysis all resolved themselves into a failure to exercise an
adequate control over the offices."
As in the case of the First and Second Banks the early experiments with, "branch hanking in the Southern States were chiefly with
banks with branches that in structure resembled modern branch organizations.

In general, the branches of the different banks had no

independence and were offices of one single entity.

Hone of the banks

had very many branches but the branches were numerous by 1SUS in
Alabama, Delaware, Georgia, Kentucky, North Carolina, South Carolina,
Tennessee, and Virginia.
The history of banks in the lest and South prior to the Civil War
indicates that branches were taken as a matter of course.

No record

lias been found of contemporary dissatisfaction with them.

Some banks

had more successful Careers than others, but branches appear to have
had little or nothing to do with that fact.

The purpose of branches

in all these cases was evidently to make adequate banking facilities
accessible throughout the State without, however, creating more banks
than could be watched and controlled.
In the Northern and Eastern States where economic and social conditions were developing differently from those In the South and West,

£/ Catterall, Second Bank of the United States, p. U02.
2/ For details as to the number of banks and the number of branches in
different States in IgHg, see U. S« Congress, flst^ 2nd Session,
Hearings before the Committee on Banking and Currency, House of
Representatives, H # Res# lUl, p. U30.




- 19 the principle of free

and independent banking took root by iSUo and

branch banking declined*

By ISUS only 6 branches were reported in the

Eastern States, 2 each in the States of New York, Maryland, and New
Jersey*

By 1S60 the 2 branches in New York had disappeared* 2/

After IS3S as the principle of free banking became popular and
spread rapidly, one of the basic problems that developed along with
it was the regulation of notes issued by the banks*

Steps were neces-

sary to protect note issues and among those taken to safeguard them
were measures to limit the opening of offices to issue notes to the
place specified in the certificate of organisation as the bank*s
"usual place of business."

These measures, which were to prevent

the issue of notes in inaccessible places, ^
the operation of genuine branches*

in effect, prevented

They were resorted to, however,

as measures of currency regulation rather than as measures hostile to
the operation of branches*

There is no reason for thinking that branch

banking as a form of banking organization was an issue underlying these
measures at all*

The problem was the protection of notes, and one ef-

fective way to accomplish this was to prevent the maintenance of bank

l/ Free banking derived its name from the fact that it developed out of
dissatisfaction with the original practice of authorizing hanks by
special charter only* In New York the issuance of special charters
was discontinued by the adoption of the Act of April IS, 1838, which
provided that "any person or association of persons formed for the
purpose of banking 'should be authorized1 to establish offices of
discount, deposit, and circulation."
2/ U« S# Congress, 71st, 2nd Session, Hearings before the Committee on
Banking and Currency, House of Representatives, H* Res. lHl, p. U3O.
3/ Millard Eillmore, Comptroller of the State of New York, Bankers
Maaagino. Vol. II, May 18kSf p. ffo*




- 20 -

offices in places where notes could not bo readily redeemed.

Thus

it is reasonable to conclude that under the system of free "banking
the prevention of the operation of "branches was largely a "by-product
of currency regulation rather than the result of efforts to prevent
branch banking itself.
Branch Banking Under the National Bank Act. - Experiences of the
different States with free banking were drawn upon when the National
Bank Act was prepared in 1863 and provisions similar to the New York
Statutes,which in effect had prevented the operation of branches, were
1/
followed. ~

The National Bank Act contained this provision:

"The

usual business of each national banking association shall be transacted
at an office or banking house located in the place specified in its
organization certificate."

As a result of this, the development of

modern branch banking, i.e., banks with several offices, was prevented
for national banks until 1927 when the Act was amended by the McFadden
Act.

?or a few years previous to this enactment, the Comptroller of

the Currency had by administrative ruling permitted national banks to
operate limited power offices in the head office city where State banks
could exercise such powers.

Since the provisions which operated as a

bar to branches had been included in the free banking statutes of New
York as a by-product of the effort to regulate the issue of notes, it
appears clearly that the underlying reason why the establishment of
branches by national banks was not permitted until fairly recently
goes back to the problem of regulating note issues prior to the Civil
War.
1/ Congressional Globe, Vol. 33, Part 1, 1S62~1863> 37th Congress, 3rd
Session, pp. g^g, 850, and 851.




- 21 -

Although the National Bank Act did not permit the establishment
of banks with branches it appears that the first Comptroller of the
Currency, Hugh McCulloch, regarded the national banking system as
bearing some resemblance to a banking system of branches, each bank
operating as a local branch with its own stockholders, officers, and
capital, under the general supervision of the Comptroller of the Currency.

As an organization the national banking system was in its

structure similar in many respects to the organization of the State
Bank of Indiana, established in 183^»

which Mr. McCulloch had been

president during the greater part of its long and successful career. ^
For about thirty years following the adoption of the National Bank
Act branch banking received but little public attention.

Toward the

end of the last century, however, the demand for banking services,
particularly in rural areas, and the general movement for money and
banking reform that became widespread in the 1890!s, were accompanied
by increased interest in branch banking as a method by v/hich banking
facilities might be extended and improved.
continued for approximately a decade.

Agitation and discussion

In the end no changes were made

in the National Bank Act with reference to the establishment of branches , but the Act was amended in 1900 to permit the organization of
national banks in towns of 3,000 population or less with a minimum
capital of $25>000

as

compared with $50*000 formerly required.

This

made possible at the time a solution to the problem of lack of banking
facilities in smaller places by the establishment of national banks
with small capital, but it set in motion developments that generated
more serious problems for the future.

These, however, did not begin

1/ Hugh McCulloch, Men and Measures of Half a Century.



- 22 -

to materialize until after 1920 when thousands of the small "banks
that were established after 1900 "began to fail.
Branch Banking by State Banks After IgOO. - Although the strong
movement for branch banking by national banks at the turn of the century failed in its aim and was circumvented by the amendment permitting
national banks with small capital to be established in small places,
there were several important branch banking developments by State banks
in the following quarter of a century. Up to 1900 only Ilk branches
had been established by 82 State banks but by 1926
operating 2,280 branches.

595 banks were

Urban branch banking developed more rapidly

than rural branch banking and by the end of the period branches in
urban centers were more than twice as numerous as those in rural areas.
Urban or city-wide branch banking was most pronounced in metropolitan
areas in Massachusetts, Michigan, New lork, and Ohio.

State-wide

branch banking developed extensively in California and in several
Southeastern States.

In California "branches were developed in both

urban and rural areas while in the Southeast they were mainly in rural
communities.
McFadden Act of I927 and Branch Banking. - Development of branches
by State banks during the period

1900 to 1922, when national banks

were not permitted to establish them, resulted in agitation for legislation giving national banks powers to operate branches similar to
those enjoyed by competing State banks. Recommendations to give national banks powers to operate branches wert made by the Federal Reserve Board in 1915, 1917» 1918, 1919; " y the Comptroller of the
b




~ 23 ~
Currency in 1915, 1916, 1917, 1912, 1919. 1920, and 1921; but no legisl£ution was adopted*

In 1922 steps were taken to alleviate the situation

as far as possible, in the absence of legislation, when the Comptroller
authorized national banks to have additional offices with limited banking powers in the city of the head office where State laws permitted
State banks to have branches*
Legislative changes were made in February 1927* when the McFadden
Act was adopted*

The bill had been first introduced in Congress in

February 192^, three years earlier, but intense opposition delayed
its adoption*

In general, in States where branch banking was per-

mitted, the Act authorized the operation by national banks of local
branches within the city of the head office but prohibited the extension of rural branches*

It also restrained State member banks of the

Federal Reserve System from establishing branches outside the city of
the head office and made State banks with out-of-town branches thereafter established ineligible for admission to the Federal Reserve System*

The McFadden Act, therefore, approved intracity branches but dis-

approved out-of-town branches*

With the exception of legalizing the op-

eration of local branches of national banks, the Act in effect did little
more than "freeze" branch banking in the status which then existed*
The McFadden Act was inconsistent in that it permitted the establishment of intracity branches only if the establishment of such branches was
permitted by State law, but it forbade the establishment of out-of-town
branches, regardless

of whether or not the establishment of such branches

was permitted by State law*
I>uring the three years 1927-1929, following the adoption of the McFadden Act, the principal development in the extension of branch banking was the
building up of urban branch systems, particularly by national banks, and the



- 2^ conversion of one of the largest State-wide State branch banking systems into a
national bank*

In contrast, however, to the extension of branches by national

banks during this period there was a movement in several States to prohibit
branches of State banks*

State statutes with reference to branch banking are

analyzed in detail in the following chapter, but it is of interest to note here
that five States - Iowa, Kansas, Montana, Nebraska, and West Virginia - adopted
legislation of this sort between 1927 and 1929*
Banking Act of 1 9 ^ and Branch Banking* - The McFadden Act did not settle
the branch banking issue*

The alarming continuance of bank failures suggested

that the banking structure was inherently weak*
chain banking were becoming important*

At the same time group and

Furthermore, it had been found possible,

where State-wide branch banking was permitted, as in California, for a member
bank which itself could not establish branches outside its home city to con~
trol through affiliation a nonmember bank which could establish them*
Dissatisfaction with the McFadden Act under these circumstances was widespread®

In 1930 the House of Representatives (Seventy-second Congress) author-

ized by Resolution lHl the Committee on Banking and Currency to hold hearings
on the subject of branch, group, and chain banking "for the purpose of obtain*ing information necessary as a basis for legislation*"

At these hearings branch

banking was discussed at length by public officials, bankers, and others*

Among

the important recommendations for an extension of branch banking was that by
the Comptroller of the Currency, Mr* J* W* Pole, who recommended that national
banks under proper supervision be granted the authority to establish branches
in "trade areas*"

The hearings, however, ended in June 1930, and Congress ad-

journed without the introduction of a committee measure pertaining to branch
banking*
When Congress convened the following December a subcommittee of the



• 25 ~
Senate Committee on Banking and Currency was organized under the chairmanship
of Senator Glass to study the "operation of the national and Federal He serve
"banking systems©Branch banking was included by the subcommittee in its study
but was given less attention than by the House Committee the year before*

Hear-

ings were held in the winter and spring of 1931 and the Glass bills, S© 3215,
was introduced in January 1932©
Provisions in the .>111 pertaining to branch banking would have given
greater powers to national banks than the McFadden Act permitted by authorizing Statewide branch banking privileges wherever State banks had the same
privileges*

Opposition, however, developed with reference to this provision

at the hearings on the bill in March 1932, on the ground that it made national
bank branch privileges dependent on State laws®

Following the hearings the bill

was changed and when it was again introduced as S® W+12 on April 12, 1932, it
authorized State-wide branch banking for national banks regardless of State
laws and under certain restrictions it authorized branches to be operated
across State lines®
Although the proposals for extending branch banking by national banks
along the lines suggested in this draft of the Glass bill represented the
most advanced point yet reached by the proponents of branch banking, it also
provided a rallying point for the opponents®

During the months that followed

strong opposition was organized within various banking groups and when the
bill came up again for debate in the Senate in January 1933$ changes were
made by amendment that carried the bill back to the principle embodied in the
first Glass bill, S® 3215, as introduced in January 1932* As finally adopted,
June l6, 1933, the Banking Act of 1933 changed existing legislation (the McFadden Act of 1927) with reference to branch banking mainly by extending to




- 26 -

national banks the same privileges enjoyed by State banks where State laws
permit the operation of branches by State banks*

In effect, this made the

extension of branches by national bants dependant upon State laws and thereby left the decision as to further development of branch banking in the hands
of the several State* > However, the spread of branch banking within the
national system was, and still is, seriously handicapped by the requirement
of certain minimum aggregate capital regardless of whether or not the State
law requires such capital for State banks establishing branches, l/ These
high, capital requirements prevent the establishment of branches by national
banks in a number of agricultural States, even though the State laws permit the establishment of branches by State banks*

They are also prevent-

ing a number of desirable State banks with branches from joining the Federal Reserve System*

The provisions of the McFadden Act as it stood be-

fore amendment by the Banking Act of 1933t the provisions of each of the
versions of the Glass bill with reference to branch banking, and the provisions of the National Bank Act at the present time, as amended by the
Banking Act of 1933t

are

given in Appendix I*

During the years 1931-1935 a number of States adopted legislation
authorizing branch banking on a State-wide basis and others broadened
the areas within the State in \7hich branches are permitted* At the same
time the operation of branches has continued to increase*

1/ See p. lU2£f for further discussion*




CHAPTER III
STATE LAWS AHD BRANCH BAMING, 19^6 1/
Examination of the "banking statutes in different States reveals
Y/iae variations in statutory authorizations as to the operation of
branches or additional offices*
stood in June 193^ ^

On the basis of the statutes as they

summarized in Appendix I, the States may be

divided into three general groups according as the operation of branches or additional officos is (l) authorized, (2) prohibited, or (3) not
specifically covered by State law*

F . States comprising each of these
:o

throe groups are given in Table 3» pages 36 through 399 which show also
the extent of the area in each State in which banks aro permitted to operate branches or additional offices.
Thirty-four States and the District of Columbia specifically by
statute authorize branch banking; 9 States specifically prohibit it;
and 5 States have no statutory provision regarding branch banking*

Of

the 3U States and the District of Columbia authorizing branch banking 17
States and the District of Columbia permit the operation of branches on
a State-wide basis and 17 permit them within limited areas*

Wine of the

States authorizing branches within limited areas permit them beyond the
county of the head office but not State-wide; 6 restrict them to the
U

A distinction is made in some States between "branches" on the one
hand and "offices," "agencies," or "stations" for limited purposes on
the other• The term "branch" is generally used to describe an additional office of a bank that performs the same operations as the parent
bank* "Offices"agencies," or "stations" usually are prohibited from
making loans, but are permitted tc perform the necessary operations involved in receiving and paying deposits. The term "branch or additional
office" as used here includes both types of offices unless otherwise indicated*

2/ State statutes with respect to branch operation by State banks were
summarized in the Federal Reserve Bulletin for November 193&, PP* 858-76.




- 27 -

county of the head office;!/
office of the parent "bank.

and 2 restrict them to the city of the head
Thirty of the States authorizing branch bank-

ing permit branches with full banking powers and four limit the operations
of the branches or additional offices to those involved in receiving and
paying deposits, prohibiting those involved in making loans. Branches
or additional offices in each of these four States are permitted in
areas beyond the county of the head office but are not permitted on a
State-wide basis.
In many States statutory provisions as to the types of branches
and the extent of the areas in which they are permitted are accompanied
by others stipulating conditions under which branches or additional offices may be established.

Among the more important of these provisions

are those relating to the methods by which branch offices may be established; those relating to the size of places where branch offices are
permitted; and those regarding the minimum capital requirements of
banks operating branch offices.
The law of Montana provides that no branch may be established except by consolidation of banks, and the laws of U other States contain
a similar restriction with respect to branches to be established in
certain circumstances.2/

The laws of Arkansas and Iowa provide that

no branch may be established in a place where there is already a banking office, the law of Wisconsin provides that no branch shall be established where there are already adequate banking facilities, and the laws
of 5 other States contain a similar restriction with respect to the establishment of branches in certain circumstances.

The statutes of 10 States

provide a somewhat less severe restriction to the effect that no branch

1/ Including the State of Louisiana in which banks in Allen, Calcasieu, and
Jefferson Davis parishes may operate branches in any one or more of thes
parishes.
2/ For example, if the branch is outside the head office city, in a
place under a certain population, etc.



- 29 -

may be established, except by consolidation or in a place where there is
no banking office, but in most cases this applies only to branches to be
established in certain locations.

Some States have one requirement for

the establishment of branches in certain circumstances and a different
requirement for the establishment of branches in other circumstances,
and thus there is a certain amount of duplication in any such compilation. However, 22 different States have statutes which, in at least
some circumstances, restrict the establishment of branches to consolidations, places without another bank, or an alternative between these
two. l/
The statutes of 10 States contain provisions restricting the establishment of branches to places of a specified population.

In some cases

these population restrictions practically confine branch banking to the
places in which it now exists*

For example, the law of Alabama provides

that a State bank may establish a branch at any place within the county
in which it is located, but another provision of the law restricts the
establishment of branches to counties having a population of over 2^0, 000.

This effectively restricts branch banking to Jefferson County,

in which the City of Birmingham is located, l/
Capital requirements of banks operating branches vary widely in
different States and because of their complexity the statutes with
reference to them are very difficult to describe briefly.

1/ Sco footnote 2/, p » 2],
<




The States

- 30 -

may be grouped according to the following types of capital requirements:

Table 1 - Summary of State Laws by Groups of States Regarding
Minimum Capita,! Requirements for Establishing
Branches or Additional Offices
Minimum statutory capital requirements by groups of States

States in
group &

None
$50,000 to 99,999
100,000 to 199,999
200,000 to 2^9,999
250,000 to ^99,999
500,000, to 99S.999
1,000,000 and over
^
Aggregate capital (or capital and surplus)
necessary to organize bunks in locations
of head office and branches or offices
Miscellaneous requirements based upon
individual branches or offices
Capital and/or surplus equal to percentage
( 0] unless otherwise indicated) of de1co
posits if bank has branches or offices

15
5
k
1
o
3
3
11
12
5

1/ I 1 many cases an individual State has different requirements
1
for branches or additional offices in different places® This
makes it necessary to classify the State in more than one group.

State Branch Banking Statutes Over Twelve Year Period. 192^1936. Through surveys and digests of State statutes relating to branch hanking
prepared by the office of the Board's Counsel at four different dates £/
during the period I92U--I936 information is available revealing changes
in State banking laws during the past twelve years«

Chart 1 has been

prepared on the basis of these surveys and shows the classification of

2/ December 31, I92U - Federal 5cservo
December 31, I929 - Federal Reserve
May 9, 1932
- Federal Reserve
June 1, 1936
- Federal Rescrvo




Bulletin»
Bulletin.
Bulletin.
Bulletin,

March 1925*
April 1930,
July 1932®
November 193&#

CHART 1

CLASSIFICATION OF STATES ACCORDING TO PREVALENT
INTERPRETATIONS PLACED ON STATUTES WITH RESPECT
TO BRANCH BANKING

States permitting State-wide
branch banking
States limiting branches as to location
States prohibiting branch banking or *
legislation regarding branch banking

States permitting State-wide
branch banking
States limiting branches as to location
States prohibiting branch banking or wi
legislation regarding branch banking




- 32

-

States according to prevalent interpretations placed on statutes with respect to "branch "banking as they existed in I92U and in 193^•

classi-

fication of States in I92U and in 193^ is not exactly comparable in some
instances due to different interpretations of the provisions of State laws
with respect to branch banking.

These differences do not, however, affect

the conclusions in an important degree.

In Virginia, for example, a bank

may establish branches in the head office city without regard to population and in other cities with a population of 50,000 or more.

In addition,

a bank may open branches in the head office county or adjoining counties
by purchasing other banks.

Virginia has been classified as permitting

State-wide branch banking.
Among the important changes in State laws regarding branch banking
that have taken place since 1Q2U has been the increase in the number of
States authorizing branch banking

from l6 in 132k to

in 1936* and

the decrease in the number of Sta.tes either prohibiting or without provisions regarding branch banking from 32 in I92U to lU in 193S.

There

has also been an increase in the number of States permitting branches
on a State-wide basis and in the number of States permitting them in
areas within the State beyond the city of the head office.

The number

of States limiting branches to the city of the head office declined from
five in lQ2k to two in 1936.

Table 2 summarizes in greater detail the

situation with reference to the State statutes authorizing branch banking in I92U and in 1936 and shows the changes that have taken place since
192U.




- 33 Table 2 - Number of States Classified. According to
Laws Authorizing Branches or Additional Offices
States classified according to laws
authorizing branches or additional
offices

Number of States Increase ( •
+)
192H
1936 or decrease (-)
192U to 1936

I. States which by statute specifically
authorize branches or additional
offices
ae States authorizing State-wide
branches or additional offices
b. States authorizing branches or
additional offices within
limited areas (1) In city of head office
(2) In county of head office
(3) Beyond county of head office
but not State-wide
Total
Total
II. States which by statute specifically
prohibit branches or additional offices

17

5
1
1
JL
16

+8

2

-3
+5
+g

6
Ji
JL

17

III. States with no legislation regarding branches or additional offices
15
Note: In the District of Columbia branches
were authorized on a district-wide
basis in 1924 and 1936.

+ 10
IS

+

48

-10

48

Analysis of the changes in the State statutes that took place between
the several shorter periods, 1924-1929, I929-I932, I932-I936, included in
the longer period, I92U-I936, shows that the changes that occurred within
the several periods differed widely*

Between 1924 and 19291 the period

which includes approximately 2 years before and 2 years after the adoption of
the McFadden Act, and in which there was much public discussion of branch
banting in Congress and in banking circles, the principal development was the




- 3U adoption of statutes prohibiting "branch hanking by several States which
prior to that time had had no legislation regarding branch banking*
States in this group included Iowa, Kansas, Montana, Nebraska, and West
Virginia.

New Jersey and Tennessee, on the other hand, which had been

without legislation, authorized branch banking within limited areas New Jersey within the city of the head office and Tennessee within the
county of the head office.

Georgia, which had adopted -prohibiting

legislation in 1926, having permitted State-wide branch banking prior
to that time, re-enacted legislation in the summer of 1929 permitting
branches in the city of the head office if the population of the head
office city was not less than SO,000.

The statutes thus restricted

the establishment of branches to only two of the cities in the State.
Vermont in this period authorized State-wide branch banking.
In the period 1929 to 1932, depression, bank suspensions, and extensive discussion of the branch banking provisions of the Glass Bill
were factors infl\xencing branch banking legislation and the trend in
the preceding period prohibiting branch banking was reversed.

Impor-

tant developments were the adoption by four States of legislation
authorizing branch banking and a decrease by U in the number of States
that prior to that time had specifically prohibited branch banking.
The U States adopting legislation that had formerly prohibited branch
banking were Indiana, Iowa, Montana, and Wisconsin.

Iowa and Wisconsin

authorized the establishment of limited-power branches within limited
areas where banking facilities had been destroyed by bank suspensions
and failures.




Indiana authorized the operation of branches within the

- 35

-

co-anty of the head office, and Montana permitted hanks to continue to operate
as branches following consolidation of two or more banks in the same or adjoining counties.

In addition to these changes New Jersey and Ohio broadened

the area in which branches could be operated within the State from the city
to-the county of the head office.
From 1932 to 1936 liberalization of State branch banking statutes continued and was more extensive than in the period 1929 to 1932-

Ten States -

Alabama, Arkansas, Connecticut, Idaho, Michigan, Nevada, Oregon, South Dakota,
Utah, and Washington - that had formerly prohibited or had had no legislation,
authorized branch banking, and seven States - Maine, Massachusetts, Mississippi,
New York, Ohio, Pennsylvania, and Wisconsin - that had formerly permitted
branch banking within limited areas, extended the areas in which branches are
permitted.

Delaware, which had formerly authorized State-wide branch banking,

adopted legislation limiting the operation of branches to the city of the
head office and was the only State that adopted legislation restricting
branch banking during this period.
Of the 10 States authorizing branch banking during this period, 8 authorized State-wide branches;

of the 7 States extending the areas of branch

operation, Maine, which had formerly permitted branches beyond the county of
the head office but not State-wide, amended her statutes to permit Statewide branches.-

In the 6 other States that broadened the areas in which

branches are permitted, the most important development was general extension
of the area beyond the limits of the city where the head office is located. As
a result of this development there are now only 2 States that restrict branches




- 36 to the city of the head office while there are 15 that permit "branches
outside the city of the head office "but not on a Statewide basis.
Table 3 gives a classification of States according to la^s authorizing the operation of branches or additional offices in 192U, 1929,
1932, and 1936 and shoves in summary form by States the authorization
of branch banking for each of these periods.

Table 3 - Classification of States According to Laws Authorizing
Branches or Additional Offices - 192H, 1929, 193?, and 1936
NOTE: The following tabulation is designed to indicate the
general policy of the various States on branch banking
as reflected by the provisions of the laws of such
States, but it does not reflect detailed provisions
of the law in certain States such as restrictions
based upon population of the head office or the place
of the proposed branch, etc. For example, the State
of Virginia is classified in the following tabulation
for 1936 as a State permitting State-wide branch banking, but under the laws of that State branches may be
established on a State-wide basis only in "other cities
having a population of not less than 50>000 inhabitants.nFor such detailed provisions, reference should be had to
the compilation of laws of the individual States as published in the Federal Reserve Bulletin for March 1925,
April 1930, July 1932, and" November 1936.
J« States Which By Statute Specifically Authorize Branches or
L
Additional Offices
A. States Authorizing State-wide Branches or Additional Offices
June
December
December
May
192h
1932
1936
1929




Arizona
California
Delaware
Georgia
Maryland
North Carolina
Rhode Island
South Carolina
Virginia

Arizona
California
Delaware
Maryland
North Carolina.
Rhode Island
South Carolina
Vermont
Virgi nia

Arizona
Arizona
California
California
Connecticut
Delaware
Maryland
Idaho
North Carolina Maine
Maryland
Rhode Island
South Carolina Michigan
Vermont
Nevada
North Carolina **
Virginia
Oregon
Rhode Island
South Carolina
South Dakota**
Utah
Vermont
Virginia
Washington

- 37 B. States Authorizing Branches or Additional Offices Within
Limited Areas




1. States permitting branches or additional offices beyond coiinty
of head office but not State-wide
December
192U
Maine

December
1929
Maine

May
1232
Iowa*
Maine
Montana

June

Louisiana

Louisiana
Tennessee

Indiana
Louisiana
New Jersey
Ohio
Tennessee
Wisconsin*

Alabama
Indiana
Louisiana (s<3e l/> P.28)
Massachusetts
New Jersey
Tennessee

Arkansas*
Iowa*
Mississippi**
Montana
Hew Mexico*
New York
Ohio
Pennsylvania
Wisconsin*
2. States limiting branches or additional offices to county of
head office

3, States limiting branches or additional offices to city 0f
head office
Massachusetts
Mississippi*
New York
Ohio
Pennsylvania*

Georgia
Massachusetts
Mississippi*
New Jersey
New York
Ohio
Pennsylvania

Georgia
Delawar e
Mas s achusotts Georgi a
Mississippi*
New York
Pennsylvania

- 38 II. States Which By Statute Specifically Prohibit Branches or Additional
Offices
December
192U

December
1929

Alabama
Arkansas
Colorado
Connecticut
Florida
Idaho
Illinois
Indiana
Minnesota
Missouri
Nevada
New Mexico
Oregon
Texas
Utah
Washington
Wisconsin

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

May
1932
Alabama
Arkansas
Colorado
Connecticut
Florida
Idaho
Illinois
Kansas
Minnesota
Missouri
Nebraska
Nevada
New Mexico
Oregon
Texas
Utah
Washington
West Virginia

June
1936
Colorado
Florida
Illinois
Kansas
Minnesota (l)
Missouri
Nebraska (l)
Texas
West Virginia (l)

III. States With No Legislation Regarding Branches or Additional Offices
December
192U

December
1929

May
1932

June
1936

Iowa
Kansas
Kentucky***
Michigan****
Montana
Nebraska
New Hampshire
New Jersey
North Dakota
Oklahoma
South Dakota
Tennessee
Vermont
West Virginia
Wyoming

Kentucky***
Michigan****
New Hampshire
North Dakota
Oklahoma
South Dakota
Wyoming

Kentucky***
Michi gan* * * *
New Hampshire
North Dakota
Oklahoma
South Dakota
Wyoming

Kentucky*** (2)
New Hampshire (2)
North Dakota (2)
Oklahoma
Wyoming




- 39 Recapitulation:
December December May June
1924
_1929
1322 1926
I. States Which By Statute Specifically
Authorize Branches or Additional
Offices
A. States Authorizing State-wide
Branches or Additional Offices
B. States Authorizing Branches or
Additional Offices Within Limited
Areas (1) Beyond county of head office
"but not State-wide
(2) In county of head office
(3) In city of head office
II. States Which By Statute Specifically
Prohibit Branches or Additional Office
III. States With No Legislation Regarding
Branches or Additional Offices
Total

16
17

_a
10

_iu

.11

1
1
5

1
2
7

3
6
5

9
6
2

17

22

IS

9

15
Us

7
us

7
Us

3
Us

NOTE: In the District of Columbia branches
were authorized on a district-wide
basis in 1924 and 1936.
* States authorizing by statute only the operation of "offices,!1 "agencies,11
or "stations" for limited purposes, as distinguished from "branches."
** States authorizing by statute the operation of "offices," "agencies," or
"stations" for limited purposes, and branches with full nowers.
*** States permitting by judicial decision the operation of "offices,"
"agencies," or "stations" for limited purposes.
***# States permitting by judicial opinion the operation of "offices,"
"agencies," or "stations" for limited purposes,
(1) States in which branches have been established although branch banking
is now prohibited by statute. Number of banks operating branches and
the number of branches or offices, December 31» 1935»
States are Minnesota, 2 "banks and 6 branches or offices; Nebraska, 2 banks and
2 branches or offices; West Virginia, 2 banks and 2 branches or offices.
(2) States in which branches have been established although there are no
provisions in the statutes regarding branch banking. Number of banks
operating branches and the number of branches or offices December 31»
1935* " y States are - Kentucky, l4 banks and 30 branches or offices;
b
New Hampshire, 1 bank and 1 branch or office; North Dakota, 1 bank
and 1 branch or office.




CHAPTER IV
GROWTH AND DISTRIBUTION OF BRANCH BANKING
Branch banking as it now exists in the United States dates from
the decade 1890-1900.

The National Bank Act in IS63 committed the

country to a policy of independent unit banking and the earlier experiments with branch banking were generally discontinued at that
time.

The majority of State banks and their branches in existence

prior to the Civil War either converted into unit national banks, or
failed as a result of the conflict, or were liquidated when the issuance of bank notes was discontinued*

From the end of the Civil War

until the closing decade of the nineteenth century there was very
little branch banking in the United States,

Towards the end of the

century, however, as deposit banking gradually supplanted issue banking, the number of State banks began to increase and in some instances
these banks established branches.

By 1900, according to the best in-

formation available, a total of 87 banks - 82 State and 5 national were operating a total of 119 branches *
Growth of Branch Banking^ 1900 to 1935
From 1900 to 1915 a gradual growth in branch banking brought the
number of banks operating branches to 397 and the number of branches
to 785. After 1915 growth was faster and by 1920 the number of banks
had increased to 530 and the number of branches to 1,281.

Expansion

of branch banking during the decade of the 1920!s was more rapid than
at any previous time and by 1930 the number of banks had increased to
75O and the number of branches had nearly trebled to a peak of 3»518*




- Ui In the depression years of the early I930?s the number of banks with
branches and the number of branches decreased along with the general
banking collapse.

By the end of 1935» however, branch banking was

increasing again and at that time SOU banks, exclusive of mutual
savings and private banks, were operating 3*11^ branchese

The thirty-

five year development of branch banking as thus described is illustrated in Charts 2 and 3the charts are based.




Table U presents the figures upon which

- 42 -

CHART 2

BANKS OPERATING BRANCHES
IN THE UNITED STATES

NUMBER

NUMBER

900

900

800

800
TOTAL

700
600

/
/

500
400

^

J/'-

^ 4/

STATE

700
m to
a
\ 1

''
/

500

V

V

300

600

400
300

200

200
NI A T I 0 N A L

/

100
0

1900




100

i i i 1 i i 1 i till

1905

1910

1915

1920

1925

1930

1935

Number of State and national banks operating branches in the United States,
1900-1955.
From 1900 to 1920 the figures are for five-year intervals, but •
from 1920 to 1935 they are for each year.




-

43

-

CHART 3

BRANCHES OF BANKS
IN THE UNITED STATES

NUMBER

4000

TOTAL

/
y

//

V-

rATE

* *

NAT 101
slAL

/

i i i i

1900

1905

1910

1915

1920

1925

i i i i

1930

1935

Number of domestic branches of State and national banks in the United States,
1900-1935. From 1900 to 1920 the figures are for five-year intervals, but
from 1920 to 1955 they are for each year.

(1)
Tatle U. Ifeiber of BanJ.s
Opcratin,:, Brandies
or Additional Offices and ITunbcr of
Brandies or Offices
1900-1935
Br
Year ' '
•
T t 'a
o?:
1900
1905
1910
1915
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
19 W
1931
1932
1933
193J4
1935

37
196
292
397
530
5U7
610
671
706
719
7^3
739
77!+
763
750
722
bSO
575
715
sou

opera.tinr "branches
o r officr3
,
ITational [_Statc_
5
5
9
12
21
23
55
91
112
130
148
15 "
S
171
I67
lbb
1<J4
157
l4b
17b
181

82
191
283
335
S09
324
555
580
59U
539

595
586
603
59&
584
558
523
429
539
^23

Brandies or officcs
State
national
'Total
119
350
54s
785
1,281
1,455
1,801
2,0^)4
2,297
2,524
2,701
2,912
3.136
3.3!+9
3,518
3.^3
3,121
2,7-32
2,97;
3 ,114

5
5
12
26
b3
72
1U0
204
256
318
i+21
934
995
1,042
1,110
1,220
1,121
1,243
1,329

114
345
5^6
759
1,218
1.333
1,661
1,S50
2,041
2,206
2,2 SO
2,189
0 ono
C. ,
L-\JC.
2,354
2,353
1,971
1,031
1,730
1,735

(1) Mutual savings and private ban. : not included* Mutual savin,: s band's
s
thus excluded numbered SO and . i d lZKj branches Deccubcr 1935» private
'a
ban.:s numbered 4 and . . d h brandies.
.a
(2) For the years 1900 to 1923> inclusive, tac figures are not as of any
unifom month. For 1^24 they arc: as of June, for 1925 and 192b as
of December, for 1927 to 1931» inclusive, as of June, and for 193^
to 1935? inclusive, taey are as of December•




Branch Banking of State and National Banks» - Prior to 1922 the development of "branches was limited almost entirely to State banksr as shown
" y Charts 2 and 3*
b

Occasionally a State "bank with "branches was converted

into a national "bank and retained its "branches, or was absorbed with its
branches by a national bank*

The growth in the number of branches of

national banks from this source was slow, however% and in 1921 there were
only 72 branches of national banks as compared with 1,383 branches of State
banks.

Beginning in 1922 branches of national banks increased more rapid-

ly and in 193^ they aggregated 1,0U2 as compared with 2fk~j6 for State banks.
The growth of national bank branches from 1922 to 1927 was due chiefly to
the "additional offices" authorized by the Comptroller of the Currency in
cities where State banks were permitted to have branches.

At the same time

there was an increasing number of absorptions of State banks with branches
into the national system*

The growth of branches of national banks was

accelerated by the passage of the McFadden Act on February 25, 1927>
which, with certain restrictions, expressly permitted national banks to
establish branches in their head office cities where State banks were
allowed similar privileges. 1/

The act also provided that a State bank

could become a national bank and continue to operate such other branches
as were legally in operation on February 25, 1927-

The passage of this

act also precipitated the conversion of certain State banks with numercuc
branches into national banks and caused the number of State bank branches
to decline temporarily.

1/ See Chapter II, pp. 22-23, for the legal and legislative history of
branch banking during the period 1922-1933-




46

In the period of the banking crises, 1931-1933, the number of
State and national banks operating branches and the number of branches decreased somewhat.

In 1934 and 1935, however, branches were in-

creasing again and by the end of 1935

623 State banks and 181 national

banks were operating 1,785 and 1,329 branches, respectively.
Branches Outside and in Head Office City. - At the beginning of
the branch banking movement branches were established mainly outside
the city of the head office in rural areas.

By 1910, however, branch

banking in urban areas was beginning and by 1915 it was growing faster
than in rural areas.

Since 1915 the number of branches in the city of

head office has continued greater than the number of outside branches.
Following the banking crises, however, the establishment of branches
outside the city of the head office proceeded rapidly while the number
of head office city branches continued at about the same figure as in
1933.

By the end of 1935 the number of branches in the head office

city aggregated 1,617 as compared with 1,497 outside.

Chart 4 illus-

trates the growth of branches in and outside the city of head office
from 1900 to 1935 and Table 5 gives the statistics upon which this
chart is based.




- 47 -

LOCATION OF BRANCHES OF BANKS
IN THE UNITED STATES

NUMBER

NUMBER

4000

4000

TOTAL
EIRANCHES

//
y

/
/

\

IN HEAC
OFFICE Ci

r
OUTSIDE HE AD
OFFICE c n Y

i I I l IIII

1900




1905

1910

1915

1920

1925

iiii

1930

Number of domestic branches of State and national banks in the United States
in the head office city and outside the head office city, 1900-1935. From
1900 to 1920 the figures are for five-year intervals, but from 1920 to 1935
they are for each year.

1935

Table 5 ~ Number of Branches or Additional Offices of Banks
Within and Without Head Office City 1900-1935

Year ^

Total

Number of branches or offices
In head office cityOutside head office cityState

Total

1
1
1

2U
13U
270

Ui
50

732
85U
1,038
1,146
1,281
1,428
1,^3
1,525
1,5*6
1,621
1,684
1,585
1,233
974
951
931

94
215
277
350
508
551
6%
727
783
800
824

Total (National
1900
1905
1910
1915
1920
1921
1922
1923
192U
1925
1926
1927
192S
1929
1930
1931
1932
1933
193^
1935

119
350
54S
725
1,281
1,^55
1,801
2,05^
2,297
2,52l+
2,701
2,912
3,136
3.3%
3.51S

3M3

3,191
2,752
2,973
3.11*

25
135
271
U35
77

?
904
1,156
1,327
1,51^
1,724

118
181
233
296
3SU
H33
595
650
703
714
831
677
691
686

1,877
1.95S
2,140
2,273
2.3S7
2,299
2,064
1,651
1,6^2
1,617

k20

95k

996
1,076
1,131
l,l64
1,127
1,101
1,331
1,497

National
4
4

11
11
22
22
22
23
23
22
37
290
339
3U5
339
396

??
?
444
552
6%

State
90
211
266
339
486
529
623
704
760
77S
787
664
657
731
792
768
73S
657
779
854

1J See Note 1 Table U.
2/ See Note 2 Table U.
Branches and Banking Offices, « Growth in the number of branches
in the fifteen year period, 1920-1935t as thus described, and the decline at the same time in the number of banks have resulted in a rapid
increase in the proportion of branches to total banking offices.
the end of 19351

At

shown by Chart 5> branches constituted 17 percent

of total balking offices or slightly more than one of every six of the
total offices.

In 1920

branches amounted to less than one of every

twenty of the total offices.




- 49 -

CHART 5

BRANCHES AND TOTAL BANKING OFFICES
RATIO
40

NUMBER
40000

TOTAL
BANKING OFFICES

30000

30

N U M B E R ^ ^ ^ .
OF BANKS

^

20

20000

R A l TO OF BRANCHES
T O T O T&L BANKING OFFICES

10

10000
NUMBER
OF BRANCHES

.

1

1920




1

1

1

I

1925

1

1

1

l

1930

I

1

1

1935

Number of banking offices, banks and branches of State and national banks
(exclusive of mutual savings and private banks) and the ratio of the number of branches to total banking offices in the United States. For the
years 1920 to 1925, inclusive, the figures are not of any uniform month.
For 1924 they are as of June, for 1925 and 1926 as of December, for 1927 to
1930, inclusive, they are as of. June, and for 1931 to 1955, inclusive,
they are as of December.

-

50 -

Distribution of Branch Banking, December 51, 1935
The extent to which branch banking has developed varies widely in
different sections of the country.

As pointed out in Chapter III the

States may be classified into four groups according as branches or additional offices by statute are (1) permitted on a State-wide basis, (2)
permitted on a limited basis, (3) prohibited, or (4) not specifically
covered by legislation,,

Tables 1 and 2 of Appendix II classify the

States on this basis and show for each State and for each class of
banks - national, State member, nonmember, mutual savings and private
banks - the total number of banks, the number of banks operating branches or additional offices, the number of branches or offices, and the
amount of loans and investments,and deposits of all banks and of banks
operating branches or offices*
Proportion of Banks With Branches to Total Banks» - Table 6, summarizing by groups of States the statistics of banks and banking offices,
shows that 5 percent of all banks in the United States operate branches*
In the States, however, that permit branch banking on a State-wide basis
and in those limiting branches to certain areas the proportion is higher ~
10 percent and 8 percent, respectively.

Total banking offices in branch

systems, on the other hand, are much larger in proportion to the total
number of banking offices, constituting 22 percent for the country as
a whole, 44 percent for States permitting State-wide branch banking,and
26 percent for States limiting the operation of branches or additional
offices.
The table also shows by geographic regions that the proportion of
banks operating branches to total banks is largest in the New England and




-

5i

~

Pacific States v/h/ re 15 and 9 percent, respectively, of all ban^s have
branches0

The proportion of total banking offices in branch systems

is largest in the Pacific States v/herc it amounts to 60 percent, and
smallest in the 7;est South Central and the West North Central States
where it is only 5

an

& 7 percent respectively *

It is approximately

percent in l e / England; 32 percent in the kiddle Atlantic States
iv
and 25 percent in the South Atlantic States®




Table 6 -Nurbe] of Bpnks and Banking Offices in 12ranch Systems C^spared
With All 5anks
December 3i» 1935
Ratio of "branch Ratio of banking
States classified acB ranch systens
All t) anks
systems to total offices in branch
cording to lav/ (June 1,
rvcracr of banks systems to total
Total banking
1936) regarding branch
Total "banking
Funber of
Number of
(percent)
banking officcs
banking
offices ("banks ;
offices ("banks
b nrslr^
"C.Li l iV^
h n -O
^
(percent)
and "branches)
and "branches)
V

State-wide branch
banking permitted
Branches linited as to
location
Establishment of branches
prohibited
No provision in State lav;
regarding branch banking
Total - A H States

260

1,757

2,475

3,972

10.5

44.2

522

2,097

6,521

8,096

8.0

25.9

6

16

4,791

4,801

.1

•3

s
l6

Us

1,165

1,197

1.4

4.0

s o4

3,910

952

IS,0b6

5.H

21.7

Bj

313
972
629
252
447
19s

560

7SS
3,059
3,624
3,749
1.S17

15.2
1.2

39-7
31.3
17.4
6.7
24.6

1,320

4.9
l.S
3.o
9.4
5.4

Geographic divisions of
United States
Nov England
Middle A t l a n t i c
East- North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain
Pacific
Total -United States
Note:

l6l
1ST

103
129
5S
32

20
49

bOH

50
S9
929
3.91S

2,24s

3,162
3,600
1,499
1,180
1,660

520
523
14,952

Mutual savings banks and private banks not included in tabulation.




1,717
589
1,403
16,06b

5.3
2.9

S.6

15.0
5*2

15.1
66.2
21.7

1

- 53 The proportion of total loans and investments in hanks operating
"branches to loans and investments of all banks is considerably larger
than the proportion of banking offices in branch systems.

Table 7

shows that it amounts to 53 percent for the country as a whole; 67 percent for States permitting State-wide branch banking; and 63 percent
for States restricting branches limited as to location.

For geographic

regions it amounts to 82 percent in the Pacific States; 69 percent in
the Middle Atlantic States; 55 percent in New England; and U5 percent
in the Southeastern.
Table J - Loans and Investments of Banks Operating Branches or
Additional Offices and Loans and Investments of All Banks
December 31, 1935
States classified according to law (June
1,1936) regarding
branch banking
State-wide branch
banking permitted
$
Branches limited as
to location
Establishment of
branches prohibited
No provision in State
law regarding branch
banking

Loans and investments of banks
operating branches
^(000 omitted)

Loans and invest- Percent of
ments of all banks total in
banks oper(000 omitted)
ating branches
7,0^6,656

67.6

13,^99,^83

21,430,135

63,0

203,33s

5,938,733

106,454

757,827

Total - All States

IS,573,75^

35,173,351

52.2

Geographic divisions of
United States
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain
Pacific

1,300,320
10,822,303
1,703,014
271,883
962,065
292,635
16^,103
106,668
2,950,763

2,369,357
15,634,158
6,049,729
2,513,923
2,1*12,159
939,583
i,3S2,sqi
5^5,743
3,595,80S

5 M
69.2
28.1
H4.9
31.1
11.9
19.5
82.1

Total - United States$ 18,573,754

$ 35,173,351

52.8

U,76U,U79

$

i4.o

10.8

Note: Mutual Savings banks and private banks not included in tabulation.




-

51+ -

Geographic Distribution of Branch Systems

- Table 8 shows that

slightly less than one-third of the banks operating branches or additional offices are in States permitting State-wide branch banking and
nearly two-thirds are in States limiting branch banking

Chart 6 gives

the distribution of branch systems by geographic divisions and shows
that over one-half of the branch systems are in the Middle Atlantic,
the East Forth Central, and the South Atlantic States.

Chart 7 shows

the distribution of branches by geographic divisions.

Table 8 - Banks and Branches or Additional Offices by Groups of States
December 31, 1935
States classified ac- Number of
Number
banks
cording to law (June 1,
of
1936) regarding branch operating
branches
branches
banking

Percent of total in
each group of States
Banks
Branches

State-wide branch banking permitted

260

1,^97

32.3

Ug.l

Branches limited as to
location

522

1,575

64.9

50.6

6

10

.8

•3

l6

32

2.0

1.0

SOU

3.11^

100.0

100.0

10.6
20.0
20.8
12.8
16.0
7-2

7-3
26,1
lU.g
H.g
10.2

U.o
2-5
6.1

1.8
2.2
28.3

100.0

100.0

Establishment of branches prohibited
No provision in State law
regarding branch banking
Total - All States
Geographic divisions of
United States
Hew England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
r/est South Central
Mountain
Pacific

25
161
167
103
129
52
32
20

228
811
H62
1U9
31S
1U0
57
69

J2

gso

Total - United States

mb

Note




3. ii1*

Mutual savings and private banks not included in tabulation.

CHART 6

DISTRIBUTION OF BRANCH SYSTEMS
BY GEOGRAPHIC DIVISIONS, DECEMBER 31,1935
NUMBER

NUMBER

100
80
60
40

20




NEW
MIDDLE
ENGLAND ATLANTIC

EAST

SOUTH
ATLANTIC

EAST
WEST
SOUTH
SOUTH MOUNTAIN PACIFIC
C E N T R A | _ CENTRAL

Number of State and national banks operating branches arranged according to
the geographic divisionsin which they are located.

CHART 6

DISTRIBUTION OF BRANCHES
BY GEOGRAPHIC DIVISIONS, DECEMBER 31, 1935
NUMBER

NUMBER

900

900




300
200
100

NEW

MIDDLE

cwri A nATLANTIC ^
M T
ENGLAND A I amtip

EAST

WEST
EAST
SOUTH
NORTH ^ NORTH ATLANTIC_ SOUTH
AT1 A K m
^
^
CENTRAL

WEST

SOUTH

CENTRAL

MOUNTAIN PACIFIC

Number of branches of State and national banks arranged according to the geographic divisions in which they are located.

- 57 -

Loans and Investments, and Deposits. - Table 9, which summarizes
by groups of States loans and investments, and deposits of banks operating.branches, shows that approximately 25 percent of loans and irv
vestments and of deposits are in banks in the States permitting Statewide branch banking and nearly 75 percent are in States limiting the
operation of branches#

By geographic regions 58 percent of loans and

investments, and deposits are in the Middle Atlantic States and l6
percent are in the Pacific States®

The concentration of loans and

investments, and deposits in banks operating branches in the Middle
Atlantic States is due to the fact that each of several of the large
banks in New York City operates a small number of branches*

The

Guaranty Trust Company, for example, has $1,^00,000,000 of deposits
but operates only two branches.




Table 9 ~ Loans and Investments, and Deposits of All Banks and Banks Operating Branches
or Additional Offices, by Groups of States
December
1935
Loans and investments

States classified according to law (June
1, 1936) regarding
branch banking
State-wide branch
banking permitted

All
Banks operatbanks
ing branches
(000 omi
itted)
$

Branches limited as
to location
Establishment of
branches prohibited

7,0^6,656 $

4, 7&M79 $

Percent of total for each group of States

Deposits
All
banks

Banks oper- Loans and investments
atin g branch- All
Banks operat(000 omitted)
banks
ing branches

Deposits
All Banks oporat
banks ing branches

S,644,oi4 4 5,819,470

20.0

25.7

19.4

24,6

21,U30.135

13,499,^83

26,718,810

17,407,101

60.9

72.7

59.2

73-7

5,938,733

203,338

8,325,218

263,412

16.9

1.1

18.6

l.l

No provision in State
law regarding branch
banking

757,227

106,^51+

993,927

138,937

2.2

.5

2.2

.6

Total - All States

35,173,351

18,573,754

44,686,969

23,628,970

100.0

100.0

100.0

100.0

2,922,677

1,705,790
13,794,818
2,326,438
35^,708

7.0
58.2
9-2
1-5
5-1

6.5
H2.6

58.4

o
a

Geographic divisions of
United States
New England
1,300,320
2,369,357
Middle Atlantic
10,822,30"5
15,63^,158
1,703,014
East North Central
6,049,729
West North Central
271,883
2,513,923
South Atlantic
962,065
2,142,159
East South Central
292,635
939,583
West South Central
1,382,891
164,103
Mountain
106,668
545,7%
Pacific
3,595,SOS
2,950,763
United
Total - St at e s $ 35,173,351 $ is,573,754 $

19,068,735
8,056,400
3,486,941
2,839,289
1,240,681
2,077,538
833,018
4,161,690

6.7
44. 417.2

243,518
149,581
3,379,024

7-2
6.1
2.7
3-9
1.6
10.2

44,686,969$ 23,628,970

100.0

1,285,857
389,236

Note: Mutual savings "banks and private banks not included in this tabulation.



1.6

•9

7.2

18.0

9.8

7-8
6.4

1-5
5-5
1-7
1.0

2.8

.6

.6
15.9

1.9
9-3

1U.3

100.0

100.0

100.0

Types of Branch Systems* - Table 10 shows the types of banks
operating branches by groups of States classified according to the
extent of the area in which branches are operated.

The different

types of systems are (1) those that operate branches confined to
the head office city, (2) those that operate branches outside the
head office city but confined to the head office county, (3) those
that operate branches beyond the county of the head office in contiguous counties, and (4) those that operate branches beyond the
head office county.in non-contiguous counties.

Of the 804 banks

operating branches, 285 operate them only in the city of the head
office; 347 operate them only in the county of the head office; 122
operate them in contiguous counties; and 50 operate them in non-contiguous counties.

The largest proportion of banks operating branches

confined to the city of the head office is in the Middle Atlantic
States; the largest proportion in contiguous counties is in the West
North Central States, in Iowa and Wisconsin particularly, and in the
South Atlantic States, particularly in North Carolina and Virginia;
and the largest proportion in non-contiguous counties is in the South
Atlantic States, particularly in North and South Carolina,and the
Pacific States, especially California.




- 6o -

Table 10 - Types of Branch Systems by Groups of States
December 31» 1935
States classified according to law (June 1,
1936). regarding branch
banking

Number of banks operating branches or offices
Confined
Outside head office city
to head
Head
NonTotal
office Total office Contiguous contiguous
counties
city
county
counties

State-wide branch banking permitted

260

68

192

99

Branches limited as to
location

522

208

31U

2U0

6

5

1

1

l6

h

12

J
_

SOU

285

519

3^7

122

50

85

^3
132
v
k
35
g

Us
29
120

25

16

7

6

26
20

21
97
70
Hg
35
23
7

25
32
10
1
h

Establishment of branches prohibited
No provision in State law
regarding branch banking
Total - All States

39
6U

10

_1

Geographic divisions of
United States
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain
Pacific
Total - United States
Note:

10

l6l

167
103
129
5B

32
20
zok

J£L

21

6

1
1
2
k
lU
5
2
9
12

2g5

519

3^7

122

50

-

99
9U
50

21

Mutual savings "banks and private "banks not included in tabulation.




Table 10 -(Continued) Percentage Distribution of Types
of Branch Systems in Each Group of States
December 31, 1935
— —

i t a . s rl
3.ts.
fi fid
cording to law (June 1,
1936) regarding branch
banking

—

•

'

'

.

—

•

•—.———

Number of banks operating brancnas*o-P offices
...Outside head office city
Confined
NonHead Contiguous
Total to head
Total office counties contiguous
office
county
counties

State-wide "branch banking permitted

32.3

23.9

37.0

28.5

44.3

78.0

Branches limited as to
location

64.y

73»°

60.5

69.2

52.5

20.0

.2

•3

2.3

2.0

3.2

2.0

100.0 100.0

100.0

100.0

Establishment of branches
prohibited

.8

No provision in State law
regarding branch banking

2.0

Total - All States

1.7

100.0

100.0

10.6
20.0
20.8
12.8
lb.O
7-2
4*0
2.5
b.l

15.1
46.3
16.5
i.4
12.3
2.8
2.1

100.0

100.0

-

-

Geographic divisions of
United States
New England
Middle Atlantic
East North Central
' V s North Central
.et
South Atlantic
East South Central
V " s South Central
<et
Mountain
Pacific
Total - United States

-

8,1
5.6
23.1
19a
18.1
9.6
5.0
3.9
7o

7.2
6a
27.9
20.2
13.2
10.1
6.6
2.0
6.1

13.1
5,8
17.2
20.5
2b. 2
8.2
.8
3.3
4.9

100.0 100.0

100.0

2.0
2.0
4.0
8.0
28.0
10.04.0
18.0
24.0
100.0

Note: Mutual savings banks and private banks not included in tabulation.

Location of Branches or Officon. - Examination of Table 11
giving by groups of States the location of branches or additional
offices according to (l) head office city, (2) head office county,
(3) contiguous counties, and (k) non-contiguous counties, shovs
that l,Sl7 or slightly more than one-half of the 3,11^ branches




- 62 are in the city where the parent "bank has its head office.

The remain-

ing 1,U97 branches are distributed as follows: 617 in the county of the
head office but outside of the head office city; 314S in the counties contiguous to the head office county; and 532 in non-contiguous counties*
The largest proportion of head office city branches is in the Middle
Atlantic, East North Central, and Pacific Statbs®

Head office county

branches are largely in the East and West North Central, the South
Atlantic, and the Pacific States. Head office city branches are
largely in New York, California, Ohio, and Michigan, while head office county branches or additional offices are mainly in Iowa, California, and Wisconsin®

Branches operating beyond the county of the

head office are more numerous, in proportion to total branches, in the
New England, the South Atlantic, and the Pacific States.

The States

where these branches are most important are California, North Carolina,
Maine, Oregon, and Washington.




- 63 -

Table 11- Location of Branches or additional Offices,
by Groups of States
. December 31, 1935
Number of branches or offices
In
States ciassilleu acOutside head office city
cording to law (June 1, Total head
Head wUIl 0 1 ^UO Ub Nonoffice Total office c v T f. i contiguous
1936) regarding branch
w c nii U J. V W
W U-.X
t
banking
city
county
counties
State-wide branch banking permitted
1.^97
Branches limited as to
location
1,575
Establishment of branches prohibited
10
Mo provision in State
law regarding branch
banking
Total - i . l States
il

32
1

3 tH *

508

989

kkf

2U8

1.)
491

1,081

kyk

361

96

37

9

1

1

-

-

13
1,617 1,1*97

8

1
+

1

617

3US

532

72

67
Glk

102
87
46
29
Ik
8k

3s
9
2k
32
67
28
3
27
120

1
55
26
2
26
U10

1,6171,1+97

617

3Ug

532

19

Geographic divisions of
United States
Now England
hiddlc Atlantic
East North Central
Vest North Central
South Atlantic
East South Central
Vest South Central
Mountain
Pacific
Total - United States

228
811
462
1^9
3io
i4o
57
69
880
3*11^

115
767
287
8
109
40
23
0
266

113
U4
175
iki
209
100

1U9

3

l
2

Note: Mutual savings and private banics not included in tabulation.




- 6HTable 11
(Continued) Percentage Distribution of Location of
Branches or Additional Offices by Groups of States
December 31, 1935
States classified according to law (Juno
1, 1936) regarding
branch banking

Total

State-wide branch
banking permitted
Ug.l
Branches limited as to
50.6
location
Establishment of branches
prohibited
•3
No provision in State
law regarding branch
1.0
banking

Number of branches or offices
In
Outside head off]
uce city
i
head
NonHead Contigoffice Total office uous
contiguous
city
county counties countics
31. ^

66.1

40.0

71.3

92.9

66.9

33-0

5S.5

27.6

7-0

•5

.1

.2

1.2

.g

1-3

1.1

.1

-

100 oO

100.0

100.0 100.0

100.0

100.0

7*3
26.1
Ik.8
H.g
10.2
M
i.g
2.2
2g,3

,7-1
47.1+
17.g
•5
6.7
2.5
i.h
,1
16.5

7-5 11.7
2.9
5.5
11.7 24.2
9.4 16.5
14.0 l4.1
7-4
6.7
2.3
4.7
4.5
2-3
4 i . o 13.6

10.9
2.6
6.9
9.2
19.3
s.o
.g
7-8
3^-5

.6
.2
•3
1.3
10.3
4.9
.4
4.9
77-1

Total - United States 100.0

100.0

100.0 100.0

100.0

100.0

Total - All States
Geographic divisions of
United States
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain
Pacific

Note:

Mutual savings and private banks not included in tabulation.
Important Branch Banking States. - At the end of 1935 banks in 39

States and the District of Columbia were operating branches or additional
offices.

In different States, however, branch banking varied widely in

its development and importance.

The thirteen States in which the largest

number of banks with branches or additional offices wore operating are
given in Table 12.




Table 12-Number of Banks Operating Branches or Additional Offices
and Number and Location of Branches or Offices in 13 States
December 31» 1935

State

Number 6f
Loans
banks operating
and
Deposits
branches or ad- Investments
Total
ditional" offices (000 omitted) (000 omitted)

California
Indiana
Iowa
Maryland
Mas sachu setts
Michigan
New Jersey
New York
North Carolina
Ohio
Pennsy 1 vani a
Virginia
Wisconsin
Total - 13 States
Total - All States
Percent of 13 States
to A H States

Note:

2,967,281
160,362
70,846
321,523
1,221,932
828,833
845,347
11,232,324
161,150
1,050,119
1,717.1^7
200,162
287,124

794
47
125
76
110
l4i
li4
606
89
169
91
64
105

24l
19

Us
76
36
3*4
37
37
67

2,630,576
115,430
5^.727
265,151
883,975
564,316
676,064
S,725,640
120,458
80S,990
1,420,599
135,440
214,278

597

16,615,704

21,064,150

2,531

8*04

18,573*75*+

23,623,970

38
" T O

93
23
42

7U.3

89.1

367

108
1
27
l4
1
2
1
6
3
2
10
IS

2

27

78
27
98
21
18
17
21
9
24
36
4
31
69

1.449

1,0S2

^53

227

k02

3,11^ 1,617

i>97

617

34s

532

73.H

65.2

'5.6

81*3

Mutual savings and private banks not included in tabulation.




Number of branches or a dditional offices
Oatside head office city
Head
office Tnt
Head office Contiguous Non- c ontiguous
i U lr ai ,
counties
counties
city
county

35
91
120
91
591
7
130
85
21
18

29.6

553
2S
125
4i
19
21
23
15
82
39
6

72.3

-

_

6
-

2
l
-

24

f
vr
j|
1

~ 66 -

Distribution of Branches and Banks by giae of Town. - More than
60 percent of the branches in the United States are divided between
the very large cities and the very small towns?

Thirty** six percent

of them are in cities of over 500^000 population and 26 percent are
in towns of less than 2,500.

Head offico city branches are concen-

trated in cities of 50,000 population and over, more than 95 percent
of them being in these cities®

On the other hand, more than one-half

of the branches outside the city of the head office are in towns with
less than 2,500 population.

Table 13 and Chart 8 show the extent to

which branches are distributed in towns of different size*




Tabic 13 - Number of Branches or Additional Offices by Size of Town
December 31, 1935

Population
of
town
Unicr 25O
250 - U99
500 - 999
1,000 - 2,499
2,500 - 2,999
3,000 - 4,999
5,000 - 5,999
6,000 - 9.999
10,000 - 24,999
25,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 and over
To til

Number of branches or offices
In
Outside head office city
head
Head Contiguous
nonTotal J
office Total office
contiguous
county
city
county
county
100
I87
233
291
52
129
33
108
138
93
137
4si
1,11a
3,114

Total
Under 25O
250 - 499
500 - 999
1,000 - 2,499
2,500 - 2,999
3,000 - 4,999
5,000 - 5,999
6,000 - 9,999
10,000 - 24,999
25,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 and over
Total

3.2
6.0
7.5
9.3
1.7
4.1
l.l

b
1
4
17
39
73
423
1,051

100
187
233
288
52
123
32
104
121
54
64
58
81

72
124
138
103
17
32
12
29
37
16
29
b
2

22
46
42
77
10
37
7
25
21
l4
12
33
2

6
17
53
108
25
54
13
50
61
24
23
19
77

l,bl7

1,497

617

34 >
3

jj1-

-

-

3
-

P'arco: of -tot-il
rA
Out 3 i do head office city
In
head
Hear! Contiguous
llonoffice Total office
conti pious
county
city
county
county
_
-

-

.2
-

•3
.1
.2
4.4
1.1
2.4
3.0
4.4
4.5
15.4
26.2
.. 36.4 65.O
..
100.0

100.0

b.7
12.5
15. b
19.2
3.5
8.2
2.1
6.9
8.1
3.6
M

100.0

11.7
20.1
22.4
16.7
2.7
3.2
1.9
6.0
2.6
1.0
.3
100.0

6.3
13.2
12.1
22.1
2.9
10. b
2.0
7.2
6.0
4.0
3.5
9-5
.6
100.0

1.1
3-2
10.0
20.3
4.7
10.2
2.4
9.4
11.8
3.6
14.5
100.0

Note: Mutual savings and private banks not included in tabulation.




-

68

-

CHART 8

DISTRIBUTION OF BRANCHES
BY SIZE OF TOWN, DECEMBER 31, 1935

NUMBER

NUMBER

1200

1200

^

OUTSIDE HEAD OFFICE CITY

1000

1000

HEAD OFFICE CITY

800

800

600

600

400

400

200

200

1
0

m .

POPULATION UNDER
ro ATTDC
nez-N
GROUPS 250




250
TO
499

500
TO

9 9 9

1•
_

w\

U p t i

11
|

•

1,000 2,500 2,500 5,000 6,000 10,000 25,000 50,000 iOQOOO 500,000
TO
TO
TO
TO
TO
TO
TO
To
TO
AND
2,999 4,999 5,999 9,999 24,999 49,999 99,999 499,999 OVER

2,499

Number of branches located in and outside head office city of State and
national banks in the United States arranged according to the size of
town in which they are located.

- 69 As in the case of tranches, a large proportion of the "banks operating
•branches are in cities of more than 500,000 "copulation and of less than 2,500.
The hanks operating branches, however, are not concentrated in these two
groups of cities to the same extent as the "branches, only 4-5 percent of them
"being in theso cities and towns. Banks in the large cities, i. o.,
those of more than 500,000 population, have 75 percent of the deposits of all
"banks with "branches. Table l4 shows the distribution of branch systems by
size of town in which the head office is located and Table 15 shows the
number of them in the 13 largest cities, together with the location of their
branches.
'
Table l 4 - Branch Systems by Size of
Town of Head Office
December J 1 1935
>,
Population
of
Town
Under 250
250J+99
500-999
1,000-2,499
2,500-2,999
3,000-4,999
5,000-5,999
6,000-9,999
10,000-24,999
25,000-49,999
50,000-99,999
100,000-499,999
500,000 and over
Total

Percejnt of Total.
Number Loans and
Number Loans and
investments Deposits
of
Deposits
of
"banks [000 omitted)(000 onittod) banks investments
21
51
70
105
15
64
12
32
64
54
61
150
105

5.178
6,392
22,428
18,761
27,7^4
33,915
68.237
84,965
18 968
25,067
77-894
91,051
22,091
25,760
64,132
52,337
269,4qo
222,267
388,921
319,450
671,77^
523,498
4,i45,3o4
3,217,861
13,999,468 17,799,765

804

18,573,754

23,628,970

2.6
6.2
5.7
13.1
1-9

8.0
1.5
4.o
8.0

6-7
7-5
18.7

.1

.2

.2

.4
.1
.4

h
.1
.4

.1

.1

•3
1.2
1-7
2.8

13.1

17.3
75-H

100.0

100.0

Note: Mutual Savings and private banks not included in tabulation.




.1

.3
l.l
1-7
2.8
17-5
75-3
100.0

Table IS-Number of Branch Systems Operating Branches or Additional Offices
in the Thirteen Largest Cities in the United States
December 31»1-935
Number of
Number of branches or offices
Loans and
Outside head office city
banks
n ulatiinvestments
Cities :f more than
In
| " r | In • Nonoperating
" 1930
of banks with
i T4
500,000 population
head
conconeon 3 us branches cr Total office Totalj head
branches
(1930 census)
addi ti cnal
tigrus tiguous (000 omitted)
Jofficc
city
offices j
! county county county
6,930,446
463
" 463
4o
7,946,495
2 cw Y^rk City
7
Chicago
3,376,432
64
1,950,961
62
2
2
921,,50
19
Phi 1 adelphi a
h
79
4
Detroit
1,56s,fao2
413,571
75
r
U
143
Los Angeles
211
6c
i,23o,04o
42
620,052
O
IS
-7
54
436,754
6
15
900,429
Cleveland
69
12
321,960
St. Louis
„
504,574
2
2
Baltimore
242,410
7
33
3p
7
669,667
7c'i, i,.S
Boston
47
47
i
4
669,217
10
Pittsburgh
10
420,514
O
O
H
Son Francisco
443
6^4,394
1,O94,295
94
527
3^9
57o,24g
i4
llilwuizuc
2
l4
161,172
a
Buffalo
cl
4
6s
66
2
272,295
573,076
-

-

-

-

-

-

-

1

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Total 13 citics

Deposits
cf banks
v i th
/
branches
(000 omitted)
10,359,592
-

1,201,777
6^9,756
720,764
560,263
-

292,653
969,403
424,555
2,103,712
219,716
301,214

20,525,542

105

i,5S7

1,051

536

60

109

367

13,999,465

17,7^9,765

Remainder of United
States

101,946,500

699

1,527

506

96l

557

239

165

4,574,256

5,529,205

Total United States

122,775,042

so4

3,114 1,617

1/497 617

3^5

532

10,573,75^

23,625,970

to: Mutual savings and private banks not included in tabulation•




'
^
,

Distribution of Branches and Banks by Size of Banks . - Approximately
one-half of the branches in existence are operated by the very large banks,
as sho^n in Table Id.

Of the total of

branches or offices, 1,555

are operated by 6l banks each with $50,000,000 or more of loans and investments.

These 6l banks hold 76 percent of total loans and investments,

and deposits of all banks operating branches.

Table l6 and Chart 9 show

that the number of banks operating branches, however, is fairly evenly
distributed between large banks and small banks; 397 having loans and
investments under $2,000,000 and U07 having loans and investments of
$2,000,000 or more.

Table 16 - Banks Operating Branches or Additional Offices
Classified by Size of Loans and Investments
December 31, 1935
Number
Numb er of
Size group
branchof
loans and
es or
banks
investments
offices
(000 omitted)

Under
100 150 250 -00 -

$100
iks
2U9
U99
999
1 , 0 0 0 - 1,999
2,000 - U,9$9
5,000 - 9.999
10,000 - ^9,999
50,000 and over
Total
NOTE:

fa

Loans
and
investDeposits
ments
(000 omitted)

Percent of
Number
of
Number
branchof
es or
banks
offices

.1
.2
.5
.5
2.1
3.4
16.5
76/7
100.0

125
S4
137
61

.7
1.6
8.1
15.2
14.4
9-3
15.6
10.5
17.0
7.6

^9-9

.1
,2
.5
.5
2.2
3.6
16.5
76.4

SOU

3,11*1 IS,57U, 7 ^ 23,628,970
54

100.0

100.0

100.0

75

19.1

Mutual savings and private banks not included in tabulation.




Deposits

S
$S©7
$507
2,454
1,644
13
12,474
72
18.073
i4s
1+3,882
57,227
169
S3.S31
105,273
10s
125,121
103,949
224
406,388
498,149
664,219
807,241
203
3,900,148
596
3,071,174
1,555 l4,185,086 12,113,797

13
65
122
116

.2
.4
2.3
4.8
6.1
3-5
7.2
6.5

total
Loans
and
investments

-

72 -

CHART 9

DISTRIBUTION OF BRANCH SYSTEMS
BY SIZE OF BANK, DECEMBER 31,1935

NUMBER

NUMBER

140

120

teo

100

100

80

80

m




l

IIIIIIII
IIIIIIII
IIIIIIII

0
SIZE GROUPS
IN
UNDER
THOUSANDS t o o
OF DOLLARS

i

250

149

249

500

ipoo

2,000

5,000

10,000

TO

TO

TO

TO

TO

TO

TO

50,000
AND

499

999

1,999

4,999

9,999

49,999

OVER

Number of State and national banks in the United States operating branches
arranged according to the size of the banks as measured by the amount of
loans and investments.

60
40

20

- 73 The majority of the large "banks operate "branches "but there is
very little correspondent relation "between size of "bank and number
of "branches.

Of the 50 largest banks in the country as shown in

Appendix II, 15 have no branches; and nine have only 1 to 2 "branches
each, 1 of these being the third largest bank in the country.
fifth and seventh largest "banks have no branches at all.

The

The ma-

jority of these banks are metropolitan banks, with large business
with country correspondents and with correspondents in foreign fields,
and were large before they acquired branches. Their branches are responsible for only a portion of their subsequent growths

It has

rather been through consolidation that the banks have grown, consolidation having been more extensive and having affected more banks
than branch operation.

Only in certain States, especially California,

and not until recently has branch banking been able to follow consolidation.
Table 17 shows that the capital of banks operating branches
varies from less than $25,000 to over $1*000,000e

Approximately 25

percent of the banks have $1,000,000 of capital or over and 10 percent have $25i000 or less.

Deposits, however, of the small banks

with branches constitute one-tenth of 1 percent while those of the
larger banks amount to 32. percent of the total.




-

7k

~

Table 17 - Banks Operating Branches or Additional Offices,
Classified by Amount of Capital Stock l/
December 31, 1935
Amount of
capital stock
(000 omitted)

Number
of
"banks

Number
of
branches

Less than $25,000
25,000
26,000 - Us,000
50,000
51,000 - 93,000
100,000
101,000 - 199,000
200,000
201,000 - 2^9,000
250,000
251,000 - 4-99,000
500,000
ROI,000 - 999,000
1,000,'000
Over 1,000,000

22
55
50
53
60
61
32
12
10
60
26
72
30
198

22
64
61
63
87
S3
90
58
21
30
99
57
180
88
2,111

$4,084
14,388
16,251
25,576
34,953
67,109
57,53S
75,672
IS,97S
21,090
191,579
19S,113
429,180
360,186
17.053.057

$5,576
18,815
20,745
34,153
44,190
83,139
67,739
94,016
21,777
26,765
241,873
232,356
531,105
477,924
21,728.737

804

3,11^

13,573,75^

23,628,970

Total

Loans and
Deposits
investments
(000 omi.tted)

Percentage distribution
Less than $25,000
25,000
26,000 - 49,000
50,000
51,000 - 99,000
100,000
101,000 - 199,000
200,000
201,000 - 249,000
250,000
251,000 - 499,000
500,000
501,000 - 999,000
1,000,000
Over 1,000,000
Total

2.7
6.9
6.2
6.6
7.8

H
24.6

.7
2.0
1.9
2.0
2.S
2.7
2.9
1.9
.7
1.0
3.2
1.8
5.8
2.8
67.8

.1
.1
.1
.2
.4
.3
.4
.1
.1
1.0
1.1
2.3
2.0
91.8

.4
.1
.1
1.0
1.0
2.2
2.0
92.0

100.0

100.0

100.0

100.0

7.5

7.6
4.0
1.5
1.2
7.5

3.2
9.0

—

.1
.1
.1
.2
.4

l/ Aggregate par value of common and preferred stock plus capital notes and debentures sold to the Reconstruction Finance Corporation.
NOTE:

Mutual savings and private banks not included in tabulation.




Classification of Branch Systems• - Classification of branch
systems by number of branches per system, as given in Table 18,
shows that the number of branches operated by the majority of branch
operating baiks is small*

More than one-half of the banks operating

branches have only one branch each.
has 420 branches.

At the other extreme one bank

Only two bonks have more than 100 branches while

476 have only one each and 243 have from two to five each*

The two

largest systems have 539 branches while the 719 smaller ones operate
only 1,157 branches.

The average size of the 476 banks with one

branch each is about $5,650,000 of deposits, and that of the 129
banks with two branches is about $>35,000,000.

Deposits of the bank

with 420 bronchos are approximately $1,150,000,000*

The banks with

two branches each obviously include some of the very large banks.




Table 18-r Number of Branch Systems Classified by Fumber
of Branches or Additional Offices in Each System
i
Dccc-faer 31,1935;
Funbor cf
branches
per
bank
1
2
3
5
6
7
g
9
10
11
12
13
14
15
lb
17
19
20
24
25
2b
27
23
30
33
35
3s
53
54
55
63
70
73
119
420
Total

j f x b r of
j-nc
b anks
operating
branches
476
129
56
35
23
12
g
5
6
6
R
3
4
7
2
3
3
l
2
l
l
1
^

-1
J_

1
1
].

l
l
l
l
1
1
1
2
1
1
804

Aggregate
n - . e r of
uib
branches
476
258
l6g
i4o
115
72
56
4o
54
60
55
36
52
98
30
48
51
19
4o
24
25
26
27
25
30
33
35
3s
53
54
55
63
70
146
119
420
3.114

Aggregrte
Aggregate
loans and
deposits
investrents (000 onitted)
(000 onitted)
2,256,998
3.519.095
776,388
511.993
631,895
285.296
262,998
465,967
168,536
510,050
186,649
73.894
1,260,763
224,907
20,793
302,711
284,5S2
73,060
42,534
379,43b.
56,lb4
79,372
241,246
so,341
110,073
13&,91£
75.S15
1,350,205
65,126
222,237
502,le£
346,2E2
217,757
1,315,477
466,G25
1,06c,559

2,692,979
4,494,676
958,020
694,188
766,194
360,266
347,929
635,402
240,318
6^1,675
233,109
97.871
1,591.105
281,924
36,977
395.102
328,888
89,663
55,998
575,305
6s,825
113,290
365,060
100,919
134,784
95,245
2,006,551
83,901
303,176
552,305
483,173
242,6-2
1,702,153
525,127
1,l4o,752
23,628,970

Note: Mutual savings and private banks not included in tabulation,




~ 77 ~

A large proportion of tile hanks operating branches have them only
in the city of the head office of the parent bank and very few have
branches beyond the county of the head office*

Table 19* which illus-

trates the distribution of the SOU banks with branches according to the
number of towns and counties in which the various branch offices are
located, shows that only 172 banks have branches outside the county of
the head office.

Of the SOU banks with branches or offices, 285 have

all of their branches in the head office city; 519 have them in 1 city
outside the head office city and 101 have them in 2 towns outside the
head office city. At the other extreme 1 bank, the Bank of America
I . T. & S. A, in California, has branches in
T
counties.




towns and in 52

~ 78 ~
Table 19 - Banks Operating Branches or Additional Officess
Classified " y Number of Towns and Counties in Which
b
Branches or Offices are Located
December 31 f 1935
Towns
Counties
i Number of counties
Number of towns
Number of "banks
Number of banks
outside nead office
outside head office
operating branches
operating branches 1
city in which ofcounty in which ofor offices
or offices
fices are located
fices axe located
1
2
3
k
5
6
7
8
9
10
11
12
13
lU
15
17
20
31
ks
2V+
Total banks operating branches outside head office
city
Banks with branches
in head office city
only
Total banks operating
branches

NOTE:

319
101

ko

1
2
3

17

9
6
2
1
s
3
2
—

l
3
2
1
l
1
l
l

5
6
7
8
9
10
11
12
13
ih
15

12
57
S
6
8
2
2
2
4
2
1
-

2
1
-

17

20
52

-

1

519

Total banks operating branches outside head office
county

172

2S5

Banks with branches
in head office county
only

632

SO^

Total banks operating
branches

S04

Mutual savings banks and private banks not included in tabulation.




-

of

79 -

Establishing Branches, - Of the 3,114 branches in op-

eration, as shown in Table 20, 1,977 were established de novo, and
1,105 were established by conversion of a bank into a branch.

In

head office cities branches have been established de novo to a greater
extent than outside the head office cities.

In non-contiguous counties

more branches have been established by conversion of existing banks than
de novo.

Table 20 - Branches or Additional Offices Classified According
to Method by Which Established
December 31, 1935

Total

Head
office
city

De novo

1.977

By conversion of a bank
into a branch
Unknown

1,105

U5I

32

Outside head office city
Non-conConHead
tiguous tiguous
office
Total
.s
county _ Mintiss ..count i e

1.153

Method by which
established

Total

NOTE:

3. ii1*

3SS

210

226

654

218

135

301

13

19

11

3

5

1.617

1/497

617

3^8

532

Mutual savings and private banks not included in tabulation.




- go

-

Branch Banking Over Twelve-Year Period, 192U-I955
Since l$2k when the first intensive analysis of the development of
branch banking in the United States was published by the Federal Reserve
Board 1/ important changes in branch banking have taken place*

Laws

with reference to the operation of branches have been liberalized in
many States and those for national banks likewise have been liberalized.
Liberalization of statutes has been accompanied by an increase in the
operation of branches and by measurable
size of branch systems.

changes in the location and

In Chapter III the changes in State laws were

analyzed and Tables 21 and 22 summarize the important changes with reference to the extent of branch banking and the location and size of
branch systems between I92U and 1935•
Over the twelve-year period the major changes were substantial,
absolute and relative increases in branch banking and an extension of
branches over wider areas.

In 1935? 17 percent of all banking offices

were branches, as compared with seven percent in I92U.

Thus somewhat

more than one-sixth of banking offices in the United States in 1935
were branches v?hile twelve years ago about one-fifteenth of total offices were branches*
As these increases in the proportion of branch banking to total
banking took place over the period, there were important changes in the
location and size of branch systems.

Operation of branches by banks in

smaller places increased, branches were extended outside the city of
the head office to rural areas more rapidly than within the city, and
the number of branch operating banks in the smaller places increased
at a faster rate than those in the larger centers,
1/ Federal Beserve~ltalletin» December I92U, pp, 925-9U0,




Branch operating banks in towns of less than 2,500 population increased
percent and the number of branches in towns of this size increased 63
percentc

On the other hand, branch operating banks in towns of 100,000

population and over were 10 percent less than in 192^, and the number
of branches in these towns increased only 23 percent for the period, a
smaller increase than that for any other group of towns.
The number of branches outside the city of the head office practically
doubled between 1 2 4 and 1935» indicating that the area over which branches
9*are being operated is increasing and is wider now than twelve years ago*
It also indicates that the establishment of branches outside the city of
the head office in smaller places is growing and that rural areas are
being provided to an increasing extent with banking facilities in this way.
In 192^ banks in 29 States and the District of Columbia were operating branches and in 1935 the number of branches in 20 of these States and
the District of Columbia was larger than in 192^.
of branches declined between 192^4 and 1935 an(i
same*

In 8 States the number
one

it remained the

In 11 additional States banks established branches between 192^4

and 1935 an£i at the end of 1935 "branches were being operated in 39 States
and the District of Columbia.

States in which the largest increases (more

than 3O) in the number of branches or additional offices occurred were
California (256), New York (2^7), Iowa (125), Wisconsin (96), New Jersey
(93), Oregon (Ul), Indiana (39), Washington (37), and Massachusetts (36)*
States in which there were the largest declines in number of branches
(5 or more) were Michigan (191)* Louisiana (^2), Ohio (3^), Georgia (29),
Delaware (5), Minnesota (5)> and Tennessee (5)*




Table 21 - Changes in Branch Banking in the United States
between 13?k and 1935

Increase (+)
or
Decrease (-)
Extent of Branch Banking
Total banking offices
Total branches
Hat i0 of V/enches to total
banking offices

30,701
2,233
7-3

(percent)

is,066
3.114

- 41.2
h 39.5

17.2

+ 135.6

Location and. Size of Branch Systems
Banks operating branches with
head office in towns and
citiesUndcr 2,500
2,500-24,999
25,000-99,999

100,000 and over

Total
Branches in towns and cities
Under 2,500
2,500-2^,999
ooo~99,999

100,000 and over

Total

134
15:3
102

234
631

247
187
115
255
so4

+
+
+
-

+

Sll
460
230
1,613
3,114

+ 63.5
+ 104.4
4- 29.2
+ 23.4
+ 41.2
+
+
+

10. f}
94.4

2,233

1,617
1,497
3,114

559
122
621

661
1U3
204

+
+
+

12.2
17.2
12.1

496
225
17C
1,307
. J 2,206 .

Injj;ib jr of branches

In head office city
Outside
Total
Nunbcr of banks operating
1-3 branches
4 or more branches
Total

24.3
20.6
6.5
10.2
12.1

1,463
770

39-5

1/ The 1924 figures are those published in the December 1924 F. R. B u l l e t i n
page 924, and do not agree with those in Tables 4 and 5 which are revisod figures for which details are not available.
2/ No report on 27 branches,




- 83 Table 2? ~ Changes in the Number of Branches or Additional
Offices, by States between 192^ and 1935
June .December
192U:1/ 1935
States with banks operating branches
or additional offices in I92U
Alabama
19
22
Arizona
20
21
Arkansas
3
6
California
538
79U
Delaware
IS
12
District of Columbia
19
30
Florida
1
Georgia
53
2U
Indiana
8
Kentucky
12
30
Louisiana
93
51
Maine
%7
58
Massachusetts
7^
110
Maryland
J2
iG
Michigan
332
141
Minnesota
11
6
Mississippi
25
Nebraska
2
2
New Jersey
21
114
606
New York
359
North Carolina
0?
§9
Ohio
2O3
lb9
Oregon
1
42
Pennsylvania
82
91
Rhode Island
19
38
South Carolina
20
21
Tennessee
53
y
Virginia
^5
Washington
7
kM
Wisconsin
9
105
States without banks operating branches
or additional offices in I92U with such
hanks in 1935
Connecticut
9
Idaho
26
Iowa
125
Nevada
7
New Hampshire
1
New Mexico
5
North Dakota
1
South Dakota
15
Utah
10
Vermont
12
T7est Virginia
2
Total All States
33 3Tli5
Number of States with
banks operating branches or
2/ 30
additional offices

Increase (+) or
Decrease (~)

+

3

+

1

+

3

+256
-

6

+ 11
- 1
- 29
+ 39
+ IS
- 42
+ 11
.
+ 36
+ 4
-191
- 5
+ 15
+ 93
+247
j
+ 22
+ ii
+ 9
19
1
5
19
37
96

+ 9
+ 26
+125
+ 7
+ 1
+ 5
+ 1
+ 15
+ 10
+ 12
+ 2
+SS1
+ 10

1 / The 1924 figures are those published in the December 1924
S. ^uj-letin
page 924, and do not agree with those shown in Tables 4 and 5 which
are revised figures for which details are not available,
2/ Includes District of Columbia.




CHAPTER V
EXPERIENCE WITH BANKS OPERATING BRANCHES
Experience with branch banking on an important scale in the United
States covers only the l6 years since 1920, one of the most difficult
periods in American banking history*

Wide-spread bank failures occurred

throughout the period and finally in 1933 the entire banking structure
collapsed*

The results of the operations of branches in the United

States from 1921 to 1936 on the basis of the record of suspensions of
banks with branches and such other information as is available are
analyzed in the following paragraphs*

Suspensions of Banks Operating: Branches, 1921-1936
A total of 3S3 banks which were operating branches suspended from
1921 through 193^ involving 1,237 branches*
of branch systems in 1935 o r

193&*

period as a whole occurred after 1930*

There were no suspensions

Most of the suspensions for the
From 1921 through 1929 only

banks with 26 branches suspended as compared with 33S banks with 1,201
branches from 1930 to 193*U

Moreover, the banks that suspended after

I93O were larger than those prior to that time*

The average number of

branches per suspended bank in 1930-1931* was approximately four as con>pared with less than two in 1921-1929*

Loans and investments of such

banks in 193O-I93U averaged $9*100,000 and $1,300,000 in 1921-1929•
Table 23 shows suspensions by years from 1921 to 1936*




- g5 -

The table also shows that total loans and investments of all banks
operating branches which suspended in 192I-I936 were $3,151,000,000 and
that the deposits of these banks were $2,691,000,000.

This excess of

loans and investments over deposits is typical among suspending berJcD
since there is often a decrease in deposits before closing.




Table 23 - Suspensions of Banks with Branches, 1/ 1921-1936

Year

Numb er Percent
of
of
suspen- total
sions
6

1921

1.6

1922
2
.5
4
1.1
1923
192U
It
1.1
1925
2
.5
1926
11
2.9
.8
1927
3
192S
.8
3
2.6
10
1929
10.4
40
1930
9U
24.p;
1931
28
1932
7.3
44.6
1933 2/ 171
193U
5
1.3
None
1935
1936
None
Total

383

100.0

Number of branches
Percent Loans and
Percent
Outside head office city
In
investments
of
of
head In head In con- In non-ccn- Total
tiguous
office office tiguous
total (000 omitted) total
city
county counties counties
r

3
-

1

-

R

1

b
2

-

6

3

-

1
-

7
109
166

IS
490
8

S02

4
l
10

6
7
7
27
51
20
120
3

265

-

1
1
-

3
l

-

20
-

-

-

4

-

10

1

22

2

9
53
1

105

43
48
-

115

5
2
33
7
7
18
147
241
90
711
12

1 ,287

•5
.2
•5
.4
.2
2.6
.5
.5

1.4
11.4
18.7
7.0
55.2
.9

100.0

$33,911
1,921
2,629
1,867
2,652

11,724
2,226
2,843
23,213

434,074
538,947

99,873
1,976,371
18,26s

3,150,519

1.1
.0

.1
.0

.1
.4
.1
.1
.7
13.g
17.1
3.2
62.7

.b

100.0

Deposits percent
of
(000
omitted) total

$36,299
1,463
1,979
l,4oi
2,4lg
9,870
3,061
2,795

1.3
.1

359,663

.1
.1
.1
.4
.1
.1
•7
13.4

456,552

17.O

20,105

73,332
1,700,420

2.7
63.1
.8

21,701

2- , 6 9 1 , 0 5 9

100.0

1/ Mutual savings and private hanks not included in this tabulation• Mutual savings banks thus excluded that
failed in 1921-1936 numbered 3 and had 3 branches. One of these banks suspended in 1928, one in 1932 and
one in 1933> private banks numbered 2 and had H branches. One of these banks suspended in 1921 and the
other in 193°*
2/ Includes 13 banks with loans and investments of $75*966,000 and deposits of $52,6U6,000 which suspended
between January 1, 1933 and March 15, 1933; 1 3 licensed banks with loans and investments of $57*002,000
'
and deposits of $^9,^58,000 which suspended between March l6,. 1933 and December 31> 1933» 98 banks with
loans and investments of $1,663,022,000 and deposits of $ 1 , ^ 5 3 , 2 8 7 l i c e n s e d following the holiday and subsequently placed in liquidation or receivership; and h J banks with loans and investments of
~
$130,381,000 and deposits of $1^5,029,000 not licensed by June 30, 1933 but licensed at one time or
is
another after that date. By the end of June 1933
believed that supervisory authorities had completed their examination of the banks not granted licenses immediately following the banking holiday and
had authorized such banks to reopen as could then qualify for licenses.



-

87 -

State and National Banks* - Of the 3S3 banks operating branches
which suspended between 1921 and 193&, as shown in Table 2*+, 332, were
State banks and 5* were national banks*
branches suspended prior to 1930»

No national bank operating

Loans and investments of the State

banks operating branches which suspended amounted to $2,190,000,000
and those of national banks amounted to $9^1,000,000*

Most of the

suspensions of national banks operating branches are recorded for 1933
and represent banks which failed to open following the banking holiday*




~

92 ~

Table 24 - Suspensions of State and National Banks
with Branches, l/ 1921-1936
Number
of susYear

Total

Number of branches
Outside'head office city Loans and
In
Deposits
In head In con- In non- investments
head
tiguous ccntiguous (000 omitted) (000 omitted)
office office
county counties counties
city
State banks

6

1921

2
4
4
2

1922
1923

1924
1925
1926
1927
192S
1929
1930
1931
1932

11

3
3
10

3*
S5

/ 26
2/ 133
5

m

6
6
5
2
33
7
7
IS
145
213
44$
12

$33,911
1,921

3
1

O

1

2,629

1

1,367

1
10

6

7
107
144
$
3

2,652
20

3
1

2,226

333.407
433,564

10

50

3,061

2,795
20,105
309,254
403,530

943,049
13,263

317,971
21,701

2,343

7
7
27

22

20
117
3

11,724

$36,299
1,463
1,979
i,4oi
2,413
9,370

23,213

4

iS

63,461

1935
1936

332

990

516

102

ill,

2,139,949

1,249,709

50,667

261

50,409
47,972
9,371
733,092

National banks
1921-

1S2S.
1930
1931
1932
1933 i
193^
1935
1936

Nono
2
9
2

3*
-

2

23
20

7
-

2
22

1

5
257

3

3

-

-

-

51

297

1,237

302

21,220

£

Total

1/ See footnote 1/ Table 23.
2/ See footnote 2/ Table 23.




333,300
-

-

960,570

236

Total—
State
nat ion>al
3#3

55,3*3

265

105

115

341,350

3,150,519

2,691,059

- S9 Location of Branches, - Of the total of 1,287 branches operated by
the suspended banks, 802 or 62 percent of the total were head office
city branches*

One-fifth of the total branches rsre outside the city

of the head office in the head office county, and over one-sixth of
them v t e in contiguous and non-contiguous counties.
si

Table 25 presents

these figures in detail.

Table 25 - Branch Offices of Banks, Suspended 1921-1936*
All Banks Operating Branches, December 31 > 1935 >
by Location

Location

Head office city
Outside head office city
Head office county
Contiguous counties
Non-contiguous counties
Total

Branch-operating
banks suspended
1921-1936
Percent
Number
of total

of

All branch-operating banks
December 31. 1935
Percent
Number
of total

802

62.3

1,617

51.9

265
105
U5

20.6
8.2
8.9

617
3*+8
<732

19.8
11.2
17.1

1,287

100.0

3,114

100.0

Table 26 presents a distribution of branch offices of suspended
banks by the size of city or town in which such branch offices were located.

Of the total of 1,287 branches of suspended banks during 1921-

1936, 760 were located in towns of 50,000 population or more, and 750
of these branches were head office branches.

The disproportionately

large share of head office city branches of suspended banks in large
towns, as thus indicated, reflects the suspension of several very large
metropolitan banks.




- 90 Table 26 - Branch Offices of Banks, Suspended 1921-1936,
by the Size of Town in Which the Branches
Were Operated 1J

Size of town
or city
(Population 1930)
Under 1,000
1,000 - 2,499
2,500 - 9,999
10,000

-

49,999

50,000 and over
Total

Total

260
110
85
72
760
1,287

Number of branch offices
Outside head office city
Head
Non-conConHead
office
tiguous
office • tiguous
city
counties counties
county

1

7
44

17 6
49

42

42

36

26

24

24
28
18

8
6

2
1

265

105

I5Q.

802

115

1J Appendix IV gives the statistics in detail on which this table is
based.

By Number of Localities* - Most of the suspended branch-operating
banks had branches in only one city or county, as shown in Table 27«
Of the 383 suspended banks 300 operated branches in only one city and
3U5 had branches in only one county.

Of the 1,287 branches operated

by the suspended banks, 85^ were attached to banks operating branches
in only one city and 1,009 were attached to banks operating branches
in only one county.




- 91 Table 27 - Branch-operating Banks, Suspended 1921-1936, by
Number of Towns or Cities and Counties in Which
Branches Were Operated at Date of Suspension l/
Number of towns
or cities

Branches operated
Number of banks
Suspended
Suspended
All
All
Dec. 3 1 , 1935 1921-1936 Dec. 31, 1935 1921-1936

1
.- 5
6 and over

6o4
IS?
J51

Total

J=1

1,443
632
1,039

854
242
191

80k

383

3,n4

1,287

1
2 - 5
6 and over

70k
79
21

3^5
32
b

1,895
371
848

1,009
151
,127

Total

804

383

3,114

1,287

2

300
70

Number of
counties

1J Appendix IV gives the statistics in detail on which this table is
based.
Size of Suspended Banks Operating Branches, - Branch-ope rating
banks which suspended 1921-193& averaged about the same size as all
branch-operating banks on December 31 > 1935 > except for the banks with
more than $5°>000>0°0 of loans and investments, as the figures in
Table 28 indicate•

The average amount of loans and investments of

all branch-operating banks with less than $50,000,000 of loans and investments on that date was $5»900»000, whereas the average amount
for the same group of suspended banks was $5,200,000,




- 92 Table 28 - Banks Operating Brandies, Active December 31» 1935»
and Suspended 1921-1936, by Size of Loans
and Investments 1J
(Dollar amounts in thousands)
Size of loans
and investments

Active Dec, 31, 193*5
Loans and
Number
investments

Suspended 1921-193b
Loans and
Number
investments
32
109
172
62
8

$

284
137
61

14,625
127,713
1,175,156
3,071,17^
14.1S5.0S6

so4

18,573,75^

333

3,150,519

g4

Under 3250
250 - 999
1,000 - 9,999
10,000 - 49,399
50,000 and over
Total

$

4,626
64,059
670,218
1,218,621
1,192,99^

1/ Appendix IV gives statistics in detail on which this table is based*

Individual Branch-Operating Bank Suspensions
In Table 29 the 21 banks operating more than 10 branches each which
have suspended since 1921 are listed*

The Georgia State Bank was the

only one with more than 10 branches that suspended prior to 1930t and
it was a part of the Withan-Manly chain which operated banks in both
Georgia and Florida*

Two banks with more than 10 branches each failed

in 1930f 4 in 1931? 1 in 19321 and the remainder were banks suspending
in the year 1933®

Of the total of 561 branches operated by these banks,

or 72 percent, wore head office city branches*

These banks held

$1,418,000,000 of the total of $3,150,000,000 of loans and investments
of all branch-operating banks that suspended*




Table 29 - Suspensions of Banks With More Than Ten Branches Each, 1921-1936

In

Name and location of bank

Year of "h £so rl
XlCCLU.
sus- office
pension city

Georgia State Bank, Atlanta
Bank of United States, NYC
Bankers Trust Co.,Philadelphia
Security Home Trust Co.,Toledo
Commercial Savings Bank and Trust
Company, Toledo
Ohio Savings Bk. & Tr.Co., Toledo
Central Trust Co*,Frederick, Md.
Peoples State Bank, Charleston,
South Carolina
Tennessee Valley Bk.,Decatur, Ala,
Canal Bank and Trust Co.,New Orleans
Augusta Trust Co., Augusta, Maine
Baltimore Trust Co., Baltimore, Md.
Union Trust Co.of Maryland,Baltimore
Eastern Shore Tr. Co.,Cambridge, Md.
First National Bank, Detroit, Mich.
G u a r d i a n National Bk.of Commerce,
Detroit, Kichigan
Grand Rapids Savings Bank, Grand
Rapids, Michigan
Page Trust Co., Aberdeen, N. C.
North Carolina Bank and Trust Co.,
Greensboro, N. C.
Guardian Trust Co., Cleveland, Ohio
Union Trust Co., Cleveland, Ohio
Total - 21 banks



1926
1930
1930
1931
1931
1931
1931
1932

Tyi
±11

Number of branches
Outside head office city
Outside head office county
Ini a s / 1.
i cau

office In contiguous Non-contiguous
counties
, counties
county
2

18

58

1933
1933
1933
1933
1933
1933
1933

IU7

1933

11

1933
1933

16

1933
1933
1933

l
l4
17

3,990 $ 3,46O
161,000
213,403
44,497
47,932
25,148
25,192

11
6
1

5
5

37

5

9

14,103
44,261

11
44
15

15,44O
17,000
3,636

15,611
38,692
13,4OO
23,139
3,145
58,012
12,896

11

14,971
57,832
4s,l4s
13,394
379,788

12,528
373,360

109,856

108,103

16

5

2
K

20
12
17
18
20
1^7
39

8

17
lb

4o4

$

16

39

20

20
19

2

Amount
of
deposits

(000 omitted)

5s

19
11
11
16

Amount of
loans and
Total
investments

13,949
3,509

10,475

19,4O6

19,338
109,752

1

7

5

13

1
4
4

1

12

15
18
' 21

26

39

92

561

60,720

122,03s

189,5^3

30,642
45,255

3,676

194,906

1,418,087 1,307,079

- 94 The Bank of the United States - of New York City,which was the largest
hank that had ever failed in this country up to the "banking holiday, had
58 branches all located in one city®

After the suspension of this hank

several of its principal officials were convicted of illegal acts.
The Bankers Trust Company of Philadelphia, all the branches of which
were in one city, was closed by action of the directors after a long period
of declining deposits*

It had previously been developed in the late 1920*s

mainly by consolidating or merging with several banks in different sections
of the city.
Suspension of the three banks in Toledo in I93I accompanied a local
crisis, in which four leading banks closed in one day, another having closed
two months earlier.

One of the five banks had no branches, and all the

branches of the others were within the city of Toledo.
All of the foregoing six branch-operating banks that suspended in I93O
and 1931 were city banks the branches of which were confined to the city
in every case.

The Central Trust Company of Maryland, however, was more

distinctively a branch organization.

Frederick, where its main office was

situated, is a town of about 15,000 people, and the bank, which had loans
and investments of more than $16,500,000 at the end of 1930, or U5 percent
of the loans and investments of all the banks in town, appears to have owed
a substantial part of its business to its branches, which were situated in
eleven other towns.
tem.

The bank was not a member of the Federal Reserve Sys-

According to the State Commissioner of Maryland, its difficulties

arose mainly from "various large commitments accumulated in real estate
holdings**®..*a majority of which were located outside the State, and of
course, the conditions existing nationally at that time contributed in no




- 95 small degree to the shrinkage in the asset value of this class of commitment." i/
Of all the hanks with branches that failed prior to 1933

Peoples

State Bank of South Carolina was most distinctively a branch organization
It had a total of U5 offices, including its head office, in k2. different
cities, towns, and villages situated throughout the State®

Its business

was derived to a large extent from its branches and externally it would
appear to have been one of the chief exemplars in structure of State-wide
branch banking in this country outside of California*

It v/as not a member

of the Federal Reserve System and its branch organization had. been developed
almost entirely after the passage of the McFadden Act in 1927*

The bank's

failure, according to reports, nwas caused by poor judgment, poor management, and an excess of ambition*

The branches contributed to the failure,

of course, but if the institution had possessed good ability and good judgment it would not have failed just because it had a string of branches*" 2/
Before converting to a State charter and beginning its career as a branch
organization it had already been "continuously subject to criticism from
national examiners*..,*

The part which the branches played in the failure

was played not because they were branches but because of the manner in which
they were established*

A large proportion of the branches wore formed by tak-

ing over unit banks which were practically 'busted1 when they were taken over*
These operations filled the group with highly unliquid, and in many cases,
worthless assets, and when public confidence began to weaken in South Carolina,
the Peoples State Bank had absolutely no margin of safety****

The whole thing

was recklessly and inexpertly done, and therein lies the real cause of the
failure*" 2/

1/ Twenty~second Annual Report of the Bank Commission of the gtate of Maryland,
February 1, 1932, p. 7*
2/ Comments transmitted by the Agent of the Federal Reserve Bank of Richmond*




~ 96 All of the other banks with more than 10 branches each which suspended
were those that suspended in the year 1933#

& largest of those banks

included 2 each in Detroit and Cleveland and 1 each in New Orleans and
Baltimore.
The First National Bank-Detroit was not only the largest suspension in
our banking history but also had the largest branch systen involved in a
suspension.

The management of this bank was identical with the management

of the Detroit Bankers Company, a large group organization, and nany practices
of this holding company were responsible in large measure for the difficulties
of -Che bank.

Dividends yt&fe maintained long after substantial losses had been

suffered in order to maintain dividends on the group company stock.

In addi-

tion, this bank made many loans on the collateral of the holding company and
conducted improper operations in the maintenance of the market prices of the
stock.

The proportion of real estate investment by the bank was excessive

and large loans were made to officers, directors, and their interests.

1J

The history of the Guardian National Bank of Commerce of Detroit was
very similar to that of the First National Bank-Detroit.

Its holding company

organization, however, had expanded beyond the Detroit area and included banks
throughout southern Michigan.

2/

The two large Cleveland banks, the Guardian Trust Company and the Union
Trust Company, operating together 39 branches in the greater Cleveland area,
had been linked with a large number of noribanking affiliates and were engaged
in a number of lines of business quite foreign to banking, many of them involving real estate promotion.

The Guardian Trust Company conducted extensive

real estate operations and supported the enterprises of several of its officers
and directors. 3J

Union Trust Company was heavily involved in the enter-

prises of the Van Sweringens.

bf

1/ U. S. Congress, 72nd (S.Res. SH) and 73rd (S.Eos* 56 & 97) Report of the Committee on Banking and Currency of the Senate on Stock Exchange Practices, p. 23.
2/Ibid., p. 232.
1/ Ibid., p. 295.
bj Ibid., p. 31S



- 97 The Baltimore Trust Companyt according to examination reports, was conducted in an unsafe manner, mailing improvident loans to local enterprises and
individuals, several of which resulted in heavy losses*

In addition, the Com-

pany engaged in security operations through affiliates and made commitments
which were not consistent with good commercial banking practice*

Owners of

a security issue successfully prosecuted a claim against the Trust Company
for an improper discharge of trust and this not only caused a loss but resulted in reduced confidence and considerable withdrawal of outside money*
Although the bank survived some time after this incident, its losses were
so substantial that it could not be reorganized for license following the
banking holiday*
The Canal Bank and Trust of New Orleans incurred heavy losses through
unwise loan policiesf poor collection methods, and poor investment practices, and its weak condition was recognized very early in the depression*
The bank was reorganized, new capital was subscribed, and new officers were
installed in an effort to "clean up" the bank*

The bank*3 earning power,

howeverf was reduced because of the losses and it was too weak to open following the holiday®
Analysis of the suspensions of branch banks in this country suggests
that such suspensions were caused by many of the same factors that characterized unit banking*

Branch banking may have contributed to failure in

some instances in which ambitious promoters to achieve bigness acquired
banks at excessively high prices and converted then into branches*

In a

great many cases the branches were undoubtedly purchased during the inflation 0^ t a 1920*s and on the basis of the immediately past earning record*
]c
NOTE: During the years when the banks with large n-umbers of branches, especially head office city branchest referred to in the above paragraphs,
were failing, numerous failures also occurrcd among neighborhood banks in
localities of all sizes* Difficulties in Chicago and elsewhere,where no
branch banking existed, wero notable*




- gg Such cases were largely a fault of the individuals who wanted to expand
rapidly rather than the fault of the type of the system.
^periencp. with Branch Banking in Canada and England
The Canadian and English "branch banking systems withstood tho post-war
international financial developments and the problems of the recent depression alnost without 1 jSS to depositors®

The only failure in either system

was the Hone Bank of Canada which failed in 1923* ^

The strength, however,

of barring in England and Canada is not wholly due to the branch structures
of these countries.

Smaller departure from classical commercial banking

and the greater traditions of banking conservatism, professionalism, and
integrity are undoubtedly factors®

Banks in these countries have had the

opportunity for a wide diversification of assets since through branch operation they serve many areas covering a variety of economic activities.
In addition, tho flexibility of these systems, particularly in adjusting
to receding and unprofitable territories, lias avoided the scourge

of fail-

ure in such areas, as experienced in the United States.
Another experience of the Canadian banking cyst en that is significant
in comparison with that in the United States has boon the greater stability
of Canadian bank earnings over the past 10 years*

Table 31 shows that the

earnings of the Canadian banks on either loana and investments or capitai
funds have moved within a much narrower margin than in this country.

Tho

roiuiniin return per $100 of loans and investments between I925 and I93U was

1/ It has been variously claimed that suspensions underrate the true losses
in the Canadian system since many banks known to bo weak have boon absorbed by the stronger banks to avoid the consequences of a failure.
Stockholders may have lost thereby, but the fact remains that the interests of depositors have boon safeguarded—sonic thing that heretofore
was not done effectively for depositors in tho United States.




- 99

-

$0.31 and the maximum return was $1*09, whereas in b States (Illinois,
Minnesota, North Dakota, and Montana) not permitting "branch banking, and
with areas and banking resources similar to those in Canada, the range
of fluctuation was from a loss of $U#22 to $1*67 of profits.

Similar

fluctuations arc apparent in the ratio of net profits to capital funds»
The apparently larg'3 return on capital funds throughout the greater part
of the period for Canadian banks is.due to the proportionately smaller
proprietary equities of these banks*

It is reported, however, that the

retention of hidden reserves is greater in Canadian banks than in nonmetropolitan banks in the United States,

This does not explain, how-

ever, the wide differences in the fluctuations of the rates of return
in the two countries*
Table 31 - Uet Profits Per $100 of Loans and Investments and of
Capital and Surplus for All Canadian Banks and for National
Banks in Selected States 1j which Prohibited Branch Banking
I905-I93U

Net profits per $100 of
lefans and investnents

Year

Selected
States
1925
1926
I927
192S
1929
1930
1931
1932
1933
I93U

$

1.12
1.13
1.01
1.26
I.67
.89
-.OS
-1.75
•4,28
-.47

Canada
$

0.91
.96
.92
.93
1.07
1.09
1.00
.94
.82
.81

Net profits per $100 of
capital and surplus
Selected
States
$

7.76
7.68
7.03
9.21
H.65
6.02
-.51
-IO.79
-26.03
-2.95

1/ Illinois, Minnesota, North Dakota,and Montana.




Canada
$

8.11
8.73
8.95
9.52
9.^1
8.72
7.69
6*86
6.65
6.64

CHAPTER VI
EVALUATION OF BRANCH BANKING- AS A
TYPE OF BAKKING STRUCTURE
Up to this point developments with reference to "branch "banking
have "beon discussed without attempting to evaluate it as a type of
"banking structure.

The task remains now to analyze its abstract ad-

vantages and disadvantages for the economy of the United States in
the light of the responsibilities of the banking system as discussed
in Chapter I.
The type of banking structure that will render most satisfactorily the banking services required in a modern economy with a highly
developed credit system depends to a great extent upon the nature
and structure of the economic organization of the community.

It is

important, therefore, in attempting to evaluate branch banking as a
.
type of banking structure for the United States to bear in rnind some
of the important characteristics and features of the country rs economic organization at the present time and the general background
of their evolution and development over the past century.
A Century of Banking and Economic Evolution. - A hundred years
ago when developments in industry and commerce were turning in
the same direction in the United States and in England and the
use of bank credit in both countries as a medium of circulation
was increasing, it is significant that the structural organization
of banking in the two coimtries was beginning to shape itself
according to basically different patterns.




- 100 -

As the century ad~

vanced the economy of each of these countries became increasingly industrial.

Population increased rapidly, particularly in the United

States, and the proportion that was rural steadily declined.

Organi-

zation of industry changed from individual and family undertakings operating on a small scale to large scale companies—corporate units in
the United States and joint stock enterprises in England—operating in
nation-wide and international markets.

Developments in transportation

and communication brought the different regions of each country closer
together and stimulated larger intercourse "between them. As these
transitions took place, and as production, distribution, and consumption expanded, bank deposits gradually surpassed metallic and paper
currencies as the most important circulating medium in each of the
two countries.
In England the banking development was similar to that which
took place in industry.

From many small units widely scattered

throughout the country in the 1220*s the banking structure was transformed by 1920 into a highly organized system of a few joint stock
banks operating on a nation-wide basis through widely distributed
branches.

In the United States developments in the structure of

banking over the century were opposite to those in England,

Inde-

pendent banking units were preserved on a local basis and correspondent banking evolved as a mechanism to handle banking services
over wider areas*

E:xperiments with nation-wide branches terminated

with the second Bank of the United States in

I836,

State-wide branches were generally abandoned by




and those with

IS63.

It is of

- 102 particular interest to note in this connection that independent "banking started in the lS30Ts as the second Bank of the United States
with its widespread branches liquidated, and developed most rapidly
in the regions that were beginning to experience the same type of
industrial evolution that was taking place in England, By i860 the
principle of independent banking had been generally adopted in the
Northern and Eastern States, and in 1863 it was incorporated in the
National Bank Act and thereby became a fundamental feature in the
development of American banking for the following three-quarters of
a century.
To summarize, the two countries were starting on similar industrial careers as the century opened, using the same form of media
of exchange but with banking structures that were to develop on
fundamentally different principles.

Independent unit banking on

a local basis was declining in England and branch banking was beginning a development that was to continue for a hundred years

In

the United States nation-wide branch banking ended in the lS30?s and
State-wide branches were discontinued in the lSfiO's.

Independent

banking started a career in the 1830rs that was to reach its zenith
in the 1920?s.

The hundred years following the 1820*s witnessed in

England the development of an integrated branch banking structure
operating on a nation-wide basis through widely extended branches.
In the United States the same period saw the development of an
independent banking structure with each bank operating on a local
basis.
It is the opinion of some authorities that the compactness of
the English banking structure contributed in large measure to its




- 103 success in meeting the difficulties of the post-war period without
failures.

Crick and Wadsworth in their recent history of the de-

velopment of joint stock hanking say: ^
"....It is safe to say that, hut for the process of
structural consolidation, English hanking could never
have survived unmutilated the stress of the post-war
period. Consider, for example, the consequences that
might have followed during that time from the existence of numerous small local hanks concerned disproportionately with the activities of single industries
—the Bradford hank absorbed in wool; the Oldham bank
in cotton; the Sheffield bank in steel; the Lincoln
bank in agriculture; the London banks in the financing of international trade and investment. In the
modern country-wide bank it is possible deliberately
to seek a duo spread and balance of risks...."
In describing the situation in England before structural unification began, following the

1
1

Act for the better regulation of Co-

partnerships of certain Bankers in England" in May

1826, the same

authors comment on the position of the independent banks as follows:
"....The country banker, generally speaking, was for a
number of reasons a constant source of weakness in a
flimsy, ill-balanced banking structure. Too often the
capital employed in banking firms was dangerously small
•
The mixing of banking with other trad.es, moreover,
involved divided interest and unsound methods,.... Moreover, in the allocation of the country bmkor's assets
there was little or no possibility of spreading risks,
and the fortune of many a country bank was bound up in
the success or failure of one or two large firms.
f
Runs! upon banks were common occurrences, . . * At the
..
best of times failures wore distressingly numerous,
and in periods of strain the country banks collapsed
in such numbers as to entail grave disorder and to
undermine confidence over and over again."
Thus, in view of developments in the United States in the 1920T
and the early 1930*8, it appears that structural problems in banking
are similar in many respects to those in England in the 1820-30fs
1/ W. P. Crick and J. E. Wadsworth, A Hundred Years of Joint Stock
Banking, 1936, p, 3U5.
2/
pp.




-

10k

-

when consolidations and unification contributed to the development
of joint stock banks and the extension of branches•

It is the pur-

pose of the remainder of this chapter to analyze the advantages and
disadvantages that are claimed for branch "banking as a type of banking structure to meet the requirements of agriculture, commerce, and
industry under present conditions.
Advantages Claimed for Branch Banking
Although branch banking in the United States thus far has had
a very limited development, experience abroad has caused some commentators to sec in it certain definite advantages as a form of banking structure*

Such a structure is said to have the following com-

parative advantages to the banking public; greater safety and increased mobility of funds; more uniform and lower money rates; more
efficient banking services, including greater availability of bank
credit to borrowers and to local communities; and more flexible banking

facilities®

Branch operating banks are said to have greater op-

portunities for diversification of loans and deposits; possibilities
for better bank management; and economies in operation*
In addition, it is claimed that branch banking offers improved
arrangements for administering monetary and credit policies as woll
as protection against development of chain and group "banking organizations*
Safety and Mobility of Funds* - Greater diversification of risks
increases the safety of funds.

Such diversification is much easier

for branch systems operating over Y/idor areas than for local unit
banks*




Illustrations of greater safety to depositors are found in

- 105 -

England and Canada, where branch banking has developed extensively.

Al-

though these countries have had a few bank failures over the past thirtyfive years, losses to depositors have been infinitesimal as compared with
losses in the United States.
It has been pointed out by Cartinhour 1/ that the ability of the
Canadian banking system to transfer funds is one of its distinctive
features that has meant much to the development of the western grain
provinces.

In tho United States funds are shifted about but

"....in a relatively crude fashion when compeared with the
ease in tho mobility of funds in Canada. Interior banks
borrow from their correspondents in the East or in large
centers or from the Federal reserve banks to meet seasonal
and on occasion cyclic needs. But the borrowing unit banks
cannot be financed continuously to meet the constantly growing needs of a developing community, as may tho branches of
banks in Western Canada whose loans may for a long period
exceed deposits." 2j
More Uniform and Lower Money Rates. - is a result of the increased
mobility of funds between economic areas under branch banking, more
uniform and lower money rates are facilitated.

Sykes points out in

his study of the amalgamation movement in English banking 1825-192^ l!
that:
"....With the increase in the number of branches belonging to one bank (particularly since tho 90* s of the last
century), and tho growth of associations of bankers, rates
and charges have tended to become more uniform and to be
reduced. This tendency has now crystallized into effective practice by tho development of competition.11

if Gaines T. Cartinhour, Branch, Group, and Chain Banking, p. 309'
2/ Ibid. See also H. P. YTillis and B. H. Beckhart, Foreign Banking
Systems, pp. U12-I3.
3 / Joseph Sykes, Tho Amalgamation Movement in English Banking, 1825.
192k, pp. 1^9 and 106. See also Cartinhour, crp. cit., p. 12.




- 106 Scottish banks through their branches are also reported to maintain uniform rates throughout the country for both deposits and loans.
On the basis of information reported to the Banking and Currency Committee of the House of Representatives, it appears that branch banking has lowered the rates of interest in some leading agricultural
communities in California. 1/

It has been pointed out that in Canada:

11

. . .Rates in the territory west of the Great Lakes vary
from 7$ to Sfo and in the east from
to 6$. Free money
in the East is shifted West because the banks are thus
able to secure higher rates. As a result, interest rates
in the East tend to increase while those in the West tend
to decline. In consequence, a more uniform rate prevails
throughout the Dominion than is found in the United States.
The easier it is to transfer funds, the more uniform will
be interest rates. Borrowers are continually seeking lower
rates and competition in this way tends to reduce the cost
of borrowing. The final result seems to be that branch banking lowers the rate for borrowing in Western Canada." 2/
"By virtue of the great mobility of capital under the
branch system,, the large Canadian banks have for many years
been able to finance the immense seasonal money demands of
the Dominion involved in crop-seeding, crop-harvesting,
lumbering and fishing, as well as security market operations without the fluctuation of rates for credit accommodation that occur in some other countries including our
own." 37
It is possible that the lower rates charged by branch systems than
by unit banks in the same localities may in some cases be more apparent
than real.

Unit banks may be willing to enter fields involving higher

risks than their branch banking competitors.
Banking Services. - The availability of bank credit to borrowers
is one of the important banking services that receives considerable

17 U. S. Congress, 71st, 2nd Session, Hearings on H. Res. lUl, pp. 1525-26,
27 Cartinhour, op., cit,, pp.. 312-13, See also Willis and Beckhart, o . . cit.,
p.
P- 37^.
1/ Cartinhour, o e x t . . p. 313* See also address by C. R. Howard, Canadian
Bank of Commerce, N. Y. Agency, American Banker, September 18, 1929, p.. 1.




- 107 -

attention when the merits of branch banking are under consideration.

It

is often claimed that bank loans are not available as liberally to local
borrowers under branch banking as under independent banking and that communities served by branches are at a disadvantage.

In commenting upon

this contention at the hearings on branch, chain, and group banking in
1930, the Comptroller of the Currency, Mr. J. ft. Pole, spoke as follows: 1/
,f

It is said that branch banking will lead to a restriction upon local loans—that the borrowers will suffer. To
this theory I do not subscribe. It is unreasonable to suppose that banks will make substantial investments in branches
without any expectation of developing the business of the
branch. This cannot be done by draining the community of
its cash. It can be done only by rendering to that community a scientifically balanced banking service including the
making of loans as well as the receiving of deposits.11
Another writer comments still further with reference to this point
and says: 2/
H

....as no financial need would be too large to be supplied,
extensive branch systems would be in a far better position
to finance the sound and legitimate growth of a community
than would be possible through the employment of local capital alone. In addition,.... such banks would probably be in
a position to render a more adequate banking service at all
times because they would be capable of weathering a complete
or partial agricultural or industrial failure in any given
section during one or more years.
!,

It may be alleged that funds would be withdrawn to
metropolitan centers from snallar communities. This is improbable. In Canada complaint has been made by city borrowers that head offices located in the same cities have
been disposed to shift their funds into country districts,
in order to receive the slightly higher interest rates
obtainable in these regions. This condition has prevailed

1/ U. S. Congress, 71st, 2nd Session, Hearings, H. Res, lUl, p. 21.
2/ Cartinhour, ojo. cit., pp. 315-316.




- 10S -

in Canada for some time, and in itself constitutes a rebuttal of the assertion that the independent banking system
tends to keep funds in smaller communities, while branch
banking has the reverse effect.
"Mr. S. H. togan, General Manager of the Canadian
Bank of Commerce, expressed the opinion that, !Any suggestion that the Canadian banking system involves a concentration of loans in larger centers to the detriment
of smaller communities, is as far from the mark as can
possibly be. The larger centers are of course served and
well served, but the very essence of successful banking in
Canada is the more widely served entire community—agricultural, commercial, industrial, and financial—the better for banks and the growth of their business. Concentration would mean stagnation to the banks of Canada as well
as to the communities which they serve.1"
Experience with branch banking in California shows that parent banks
frequently have placed more funds at the disposal of local communities
served by branches than they have withdrawn from them.

When discussing

this problem before the Banking and Currency Committee of the Senate in
1931, the Comptroller of the Currency said: if
"The history of it (drawing funds from small communities) as far as branch banking has been carried in this
country, particularly in California, is that the parent
banks have thrown far more of their funds to the small
rural communities than they have ever drawn from them."
The Chairman of the Security-First National Bank of Los Angeles
which operates a large number of branches in the vicinity of Los
Angeles is of the same opinion. 2/

He says:

"Our experience in the country is that we have
done more for the branches than they could have done
for themselves as individual banks. In other words,
city funds have gone to our country branches. And
that has been true for the last 10 years."

if J. 7 . Pole, U. S. Congress, 71st, 3rd Session, Hearings, S. Res. 71,
7
January 1931 > P« 9«
2/ Henry M. Robinson* U. S. Congress, 71st, 3rd Session, Hearings, S.
Res. 71, February 1931, p. 32^.




- 109 -

Statistical information submitted by Mr. Bacigalupi, Vice Chairman
of the Advisory Committee, Transamerica Corporation, to the Banking and
Currency Committee of the House of Representatives, 1930» showed that
"in 100 branches of the Bank of Italy over 70p er cent of the local deposits are lent in the local community.

In many of these instances more

than 100 per cent of the local deposits are lent in the neighborhood." 1/
The results of a more recent analysis of the ratio of loans to deposits of all unit banks and of all branch banks in California given in
Table 32 show that the ratio of loans to deposits at the end of each of
the three years 1933, 193^, and 1935

higher for branch banks than

for unit banks, indicating that branch banks use a slightly larger percentage of their deposits for local loans than the unit banks.

The dif-

ference, however, is not large enough to be significant, but it is evidence that local communities receive loans as liberally, if not slightly
more liberally, under branch banking as under unit banking.
Table 32 - Ratio of Loans to Deposits of Unit Banks
and Branch Banks in California
Unit banks

Branch banks

December 31
1933
193^
1935

61.5
V+.o
^2.1

65.3
56.6
51.3

Table 1 of Appendix III gives the ratios for banks in each county
and shows that the ratios for the uu counties where unit banks and branch

1/ U. S. Congress, 71st, 2nd Session, Hearings on Branch, Chain, and Group
Banking, H. Res. lUl, May 6, 1930, p. 1389.




- 110 -

"banks were both operating were higher for branch banks in 19 counties,
and. smaller in 25 counties, than those for unit banks.
Procedures followed by banks with branches in handling loans are
often cited as evidence in support of the contention that local borrowers are at a greater disadvantage under branch banking than under
independent banking.

With reference to this point the experience in

Canada was commented on by the Royal Commission on Banking and Currency
in 1933 as follows: if
"It was alleged that the boards of directors of the
Canadian banks, vfao decide the general policy of the several
banks, included too large a proportion of members domiciled
in the Central Provinces and that accordingly the attitude
of the banks was more sympathetic to Central than to Eastern
and Western requirements. Representations were received to
the effect that, under such a centralized system, applications for loans from Eastern and Western communities or business interests had to be passed upon by head office officials
who were not sufficiently conversant with Eastern or Western
conditions and who might be inclined to favor enterprises near
at hand.
"The banks have been most emphatic in denying these
charges, and have submitted that their boards were as far
as possible representative of the entire country, or at least
of such parts of the country as provided a sufficient volume
of business. The banks submit that for administrative purposes
the branches are grouped into districts, generally by provinces, under the charge of a supervisor with authority to
deal with all credits up to, say, $25,000. At certain
points, where banks have committees of directors, the limit
is still larger. We received evidence to the effect that,
in the case of one bank having its head office in Montreal,
out of thousands of loans made in the throe Prairie Provinces
9 9 p o r cent were granted before reference to head office;
whilst another bank reported that 22.32 per cent of its loans
in Alberta had been dealt with by the branch managers directly, that I6.H7 per cent had been referred to tho Calgary superintendent, leaving 1.21 per cent for approval by the Assistant
General Manager in Winnipeg, and out of this 1.21 per cent only
605 per cent had been submitted to head office."

1/ Report of the Royal Commission on Banking and Currency in Canada, 1933>
pp. 77-73.




- Ill -

The policy of the Bank of America, N. T. & S. A, with regard to the
loaning policy at its branches indicates how it operates in this respect
in California. 1/
"Loans are made direct " y the branches except in inb
stances where the amount is unusually large or the branch
manager wishes to secure the advice of the head office
credit department. The customers of the branch deal with
the local officers, and only in extraordinary circumstances
are they brought into contact with the head office departments. Each branch has a general lending limit fixed by
the bank*s finance committee. Within this limit each branch
may lend and report without previous consultation of head
office. These limits vary with the proven credit capacity
of the various branch loaning officers. Experience has
demonstrated that the limits thus fixed are usually sufficient to take immediate care of the ordinary requirements of the branches. In other cases lines are established for the larger borrowing accoimts, in advance of
the time when these firms or individuals require the accommodation for their seasonable operations. As a mat,
ter of fact, after a branch has been in operation for a
year or more, experience shows that easily SO per cent
of the annual commercial credits extended by the branches
are renewals under established lines. All applications
for unfixed lines of credit in excess of the lending limit
of a given branch are promptly considered and acted upon
by the proper central credit department and proper advice
and instruction issued. The branch makes daily reports
of all loans, and as these are received the credit department reviews them. Pertinent comments or suggestions are
then forwarded to the branch manager, so that the loan may
be properly followed and collection insured at maturity.
The broad fundamental policies respecting credits are outlined by the general executive committee and interpretation and application is then made by the credit department .
"This system permits the smallest branch in the organization to secure the benefits of the best obtainable advice
and counsel on every loan that is made, and it also insures
uniformity of policy, based on a thorough knowledge of conditions throughout the entire organization and the country
as well."

1/ U. S. Congress, 71st, 3rd Session, Hearings, H. Hes. lUl,
May 1930, pp. 13^7-Ug.




- 112 Loaning policies of the Security-First National Bank of Los Angeles,
the second largest branch hanking organization in California, have been
described as follows:
"We have in the local branches in each case an executive board which corresponds with the board of the unit
bank, of the men in the community who are best informed.
And they have full authority to make loans up to certain
limits without any consultation with the head officers
.... It (the limit) varies somewhat with the community.
It will run as high as $50,000, and I think in one instance $100,000
(and) as low as $10,000." 1/
Another arran:i:ut often advanced against branch banhing is that
there is no sympathy with local needs. The point of view expressed
in the following quotation is pertinent to this matter:
"....there is such a thing as a banker being too responsive to local applications and too much under the influence of local and personal appeals.... The fact that
a local banker is under greater pressure from local borrowers than a branch manager, supervised by an outside
authority, may cause the interests of depositors to be
imperiled for the accommodations of borrowers." 2/
Trouble can more easily grow from the fact that credit is extended

too freely rather than from the fact that credit is not available.

It would seem, therefore, that with branch banking managers less under
the influence of local pressures they would be in a position to operate
more objectively and consider the needs of the community rather than
the personal desires of local interests.
There are other banking activities that would appear to be more
satisfactory under branch banking such as services in connection with
investment securities and the administration of trusts.

As an example

of the extension and improvement in trust services that would be made
available under branch banking, Mr A. P. Giarmini of the Bank of
1/ Henry M. Robinson, U. S. Congress, 71st, 3rd Session, Hearings, S.Res.
71, February 1931> page 325•
g/ Gaines T. Cartinhour, op.cit., p.31S. See also Joseph A. Broderick,
former Superintendent of Banks, New York, Hearings, S.Res. 71, January
1931. He expressed the opinion that the objections to branch banks were
due to the feeling "a local bank will be probably more liberal to its
own officers and directors than an outside institution."



- 113 America, N. T. & S. A. commontod as follov/s: A/
"Opportunities for spread of the trust idea are further
multiplied through the practical circumstances of branch
"banking. For example, the institution with "branches in
many communities is able to provide for the performance of
trust functions in places that otherwise would not be
reached. Out of a total of 165 California cities served
by our institution, the people of 91> or 551°
look to
our institution alone for service locally in connection
with their personal estates. In only 15$ of the communities we serve are there unit banks authorized to perform
trust functions.
"Corporate customers, as well as individual depositors,
benefit, through our plan of State-wide trust service. In
California, it is compulsory for new corporations to have
their stock registered by a trust company. A number of
corporate registrarships are being administered by our bank
in communities hundreds of miles away from the larger cities.
Likewise we are serving as transfer agents for stocks as
trustees of bond issues for many companies whose offices are
located away from the centers of population. The significance
of this development lies in the fact that these standard trust
functions are being performed by a financial institution that
is able to guarantee a high degree of specialization and security in the performance of its work."
Banking Facilities. - An important advantage claimed for branch banking is that a bank with branches is more flexible than an independent bank
in adjusting to the requirements of the community for banking services.
At the present time it is especially urgent tha.t banking facilities be
restored in communities tha.t have been completely deprived of banking
services because of failures over the past

deca.de, and. under ordinary

conditions it is desirable to extend banking facilities to communities
as they develop and to discontinue them as communities decline or undergo changes.
A comparison of the banking facilities available in different communities in the States where failures have boon most numerous since 1921

1/ A. P. Giannini, "How Branch Banking Multiplies Opportunities for Trust
Service," Trust Company Magazine, March 1§29, Vol. XLVI, No. 3, p. 312.




- 11U shows that there are many communities that had facilities in 1921 that
are now without them. As an illustration of the extent to which communities have been depleted of banking facilities, Table 33 shows that
in Iowa, where 1,197 banks suspended between 1921 and 1935*

a

361 towns that had facilities in 1921 are now without them.
also that an additional lib
1921-1935

are now

total of
It shows

towns which were depleted of facilities in

served by limited banking offices permitted by the

amendment to the Iowa statutes in 1932 authorizing banks to establish
such offices.

During the same lb year period there were 285 towns in

Kansas which were divested of banking facilities. Most of the towns
that lost their facilities and are still without them are small, having
less than 1,000 population.
Table 33 - Number of Towns in Iowa and Kansas
Without Banks, June 1935,
That Had Banks in 1921
Population
of town
(1930 Census)
Less than 100
100 - 2U9
250 - U99
500 - 999
1,000 - 2,^99
2,500 and over
Total

Iowa
Towns without Towns with limiTotal banking office ted banking office June 1935
June 1935
39
199
150
7^
10
3

33
178
108
35
b
3

6
21
b2
39

U75

361

llU

6

Kansas
total

37
160
66
15
7
285

In several States in addition to Iowa—Arkansas, New Mexico, Wisconsin, and South Dakota^-*bich had not permitted branch banking until
recently, policies have been adopted looking to the establishment
of branch offices with limited powers.




In several other

- 115 States branches with full powers have been authorized in recent years.
In several other States where branches are not authorized by statute, lack of banking facilities is resulting in serious hardships and
various devices are being adopted to obtain them.

In North Dakota, for

example, where 79 towns of 200 to 1,4-00 population had no banks it is
reported that several methods are being tried.
by mail is making progress.

some places, banking

"In some towns the local merchants have

arranged daily trips on an alternating basis whereby one man each day
handles the b.anking functions of the group.

In another, a former bank-

er pays and issues checks drawn on an outside bank, and renders all
services except taking deposits.

Another bank kept a man in a rented

office in a neighboring town, but discontinued this plan after losing
$600 in six months.

With opportunities so meager for banking profit

in small communities, plans such as these offer at least a temporary
2/
solution to a real problem,"

In 1935 and early in 193& two "exchange"

offices were established by two banks in North Dakota to receive and
handle deposits in communities from which the head office had b een removed .
Under ordinary conditions it is likely that banking facilities
could be provided by establishment of branches more easily and readily
than by the organization of new banks.

In both Canada and England ex-

perience indicates that branches have been established and banking services provided ahead of the time when the communities would have been
able to support an independent bank.

Indeed, branches have been estab-

lished in places whore an independent bank would probably never have
succeeded.

In Canada, particularly, branches were established in the

l/ Press reports state that North Dakota has adopted the "Iowa Plan"
effective July 1, 1937t
2/ "Bank!ess Towns," American Bankers Association Journal, August 1932,
pp. 43-50.



- 116 -

frontier outposts of the Western provinces in advance of the railways,
along with the coming of the very earliest settlers, and thereby contributed greatly to the settlement and development of the Dominion.
In England it is frequently the case that branches are established for
several years before they pay their way.

In this way facilities are

provided "to residents and storekeepers in the suburbs and outlying
districts," and deposit feeders for the main office are established.
Sometimes such facilities are provided throueh a branch that is open
but one or two days a week—the manager serving three or four such
communities on alternate days.
When communities decline or undergo important changes,such as
those resulting from the extension of highways, the use of the automobile, and improved communication Sacilities,banking services of
branches can be discontinued gradually without loss to depositors.
Independent banks often find adjustment to such changes difficult
if not impossible, and failure with heavy losses to depositors frequently occurs.

In both England and Canada banking offices are

opened and closed in response to the requirements of the communities with comparatively little, if any, losses or hardships, in the
cases where branches arc closed, to the different comunitios*

In

the United States services of an independent bant are often discontinued by failure and accompanied by heavy losses to the corxiunityf
On the basis of the number of banking offices and the population of the United States, Canada, and England, banking facili-




- 117 -

ties are not so numerous in the United States as in Canada and England under "branch banking.

For the United States as a whole the

population per banking office is 6,500 as compared with 3>000 for
Canada and U,000 for England.

In different States population per

banking office varies from 2,600 in Kansas to 12,100 in Arizona,
as compared with a variation in the different provinces of Canada
(excluding Yukon and the Northwest Territory) from 2,630 in Quebec
to U,l66 in New Brunswick.

Table

shows in detail the number of

banking offices, the population, and the population per banking office for the United States, Canada, and England, as well as for the
geographic divisions of the United States and the provinces of
Canada.




- 118 Table

- Banking Offices and Population in United
States, Canada,and England

Number of
banking offices

United States
Canada
England

Population

Population per
banking office

1/ 18,90.4
V
3,52?
3*/ 10,148

4/ 122,775,046
5/ 10,376,786
6"/ 40,090,330

6,495
2,942
3,951

1,202
3,337
3,684
3,754
1,839
1,320
1,717
589
1,412

8,166,341
26,260,750
25,297,185
13,296,915
15,793,589
9,887,214
12,176,830
3,701,789
8,194,433

6,794
7,870
6,867
3,542
8,361
7,490
7,092
6,285
5,803

18,904-

122,775,046

6,495

27
134
98
1,093
1,259
193
309
215
195
3,527

88,038
512,846
408,219
2,874,255
3,431,683
700,139
921,785
731,605
694,263
10,376,786

3,261
3,827
4,166
2,630
2,726
3,627
2,983
3,403
3,560
2,942

Geographic Divisions
of United States
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain
Pacific
Total
Provinces of Canada
Prince Edward Island
Nova Scotia
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Total

1/

1/

l/ This figure comprises 15,657 national and State banks and 3,247
~~ branches,including mutual savings and private banks, December 1935.
2/ Number of banking offices, December 1934 - Canada Year Book, 1934-35,
page 977.
3/ Includes 15 joint stock banks and 10,133 branches, 1934 - Crick and
Wadsworth, A Hundred Years of Joint Stock Banking, page 41.
4/ Census of 1930.
"~
*
~
5/ Census of 1931 - Canada Year Book, 1934-35, page 99.
6/ Census of 1931 (including Wales) - World Almanac and Statistical
Abstract of the United Kingdom.
~
7/ Includes Yukon and Northwest Territory.




- 119 Diversification of Loans and Deposits. - Vtfhere branches are
operated over a wider area than that embraced by one community,
diversification lessens the chances of losses, increases returns
to stockholders, and in general strengthens an individual bank.i/
If the system of branches is well proportioned employment of bank
funds at different seasons is easier aid the shifting of funds in
order to meet seasonal pressures is greatly facilitated.

In addi-

tion, banks with branches with diversified loans and deposits are
likely to be in a position to carry frozen assets in a particular
community until they can be liquidated with smaller losses than
individual banks.

.And finally, if banks operated branches over

diversified economic areas, they would probably find it unnecessary to carry baL ances in the New York money market to assure liquidity to tho same extent as tho independent banks have in the past.
Advantages of the diversification of risks to banks in England
through the operation of branches are summarized by Crick and Wadsworth as follows:

2/

".••.The wider the range of a branch system, the
more economically could the banking services be
rendered, and the more stable became the structure.
Only by spreading resources over the greatest possible variety of industries and personnel of borrowers could the banks attain maximum stability,
and this same process of consolidation ensured
that banking funds flowed readily from areas of
surfeit to be distributed over districts in need
of working capital."
1/ With reference to diversification in California the Chairman of
the Security-First National Bank of Los Angeles has stated, "We
have a great, wide diversity, and that means a better use of our
funds than the individual banks could have had." Henry M. Robinson,
Hearings, S. Res. 71, February 1931, page 323.
2/ W. F* Crick and J. E. Wadsworth, A Hundred Years of Joint Stock
Banking, page 38.
~
~~
"




- 120 Better Bank Management. - It has long been pointed out by students
of banking, public officials and bankers themselves, that banking under
modern conditions should be under the directions of persons with high
standards of professional competence and ethics.

Such standards would

definitely improve the management of banks and should be developed more
easily through the careful personnel policies of larger banks operating
branches than in smaller independent banks.

Operations under branches

would be on a larger sortie and they would offer greater advantages for
training and development of personnel.

Indeed, it has been noted by

students of Canadian banking that the opportunities that are offered
and used there for training personnel are among the distinctive features of that system.

Patterson summarises the advantages of Canadian

banking with respect to the training of personnel as follows: I/
"One of the most valuable assets of a bonk is the
personnel of its staff, who are men trained from their
youth up to their profession. In their early years,
moving from branch to branch, they become thoroughly
versed in local customs and environments, and in many
cases gain experience in branches abroad. As accountants and managers of large city branches they obtain a
broad knowledge of national trade and finance until, as
general managers or superintendents, they a.re found
directing the administration of their numerous branches."
Opportunities thus offered for training through the branches in
Canada have been envied by American bankers who have expressed the
opinion that "An appointment as branch manager under the (Canadian)
system of loaning limits and supervision teaches a sound banker to
creep before he is called on to walk."
i/ E. L. Stewart Patterson, Canadian Banking, p. 6 4 .
2/ Opinion of New York banker quoted by S. C. Norsworthy, Assistant General
Manager, Bank of Montreal, in "Lending Money," Journal of Canadian Bankers Association, May 7> 1 9 3 P * 408.




-il+121-

Wiser and more c a u t i o u s r e s t r a i n t s a r e likely t o be

exercised

i n c r e d i t p r a c t i c e s a t b r a n c h e s w i t h management t r a i n e d and e x p e r i enced i n t h e a r t s and t e c h n i q u e s of b a n k i n g than a t
b a n k s , and t h i s s h o u l d r e s u l t

independent

i n a d v a n t a g e s to b o t h t h e bank and

t h e community*
Economies i n Operation* - A l t h o u g h s p e c i f i c e v i d e n c e i s not
a v a i l a b l e comparing t h e c o s t of o p e r a t i n g banks w i t h b r a n c h e s and
banks w i t h o u t b r a n c h e s ,

it

i s reasonable to conclude that

economies i n o p e r a t i o n a r e a v a i l a b l e

certain

to banks w i t h b r a n c h e s

a r e not p o s s i b l e f c r independent b a n k s .

that

More e f f i c i e n t manage-

ment and d i v e r s i f i a d b u s i n e s s aiiomld r e s u l t

in r e l a t i v e l y

smaller

l o s s e s t o h a n k s w i t h b r a n c h e s , and t h e o v e r h e a d e x p e n s e s i n o p e r a t i n g b r a n c h e s s h o u l d be l o w e r than f o r independent b a n k s .

Econo-

mies of l a r g e scale o p e r a t i o n s such a s t h o s e t h a t a r e g a i n e d t h r o u g h
c e n t r a l i s e d management of a d v e r t i s i n g and p u r c h a s i n g ,

as w e l l as i n

t h e management of a l l d o m e s t i c and f o r e i g n a r r a n g e m e n t s ,
p o s s i b l e i n th<t c a s e o f t h e bank w i t h b r a n c h e s . — /
realized,

of course,

that

s h o u l d bo

I t must be

t h e t h e o r e t i c a l economies such a s some

of these may fce o f f s e t i n p a r t by t h e added e x p e n s e s o f

coordinating

an<4 centralizing t h e i n t e r n a l b a n k i n g p r o c e s s e s of t h e b r a n c h e s .

Xl Gaines T. Cartinhour, Branch, group, and Chain Banking, page 321.
Also see comment in Review of Economic Conditions, National City
Bank of New York, February 1935» that in Canada "the branch banking system undoubtedly lowers both interest rates and capital
charges by reducing both operating and capital costs,"




A n o t h e r economy t h a t

is possible

i n England i n t h e

of b r a n c h e s h a s b e e n d e s c r i b e d a s f o l l o w s :

operation

3J

" • • • • t h e expense account i s kept w i t h i n
r e a s o n a b l e l i m i t s , b e c a u s e t h e name i s a
s u f f i c i e n t assurance to the p u b l i c of i t s
i m p o r t a n c e and s t a b i l i t y .
I t d o e s not need
t o p u t up a c o s t l y bank b u i l d i n g , such a s
an i n d i v i d u a l bank would have to d o , a s a
mere m a t t e r o f a d v e r t i s i n g i t s s t r e n g t h and
i t s importance.
The p a r e n t bank can a d j u s t
t h e e x p e n s e s o f e a c h b r a n c h t o t h e volume
of b u s i n e s s ; can, i f i t chooses, occupy
modest q u a r t e r s w i t h o u t l o s s o f p r e s t i g e ,
employ o n l y what c a p i t a l i s a c t u a J - l y needed
i n t h e b u s i n e s s o f t h e b r a n c h , and f e e l no
necessity/", o r d i n a r i l y , o f f r e e z i n g a l o t
o f c a p i t a l i n an u n n e c e s s a r i l y p r e t e n t i o u s
b u i l d i n g , as i s customary w i t h banks in the
United S t a t e s . "

A d n i n i s t r a : t i o n of N a t i o n a l Monetary and C r e d i t P o l i c i e s , E n g l a n d and Canada, w i t h b r a n c h b a n k i n g ,

tho c e n t r a l bank and t h e

T r e a s u r y h a v e f e w e r i n d i v i d u a l bank managements t o d e a l w i t h
coordinating a c t i v i t i e s

t o w a r d s a common n a t i o n a l monetary

than i s t h e ca.sc i n t h i s c o u n t r y .

It i s

in

objectiv

e a s i e r to o b t a i n the

co-

o p e r a t i o n o f a f e w b a n k s r a t h e r t h a n many i n t h e a d m i n i s t r a t i o n
b a n k i n g and c r e d i t p o l i c i e s ,
p r i n c i p l e s o f sound b a n k i n g .

and e a s i e r t o h o l d a f e w b a n k s
Likewise,

In

w i t h f e w e r banks i t

of

to
should

be e a s i e r t o f o r m u l a t e raid c a r r y out p o l i c i e s i n c r i s e s and emerg e n c i e s t h a n i n t h e p a s t when t h o u s a n d s o f l o c a l b a n k s had t o b e
dealt with.

In E n g l a n d and Canada tho a d v a n t a g e s o f f e w e r b a n k s

i n t h e s e c o n n e c t i o n s h a v e b e e n g e n e r a l l y r e c o g n i z e d and t h e
s t a b i l i t y o f b a n k i n g i n t h e s e c o u n t r i e s n a y be a t t r i b u t e d i n
to

them.

1/ J o s e p h E r n e s t Goodbar, Managing t h e P e o p l e s Money,




page

greater
part

-il+123-

S u b s t i t u t e s f o r Chain and Group B a n k i n g . - The d e v e l o p m e n t
o f b r a n c h b a n k i n g i n t h e U n i t e d S t a t e s would p r o b a b l y moan t h e
s u p p l a n t i n g o f c h a i n and g r o u p b a n k i n g .

A branch banking

system

has t h e advantage of b e i n g l e s s c o m p l i c a t e d i n o r g a n i z a t i o n

and

l e s s d i f f i c u l t t o examine and s u p e r v i s e t h a n a c h a i n o r g r o u p
banking system.

R a p i d d e v e l o p n e n t o f c h a i n and g r o u p b a n k i n g ,

e s p e c i a l l y group b a n k i n g ,

in 1927-1930 i n s t e a d of branch banking

was due t o a c o n s i d e r a b l e e x t e n t t o r e s t r i c t i o n s
e x t e n s i o n of branch b a n k i n g .

S e v e r a l of the b a n k e r s

f o r the growth of group banking a t t h a t
that branch banking i f

-against

responsible

t i n e have s i n c e

legislation

stated

a l l o w e d would b e p r e f e r a b l e and t h a t

would f a v o r t h e c o n v e r s i o n of members o f t h e g r o u p s i n t o
if

the

they

branches

permitted.
D i s a d v a n t a g e s of B r a n c h B a n k i n g

Although branch banking has d e f i n i t e advantages as a type
of banking s t r u c t u r e ,

i t adLso h a s d i s a d v a n t a g e s .

The a r g u m e n t s

t h a t h a v e b e e n a d v a n c e d a g a i n s t b r a n c h b a n k i n g nay be
as




follows:
( 1 ) B r a n c h b a n k i n g i s m o n o p o l i s t i c and
w i l l r e s u l t i n the d e s t r u c t i o n of
u n i t b a n k s as w e l l as a d e c l i n e i n
the p e r s o n a l element in b a n k i n g .
(2) I f b r a n c h b a n k i n g i s p e r m i t t e d on
a largo s c a l e i t w i l l r e s u l t in a
concentration of banking resources
ar.d " 1 1 1 undermine t h e F e d e r a l R e serve System.

summarized




-

12b

~

(3) S u s p e n s i o n s and f a i l u r e s of b a n k s
operating widely d i s t r i b u t e d branches
w i l l bo more d i s a s t r o u s and r e s u l t i n
f a r w i d e r economic d i s t r e s s t h a n f a i l u r e s
of u n i t banks.
(b) O p e r a t i o n o f b r a n c h e s o v e r l a r g e a r e a s
i s dangerous because of the d i f f i c u l t y
in o b t a i n i n g adequate a d m i n i s t r a t i v e
p e r s o n n e l t o h a n d l e b a n k i n g and c r e d i t
problems in widely d i f f e r e n t communities.
(5) C o n v e r s i o n o f u n i t b a n k s t o b r a n c h e s a s
w e l l a,3 the e s t a b l i s h m e n t o f do novo
b r a n c h e s may he a s s o c i a t e d w i t h u n w h o l e some c o m p e t i t i v e p r a c t i c e s .

It is desirable at this point to discuss briefly each- of these
c r i t i c i s m s and o b j e c t i o n s t o b r a n c h b a n k i n g .
Monopolistic Tendencies, -

It

i s often asserted that

an

e x t e n s i o n of b r a n c h e s b y b a n k s would g r e a t l y r e d u c e t h e number
of b a n k s i n t h e U n i t e d S t a t e s a s i n Can a/da and E n g l a n d and i n
t h e end i t would l e a d to a monopoly i n t h e f i e l d o f
I t i s p o i n t e d out t h a t

as t h e number of b r a n c h e s

t h e u n i t bank w h i c h " i n i t s d a i l y l i f e

banking.

increases

r e p r e s e n t s the

success

of t h e community i n which i t e x i s t s " and w h i c h " i s owned and
managed b y t h e p e o p l e o f t h e c o n n u n i t y " i / would bo
I t i s a l s o claimed that

destroyed.

t h e b r a n c h e s would he u n w i l l i n g

to

t a k e s u b s t a n t i a l l o c a l r i s k s and t h e r e b y i n c l i n e d t o nake

loans

1 / L . A . Andrew, " F u t u r e o f U n i t B a n k i n g i n t h e U n i t e d S t a t e s , "
American B a n k e r s A ' - u o c i a t i o n J o u r n a l , Juno 193^, oa,ge 59®

- 125 more cautiously than local independent banks.

Such policies, it is

stated, would retard local communities and local enterprises.
A recent opinion that branch banking is monopolistic is expressed
in an editorial in the Hoosier Bankejr of the Indio.ua Bankers Association,
July 1936, under the title, "Branch Banking as a Monopoly," urging bankers
to fight the growing movement toward branch banking.

It appears, however,

from the editorial that branch banking is only monopolistic when it is
area (or nation) wide, such as that which is "prevalent in the California
program," and which is said to be broadening now to include surrounding
States.

It is explained that local branch banking of the type that is

developing in Indiana is not monopolistic*

The editorial says :

"....Branch banking in Indiana is confined by state
statute to county limits and those Indiana branches
have been established to meet a bonking need in a
community where there are no banking facilities.
Surely no one would think of the banking monopoly
as being in vogue in Indiana."
Another opinion that branch banking is monopolistic is that of
Hon. Henry B. Steagall, Chairman of tho Banking and Currency Committee
of the House of Representatives*

Speaking at tho recent meeting (Sep-

tember 15, 1936) of the National Association of Supervisors of State
Banks at Detroit, he said




"••••Branch banking is at variance with the spirit of
our people and with our fundamental principles of
Government. It is absentee banking. It is monopoly
and monopoly in its worst form. The platforms of our
great political parties denounce monopoly because it
destroys competition and imposes undue bi;.rdens upon
the public. Banking monopoly is worse than any other
because it invites those engaged in it to participate
in other forms of monopoly and becausc banking monopoly means the control of business whether engaged in
competition or not. Worst of all, banking monopoly
carries with it the power to control political and
adi-n.inistro.tion of public offices. It is at enmity
with all the free institutions and ideals of our
heritage."

In E n g l a n d ,
large joint

a l t h o u g h t h e number o f h a n k s h a s been r e d u c e d t o

s t o c k banks and e l e v e n s m a l l e r ones, and i n d e p e n d e n t

banks have d i s c o n t i n u e d a l t o g e t h e r ,

"much o f

t e r of t h e b a n k i n g s e r v i c e s was a d i r e c t
tween r a p i d l y g r o w i n g o r a l r e a d y l a r g e

charac-

outcome of k e e n c o m p e t i t i o n ' b e -

institutions."

^

I n Canada,

competition between

b a n k s i s m a i n t a i n e d and b a n k i n g s e r v i c e a p p e a r s t o h a v e b e e n

safety.

(private)

the b r o a d e n i n g o f the

branch banking has e x i s t e d f o r a long p e r i o d ,

liberally

five

where

the

extended

to r u r a l borrowers as w e l l as to others within the l i m i t s
In C a l i f o r n i a ,

t h e p a s t 15 y e a r s ,

where b r a n c h b a n k i n g h a s d e v e l o p e d r a p i d l y

experience

shows t h a t n o t o n l y i s

there

of
in

competition

between d i f f e r e n t b r a n c h s y s t e m s , b u t i n d e p e n d e n t b a n k s when w e l l managed
can e x i s t

s i d e b y s i d e w i t h b r a n c h b a n k s i n t h e same community.

So f a r a s t h e b a n k i n g p u b l i c i s c o n c e r n e d ,

i t appears i n England

and Canada t h a t " t h e r e i s s e v e r e c o m p e t i t i o n t o o b t a i n d e p o s i t s and
advance c r e d i t s , "

" I f a b a n k i n g monopoly e x i s t s

i n Canada,

n o t redound to the p e c u n i a r y a d v a n t a g e of the b a n k s .

it

Interest

does
charges

a r e r e a s o n a b l e and d i v i d e n d s p a i d a r e l o w e r than t h o s e o f n a t i o n a l b a n k s
in the U n i t e d S t a t e s . "
Furthermore,

^

the R o y a l Co /amission, i n i t s

C u r r e n c y i n Canada i n 1933 > s a i d :

r e p o r t on B a n k i n g and

3/

The b a n k s s t a t e t h a t t h e r e i s a h i g h d e g r e e
of c o m p e t i t i o n among them i n the s e r v i c e s r e n d e r e d
b y b r a n c h e s t o d e p o s i t o r s and b o r r o w e r s and i n i n v e s t m e n t and f o r e i g n e x c h a n g e t r a n s a c t i o n s .
If a
w o u l d - b e b o r r o w e r f a i l s t o r e c e i v e accommodation
from one bank he may go t o a n o t h e r .
Even b e t w e e n
b r a n c h e s o f the same bank a d e g r e e of c o m p e t i t i o n
exists."

1J W. E . C r i c k and J . E . Wadsworth, A Hundred Y e a r s of J o i n t S t o c k
B a n k i n g , p . 339•
2/ G a i n e s T. C a r t i n h o u r , " B r a n c h Banks V e r s u s U n i t B a n k s , " The A n n a l s
o f t h e American Academy o f P o l i t i c a l and S o c i a l S c i e n c e , J a n u a r y
1934, p p . 3 S - 9 .
2J Hem.qyt of t h e R o y a l Commission on B a n k i n g and C u r r e n c y i n Canada, 1 9 3 3 ,




- 127 -

The contention, however, that branch banking is monopolistic
is not new in the United States.

It runs through some phases of

the discussions of hanking problems throughout a considerable part
of the history of American banking and has been emphasized particularly since the branch banking controversy of 1890-1900.

In general,

it may be summarized that the contention has been and still is supported by the point of view of producers needing capital for production rather than by the point of view of merchants and dealers needing
facilities to effect commerce and exchange.

From the earliest days it

appears that local areas needing capital for development have felt that
their needs would be jeopardized

by banks operating branches and in-

terested largely in facilitating commerce and exchange*

Throughout the

controversy, however, it seems never to have been accepted that it is
possible for a bank operating branches properly developed to offer more
adequate and efficient services to producers and to merchants and dealers
than an independent bank.
Branch Banking and the Federal Reserve System. - It is contended
that the concentration of banking resources through the development of
banks with branches would undermine the Federal Reserve System.

Such

branch systems, it is claimed, v/ould be able to perform for themselves
mimy of the services that are now handled by the Reserve banks within
the different districts and by the Reserve System for the country as a
whole, and thereby reduce the need for tho Reserve System.

The effect

of branch banking on the Federal Reserve System has been summarized




-

128

-

as follows: 2/
"Since the existence of a largo number of banking units,
which had no dependable source of help in time of need, is
the primary reason for having a Reserve System, the formation
of large branch systems will tend to lessen the usefulness of
tho Reserve Bonks, Tho head office and branches constitute a
good-sized clearing and collection system in themselves, so
that the volume of items sent through tho Reserve System would
bo materially lessened. With its groat resources, well diversified as to season and risk, one would expect the branch
bank also to make much less use of the rediscount facilities
of the Reserve Banks than the same number of independent banks
would do.,f
If a bank operates a highly developed system of branches, the
need for some of the services in connection with clearing and collection and others now rendered by the Reserve banks would bo reduccd.
The need, however, for the larger functions of a central bank would
still remain for the Federal Reserve System to perform.

Evidence of

this is clear in England whore the functions of the central bank cnerged and bccanc definitely rocognizcd during a period when branches
had their rapid development• and in Canada, although a ccntral bank
has recently boon established, branch banking developed without one.
It is likely that r.any of the responsibilities of a centra.! bank can
be handled more, efficiently and r . r successfully through fewer banks than
:oc
through tho thousands of snail independent banks* whose activities are difficult to coordinate.
Suspension and Failure of Banks with Branches. - Tho suspension and
failure of banks operating branches over wide areas would be nuch more
disastrous and result in a far wider ocononic distress than tho failure of scattered independent banks.

Whore banks with branches thus

far have failed in the United States and abroad, tho consequences have

1/ G. W. Dowrie, Monetary and Banking Policies, pp.




- 129 been serious and far reaching*

On the other hand, the advantages and

improvement that should accompany the proper development and operation
of branches would lessen the probability of failure*

In England and

Canada, failures have been few and losses negligible*
Personnel and Management Problems of Branch Banking* - A serious
criticism tnat can oe made of branch danting on a large scale is that
the task of handling banking services and banking problems in widely
different regions would be extremely difficult.

In a country as ex-

tensive geographically and as diversified economically as the United
States, banking problems vary widely in different sections and it
might be difficult to obtain properly qualified personnel, particularly for important executive posts, in branch banking organizations
operating on a nation-wide basis.
In both Canada and England problems of personnel and management
have been difficult as the branch systems have evolved, but thus far
they are said to have been worked out reasonably satisfactorily.
Circumstances, however, surrounding the development of branch banking
in both England and Canada made the problems of personnel and management less difficult than they would be in the United States with large
scale branch banking.

Canada is more sparsely populated and less de-

veloped economically, both extensively and intensively, and the banking
problems presented in different regions are less widely diversified
than in the United States.

Moreover, branch banking is the only type

of banking structure that has been experienced in the Dominion and




- 130 as it developed with the growth of the country banking personnel was
trained from the beginning in the arts and techniques of branch administration,

In the United States, whore banking personnel has been trained

in independent bank administration, the development of a philosophy of
branch banking would naturally be slow and difficult.^

Indeed, transi-

tion from independent banking to branch banking could only be safe by
proceeding slowly.
In England, where industrial organization is similar in many respects to that of the United States, banking problems vary widely in
different regions, but the total area of the country is small, as compared with the United States, and the distances between head office
and branches are not groat.

Relatively short distances between head

office and branches facilitate contact between them and the coordination of operations and policies.

If branch banking should be attempted

in the United States on a nation-wide basis as in England, the greater
distances between head office and branches would present serious prob2/
lems of personnel and management .and internal organization. —

Such

problems would endanger its success and overwoigh any advantages that
it possesses over independent banking.
1/ In commenting upon the personnel problem in the development of branch
banking 'inCalifornia, the Chairman of the Security-First National
Bank of Los Angeles stated to the Banking and Currency Committee of
the Senate: "Our experience when we first started in branch banking
was that, in giving autonomy to the branches, we ran into a great
many different attitudes on the part of the management of the different branches as to what their duties and obligations were to the
community and to the bank itself. And it has been a matter of slow
growth to get branch managers to conform to what is considered best
banking practice." Hearings, Henry M, Robinson, Senate Resolution
71, February 1931, page 323,
2/ Albert I , Wiggin, Chairman, Chase National Bank, New York, commented
I
on this point in 1931 as follows: "...,if there was any suggestion
of branch banking to the extent of the whole country, we would consider it exceedingly inadvisable, because of the difficulty and impossibility of running branches at such a distance, in a satisfactory way," Hearings, S. Res. 71, page 196,



- 131 Although the problems of personnel and na nag orient of branch
banking on a broad scale as thus described arc serious, they arc
less important with respect to branch banking on a limited basis
under proper and effective public supervision.
Unwholesome Competitive Practices. - The development of branch
banking in this country has cone about in part in the past by the
purchase and conversion of independent banks into branches of a system, and further development of branch banking will probably be along
these lines.

This would be particularly true if do novo establish-

ment of branches were not allowed in nlaces in which existing banking
facilities were believed to be adequate.
realizes

Every student of banking

t h a t t h e r e h a v e b e e n unwholesome c o n s c q u c n c c s c o n n e c t e d w i t h

t h e b i d d i n g o f s e v e r a l banks one a g a i n s t t h e o t h e r f o r
banks t o c o n v e r t i n t o b r a n c h e s *
its

independent

A s y s t e m w h i c h p a i d t o o much f o r

b r a n c h e s w o u l d b e under t e m p t a t i o n t o s t r a i n a f t e r e a r n i n g s and

l o a d up on a s s e t s upon w h i c h l a r g e l o s s e s might h a v e to be

taken*

S u p e r v i s o r y a u t h o r i t i e s which attempted to p r e v e n t branch systems
f r o m p a y i n g t o o much f o r banks f o r c o n v e r s i o n i n t o b r a n c h e s w o u l d
be c o n f r o n t e d by s e r i o u s p r o b l e m s *

The management o f a s n a i l

w o u l d r e s e n t i n f l u e n c e s t e n d i n g to h o l d down t h e p r i c e w h i c h
night realize

in a sale*

On t h e o t h e r h a n d , i f

countenanced a s a l e a t a too h i g h p r i c e ,

the

it

authorities

t h e y would be blamed f o r

any unfortunate consequences which might erentuate*




bank

CHAPTER V I I
PROBLEMS IiT SEE EXT^TSION OE BRAMCH BAILINGThe i m p o r t a n t p r a c t i c a l p r o b l e m s t h a t would h a v e t o he
If

considered

a program were f o r m u l a t e d f o r t h e e x t e n s i o n o f "branch b a n k i n g i n t h e

United S t a t e s a r i s e in connection
(1)

with

the m u l t i p l e j u r i s d i c t i o n s of banking in
United States,

the

(2) t h e r e l a t i o n o f e x i s t i n g .independent u n i t
t o bonks w i t h b r a n c h e s ,

banks

(3) t h e e x t e n t of t h e area f a r t h e o p e r a t i o n o f
('4) t h e c o n d i t i o n s under which a bank s h o u l d be
t o e s t a b l i s h b r a n c h e s , and

branches,
permitted

( 5 ) t h e a t t i t u d e s o f b a n k e r s and o t h e r s t o w a r d t h o
sion of branch b a n k i n g .
Problems i n C o n n e c t i o n w i t h L e g a l
of many o t h e r b a n k i n g p r o b l e m s ,

exten-

St a. t u s o f B a n k i n g . - As i n t h e

case

t h e m u l t i p l e j u r i s d i c t i o n s of b a n k i n g have

b e e n an i m p o r t a n t f a c t o r i n f l u e n c i n g t h o h i s t o r y o f b r a n c h b a n k i n g * A l t h o u g h
the p r o v i s i o n s o f tho o r i g i n a l N a t i o n a l Bank Act tha/t wore

interpreted

t o p r o h i b i t b r a n c h e s wore b y - p r o d u c t s o f e f f o r t s to r e a r u l a t o tho

issue

o f bank n o t e s b e f o r e t h o C i v i l War, t h e y were u s e d e f f e c t i v e l y t o p r e v e n t
an e x t e n s i o n o f b r a n c h e s b y n a t i o n a l b a n k s f o r o v e r 60 y e a r s .

Even t h e

l e g i s l a t i o n i n 1927 and 1933 vjhich p e r m i t t e d n a t i o n a l banks t o

operate

b r a n c h e s d i d n o t g i v e t h e n any g r e a t e r powers i n a p a r t i c u l a r
were e n j o y e d by S t a t e b a n k s .

In f a c t ,

an l i b e r a l a s t h o s e i n sono S t a t e s .

State

than

i n 1927 t h e p o w e r s were b y no means

Tl:us t h e o p p o n e n t s o f b r a n c h b a n k i n g

h a v e s u c c e e d e d under t h e p r i n c i p l e o f " S t a t e r i g h t s i n b a n k i n g " i n p r o v e n t i n g F e d e r a l statuton f r o n advancing branch banking by n a t i o n a l banks
f a s t e r t h a n t h e S t a t e s t h e m s e l v e s h a v e boon w i l l i n g t o g o .
a result

of t h i s s i t u a t i o n ,

the l e g i s l a t i v e

Moreover,

p r i n c i p l e h a s boon

as

evolved

t h a t the d e c i s i o n a s t o t h o e x t e n t t o w h i c h b r a n c h e s may bo o p e r a t e d i n a




- 132 ~

- 133 particular State should " o left to that State notwithstanding the fact
b
that the Supreme Court has consistently held that national hanks are
instrumentalities of the Federal Government and the States have no
right to restrict their operations in any way.

This, in effect, has

preserved State autonomy in the operation of branches.
Illustrations of the importance of State autonomy in this connection
are reflected clearly in the following statements by L c A« Andrew, formerly
Superintendent of Banks in Iowa.

Mr. Andrew has been an ardent defender

of the principle of independent banking and of the dual banking system
for many years, and he expresses the views of a considerable body of
,
bankers*

The first of these statements was made in 1332 when he criti-

cized the branch banking provision of the Glass Bill 0:1 the grounds that
it violated the rights of the States.

At the tine, he sand,

"....Section 19 of the Glass Bill now before Congress, giving
national banks of $500,000 capital, or mere, the right to establish branches in any State where they do business even if
the State prohibits branch banking, is a direct attack on the
sovereignty of our States and an attempt to override the expressed will of the people of the individual States bjr national
legislation." 1 /
Again in 193^ he urged the independent bankers to prevent legislation permitting a further extension of branch banking on the grounds that
it would be a destruction of State rights.

He said,

"....It is apparent that a strong effort will be made at the
next session of Congress to put through a law allowing branch
banking by national banks, even in States that prohibit it by
statute. Destruction of State rights by this method should be
considered beyond the possibility of enactment, but it is going
to take the unified effort of all unit bankers, both national
and State, to prevent the passage of such legislation." 2/

1/ Address on "State Banks and Their Important Field of Service," The
Commercial and Financial Chronicle, American Bankers Convention,
October 22, 1932, page 52.
2/ Address on "The Future of the Unit Bank," Proceedings of the Missouri
Bankers Association, May 1'93 ^f page 39«




- 13 ^ Thus i f

a F e d e r a l program should -attempt t o e x t e n d b r a n c h e s more

w i d e l y than, i s now p e r m i t t e d ,

i t would i n v o l v e g i v i n g n a t i o n a l b a n k s

g r e a t e r powers than S t a t e b o n k s have i n some S t a t e s .

Such a program

may bo e j e c t e d t o a/rouse o p p o s i t i o n from the i n d e p e n d e n t u n i t
as in the p a s t .

bankers

An e f f e c t i v e r e p l y t o such o p p o s i t i o n s h o u l d b e

t h e i m p o r t a n c e of b a n k i n g and of bank d e p o s i t s
under p r e s e n t day c o n d i t i o n s ,

in the n a t i o n a l

and t h e r e s p o n s i b i l i t y

that

economy

of t h e F e d e r a l

Government t o t h e monetary o r g a n i z a t i o n o f t h e c o u n t r y a s a ^ h o l e ,
more than j u s t i f y a p o l i c y of d e a l i n g w i t h the s t r u c t u r e o f
as a n a t i o n a l matter r a t h e r
h a n d l e d on a l o c a l b a s i s .
grow,

than o f l e a v i n g i t
Moreover,

banking

to the S t a t e s t o be

i f branch banking continues

to

t h e F e d e r a l Government would be i n a p o s i t i o n t o e s t a b l i s h

ef-

f e c t i v e l y -uniform s t a n d a r d s f o r t h e e v o l u t i o n and development of

a

sound s t r u c t u r e of b r a n c h b a n k i n g .
R e l a t i o n o f E x i s t i n g Independent Unit Banks t o B r a n c h B a n k s .
Froblems a s s o c i a t e d w i t h t h e r e l a t i o n of e x i s t i n g

independent

unit

b a n k s t o b a n k s w i t h b r a n c h e s r e q u i r e t h e development o f a d e q u a t e
guards a g a i n s t

the d a n g e r s t h a t might d e v e l o p ,

between n a t i o n a l

first,

from

and S t a t e b a n k s i n e s t a b l i s h i n g b r a n c h e s ,

-

safe-

competition
second,

from

c o m p e t i t i o n b e t w e e n b r a n c h b a n k s and e x i s t i n g u n i t b a n k s i n t h e same
place,

and t h i r d ,

from t h e

ovarestablishment

of b r a n c h e s

in

particular

communities.
In t h e e v e n t o f c o m o e t i t i v e r a c e s be tween banks t o e s t a b l i s h
e s , w h i c h c o u l d e a s i l y d e v e l o p i n t h e a b s e n c e of adcciuate

safeguards,

d a n g e r s of o v e r - b a n k e d a r e a s and o f b a n k i n g a b u s e s would a r i s e ,
t h e y would bo a s s e r i o u s

i n the l o n g run as t h o s e t h a t d e v e l o p e d

communities o v e r - b a n k e d w i t h independent u n i t b a n k s i n t h e




branch-

and
in

1920rs.

- 135 In s e v e r a l

S t a t e s the p o s s i b i l i t i e s

attention already,
them.

of

such d a n g e r s have

recorded

and s t o p s h a v e b e e n s u g g e s t e d t o g u a r d

For example,

against

t h e P r e s i d e n t of t h e Nov; J e r s e y B a n k e r s

Associa-

t i o n s a i d i n I93U,
" . . . . s h o u l d S t a t e - w i d e b r a n c h b a n k i n g come t o p a s s ,
t h e p o s s i b l e and o n l y l o g i c a l s o l u t i o n , may b e f o u n d
i n t h e enactment o f l e g i s l a t i o n w h i c h s h a l l p r o v i d e
f o r t h e mutual a p p r o v a l o f b o t h S t a t e and N a t i o n a l
a u t h o r i t i e s b e f o r e t h e e s t a b l i s h m e n t of b r a n c h e s o f
e i t h e r S t a t e o r N a t i o n a l b a n k s i n any community and t h e n , o n l y a f t e r c a r e f u l a n a l y s e s o f t h e normal
b a n k i n g n e e d s o f t h a t community, made by t h e Bank
A d v i s o r y B o a r d , o r some o t h e r competent and i m p a r t i a l a u t h o r i t y . " 1/
A s i m i l a r s u g g e s t i o n was made i n New York i n 1932 by the
i n t e n d e n t of B a n k s ,

M r . ' J o s e p h A. B r o d e r i c k .

" . . . . I n our o p i n i o n , n e i t h e r S t a t e
banks should be e s t a b l i s h e d except
o f the S t a t e , N a t i o n a l and F e d e r a l
w i t h tho view of s t r e n g t h e n i n g the
t h e r e s p e c t i v e s t a t e s . " 2/

Super-

Ho s a i d ,
nor N a t i o n a l b r a n c h
on the c o n c u r r e n c e
Reserve a u t h o r i t i e s
b a n k i n g system o f

I n 1933> t h e B a n k i n g B o a r d of t h e S t a t e o f Now York t o o k a p o s i tion similar

to t h a t

expressed by the Superintendent

adopted a r e s o l u t i o n m e m o r i a l i z i n g Congress to
v i s i o n s i n t h e B a n k i n g Act of 1933*
Federal L e g i s l a t i o n

of

Again,

o f B a n k s and

incorporate

such p r o -

i n 193^> t h e Committee on

tho New York S t a t e B a n k e r s A s s o c i a t i o n

expressed

c o n c e r n a s t o t h e d a n g e r s o f c o m p e t i t i o n i n t h e e s t a b l i s h m e n t of
e s and s u g g e s t e d t h e F e d e r a l D e p o s i t
agency to e x e r c i s e

branch-

Insurance Corporation as the proper

s u p e r v i s i o n of t h e i r d e v e l o p m e n t .

They

said,

" . . . . t h e a p p r o v a l o f t h e F . D . I . C . s h o u l d b e sought b y
e v e r y bank s e e k i n g t o e s t a b l i s h b r a n c h e s .
In t h i s
manner a s i n g l e a g e n c y can c o n t r o l t h e r a t e o f e x p a n s i o n w i t h o u t i n any way i n t e r f e r i n g w i t h t h e s o v e r e i g n t i e s o f e i t h e r s t a t e or n a t i o n a l s y s t e m s .
It
i s h i g h l y p r o b a b l e t h a t such a p l a n may h e l p t o e l i m inate excessive competition."
1 / C a r l Kt W i t h e r s , P r o c e e d i n g s of the New J e r s e y B a n k e r s A s s o c i a t i o n ,
May 193U, p . 113.
2/ R e p o r t o f Banks o f D e p o s i t and D i s c o u n t , New Y o r k , 1 9 3 2 , p . 7*
37 P r o c e e d i n g s o f the M e e t i n g o f New Y o r k S t a t e B a n k e r s A s s o . , I93U, p .



153,

-il+136Although experience

i n C a l i f o r n i a and e l s e w h e r e

b a n k i n g d o e s not n e c e s s a r i l y
properly located

tand

shows t h a t

e l i n i n a t e u n i t b a n k s when the l a t t e r

operated,

it

Establishment

p e t i t i o n with existing
the d i f f i c u l t i e s of

of new b r a n c h e s ,

institutions

the

are

i s p o s s i b l e f o r abuses to r e s u l t

c o m p e t i t i o n b e t w e e n b r a n c h e s and e x i s t i n g u n i t b a n k s t h a t
guarded a g a i n s t .

branch

should be

f o r example,

i n s m a l l e r p l a c e s would

situation that

fron

i n com-

aggravate

s u r r o u n d s many s n a i l b a n k s .

The

p o t e n t i a l dangers i n v o l v e d in developments of t h i s s o r t o f t e n have been
s t r e s s e d b y u n i t b a n k e r s and i n many i n s t a n c e s t h e i r
t o b r a n c h b a n k i n g i s due i n p a r t t o
As s a f e g u a r d s a g a i n s t

strong

then.

such d a n g e r s s e v e r a l S t a t e s now p e r m i t t i n g

b r a n c h b a n k i n g have a d o p t e d measures t o p r o t e c t

e x i s t i n g banks.

measures t h a t h a v e b e e n adopted a r e of t h r e e g e n e r a l t y p o s that p r o h i b i t the establishment of branches except by
w i t h or a b s o r p t i o n of e x i s t i n g b a n k s f
establishment

(2)

consent of e x i s t i n g

The

(l)

those

consolidation

those that p r o h i b i t

of branches e x c e p t i n p l a c e s w i t h o u t banking

and (3) t h o s e t h a t p r o h i b i t

opposition

the

facilities,

tho establishment o f b r a n c h e s e x c e p t w i t h

banks* I j

the

I n many S t a t . . ; ; , however* no s u c h s a f e g u a r d s

have been provided*
As an example o f
the u n i t banks,

t h e measures t h a t have b e e n a d o p t e d to

tho Nov; Y o r k s t a t u t e s nay b e

protect

cited:

,rA b a n k . * , .nay open and occupy a b r a n c h
office
or b r a n c h o f f i c e s i n any c i t y o r v i l l a g e l o c a t e d i n
t h e b a n k i n g d i s t r i c t i n which i s l o c a t e d i t s p r i n c i p a l o f f i c e , p r o v i d e d i n no e v e n t s h a l l a b r a n c h b e
opened and o c c u p i e d , . . . i n a c i t y or v i l l a g e i n which
a r e l o c a t e d one or n o r e b a n k s , t r u s t companies or_
n a t i o n a l b a n k i n g a s s o c i a t i o n s e x c e p t f o r the p u r p o s e
o f a c q u i r i n g b y m e r g e r , s a l e or o t h e r w i s e , the b u s i n e s s and p r o p e r t y of one or more such b a n k s , t r u s t
companies or n a t i o n a l b a n k i n g a s s o c i a t i o n s . u ( i t a l i c s
ours")

ij

See Appendix I f o r d e t a i l s i n t h o d i f f e r e n t S t a t e s a s to the s p e c i f i c
s t a t u t o r y p r o v i s i o n s r e g a r d i n g t h e s e t h r o e t y p o s ^f m e a s u r e s .




- 137 Another type of safeguard is found in a few States.

In the statutes

of Utah, for example, it is required that:
"#A#«no "branch shall be established in any city, town or
village in which is located a bank or banks.. .unless the
bank seeking to establish such branch shall take over an
existing bank or obtain the consent of all banks therein
located, except that in cities of the first class, branches
nay be established without such c o n s e n t . N o unit bank
hereafter organized and operating at a point where there
are other operating banks....shall be permitted to be acquired by another bank for the purpose of establishing a
branch until such bank shall have been in operation as
such for a period of five years." (italics ours)
The overestablishnent of branches in particular communities must bo
as carefully checked as the excess chartering of independent unit banks.
The protective measure most commonly adopted is that branches can be established only with the approval of the banking supervisory authorities.
All States now permitting branches, except Georgia, South Carolina, and
Tennessee, have provisions of this sort.

A few States have attempted,

in addition, to restrict branches to places of certain size and to limit
the number of branches according to population.

A more effective safe-

guard night bo to provide by law that no additional banking office,
whether unit or branch, shall be established in any place unless the
public convenience and advantage require it and the conr.iunit^y affords
enough potential business to support it.
On the basis of the experience of different States with legislation,
thus described, it appears to be a difficult problem to give protection
by statute to unit banks against corn-petition of branch banks, and to -protect communities against over-banking.

Federal statutes pertaining to the

operation of branches by national banks contain no specific provisions to
protect existing banks against competition of branches other than the
general provision that the establishment and operation of branches must
be with the approval of the Comptroller of the Currency.



- 142 Extent ef tiie Area for Operation of Branches, - The third problem
that arises in connection with a program for the extension of branch
banking in tho United States pertains to the extent of the geographical
areas over which it is desirable to permit a bank to operate branches,
A consideration of this problem with particular reference to national
banks will indicate the nature of the problem itself and of the difficulties involved in finding a solution.
Various suggestions have been made from time to time as to the
area within which a national bnnk should be allowed to operate branches.
Among the suggested branch banking areas are the following, or combinations of some of them, all of which contemplate that a national bonk
should bo allowed to establish a branch at any point within the area
in which tho head office of the bank is located, regardless, of how that
area may be described:




(1) The entire country.
(2) The Federal He serve district.
(3) Tlie territory assigned to tho head office of a Federal
Reserve bank or to a branch thereof, as the case nay "be.
.
(k) Tho State,
(5) Adjoining counties, regardless of State or Federal Reserve district lines. Some suggest a proviso that the
aggregate population of the head, office county and of
tho adjoining counties must not exceed a given number
of persons, e.g,, 100,000, 250,000, etc.
(6) Tho head office county.
(7) Any point not more than a given number of miles from
the head office of the national bank, regardless of
county, State or Federal Reserve district lines, The
distance suggested by some is 50 niles and by others
100 miles.

- 139 (S) The " t r a d e a r e a " . o f t h e h e a d o f f i c e c i t y , t h e " t r a d e
.area" "being l e f t f o r d e t e r m i n a t i o n "by t h e F e d e r a l
"banking a u t h o r i t i e s i n t h e c a s e o f e a c h a p p l i c a t i o n
f o r the establishment of a branch.

(9) A s t a t u t o r i l y d e f i n e d " t r a d e a r e a , " such a s t h e a r e a

which i s n e a r e r to the head o f f i c e c i t y of the n a t i o n a l bank t h a n t o any o t h e r c i t y w i t h a g i v e n p o p u l a t i o n , e . g . , 100,000, 50,000, 25,000, e t c .

d o ) Any p o i n t , r e g a r d l e s s o f S t a t e o r F e d e r a l R e s e r v e
d i s t r i c t l i n e s , w i t h i n such a d i s t a n c e f r o n t h e h e a d
o f f i c e o f t h e n a t i o n a l b a n k t h a t the c o u n t i e s comp l e t e l y included in tb;-circular area represented by
t h e head o f f i c e a s a c e n t e r and t h e b r a n c h a s t h e
o u t e r p o i n t would not h a v e an a g g r e g a t e p o p u l a t i o n
i n e x c e s s o f a g i v e n number of p e r s o n s .
The p o p u l a t i o n m e n t i o n e d i n t h i s c o n n e c t i o n i s sometimes
100,000, sometimes 250,000, e t c .
C o n s i d e r a t i o n s w i t h R e s p e c t t o V a r i o u s B r a n c h B o n k i n g .Areas. -

Nation-

wide b r a n c h b a n k i n g i n t h i s c o u n t r y s c a r c e l y a p p e a r s t o bo a p r a c t i c a l
s i d e r a t i o n in either

the near or the distant f u t u r e .

For one t h i n g

con-

decades

would bo r e q u i r e d t o b u i l d up management and p e r s o n n e l t o h a n d l e a b r a n c h
banking system o p e r a t i n g in a l l

the d i v e r s e a r e a s of t h i s c o u n t r y .

Moreover,

s u c h s y s t e m s w o u l d i m p l y a d e g r e e o f h a n k i n g c o n c e n t r a t i o n w h i c h would n o t b e
generally

favored.

The b o u n d a r i e s o f F e d e r a l R e s e r v e bank o r b r a n c h zones o r
h a v e b e e n f i x e d w i t h r e f e r e n c e t o economic and f i n a n c i a l ,
stances topographical,

territories

raid i n some i n -

r a t h e r t h a n p o l i t i c a l f a c t o r s and a r e i n a s e n s e

homogeneous t r a d e a r e a s . 1 /

I f an a t t e m p t were made b y F e d o r a , !

legielation

t o g i v e n a t i o n a l b a n k s t h e r i g h t t o o p e r a t e b r a n c h e s anyvxhere w i t h i n "'the
F e d e r a l R e s e r v e bank o r b r a n c h z o n e ,

t h e r e would b e numerous

f o r n a t i o n a l b a n k s to c r o s s S t a t e l i n e s .
determined o p p o s i t i o n ,
Conversely,

if

This,

of c o u r s e , would meet

p a r t i c u l a r l y from t h e S t a t e s * r i g h t s

Federal statutes

should s t i p u l a t e

elements.

that

1/ Branch "zones" in t h e S t . Louis Federal Reserve d i s t r i c t
b y S t a t e and c o u n t y boundary l i n e s .




"possibilities

a r e n o t marked

- iko

-

an insured State bank could not operate a branch outside of the zone
or territory of the Federal Reserve bank or branch, conflicts would
arise in ccrtain States which arc divided as to zone or territory but
in which the State law permits a State bank to operate a branch anywhere within the State,

Some of the States now permitting State-wide

branch banking which would raise the question are the following;
Arizona — divided between Los /ngeles and El Paso
California — divided between San Francisco and Los Angeles
Connecticut — divided between Boston and New York
Idaho — divided between Spokane and Salt Lake City l/
Michigan — divided between Detroit, Chicago, and Minneapolis
Nevada — divided between Salt Lake City and San Francisco
North Carolina -- divided between Richmond and Charlotte
South Carolina — divided between Richmond and Charlotte
Washington — divided between Portland, Spokane, and Seattle l/
If some policy wore adopted with rospect to branch operation in Federal Reserve bank or branch zones or territories, it would appear that a
branch operating bank should be permitted to establish an offico at any
point within 50 or perhaps 100 miles of the head office in order that a
bank located at the edge of the zone as otherwise defined would not be
prevented from serving a natural trade area which might otherwise be
just outside of tho zone or territory.

Trade areas so defined should

bo largo enough to provide considerable diversification of loans and
deposits.
The operation of branches throughout contiguous counties would in
some areas of the United States allow a national bank to serve an area
xvith a diameter of as much as 300 miles.

In other parts of tho country

it would mean little more than 25 miles.

It is questionable whether in

many parts of the country a contiguous county area would servo to provide
much diversification in the banking business.
Areas defined by county boundaries or boundaries of a territory assigned to a Federal reserve bank or branch zone might vary from time to
1/ Recently the Spokane branch territory, except the city of Spokane, was
reassigned to the Seattle branch.



- lUi tine raid raise problems.

For example, if a given Federal Besorvo branch

wore discontinued and its territory either reassigned to tho hood office
or divided among other branches, this might bring about an important
chango in the field of operation of soriio banks.

Presumably in such cir-

cumstaiiccs a bank would bo permitted to retain any branches previously
established no matter if thoy wore outside the now zone limits. Similar
difficulties probably would arise more frequently, though thoy would not
bo as important, in connoction with changes in the boundary lines of counties.

Sometimes a given county is subdivided, but more recently there has

boon considerable agitation for consolidating counties in tho interest of
more economic administration of State governments.

Such consolidations

would, of course, expand the business field of operations of banks located
within tho counties that consolidated.
Any branch banking area, defined in terras of a certain distance from
tho head officc city would raise a number of individual problems.

For ex-

ample, if the aroa wore 50 miles from the head office city, a national bank
loeated in Baltimore might operate a branch in Washington, or vico versa.
Several of tho largest citios in tho United States are within 100 nilos of
another largo city, for example, Now York and Philadelphia, and Chicago and
Milwaukee.

Problems of this character night be not by allowing branches to

bo operated in other citios,tho population of which did not oxccod 25,000
or 50,000.

A branch banking aroa limited to a distrncc of 50 miles from

tho head officc city would provide little opportunity for multiple banking
facilities in tho sparsely settled regions of the country.

It takes no

account, furthermore, of the differences in accessibility.

Places 50 or

100 miles apart by airline distance but separated by a mountain range arc
much farther apart for all practical purposes than placos in tho other
sections tho.t aro many more nilos apart.




Conditions Under Which Individual Banks Should Be Permitted to
Operate Branches. - A fourth group of problems that require considera
tion pertain to the conditions under which an individual bank should
be permitted to operate branches.

They include (l) requirements as

to the capital of the banks that should be authorized to operate
branches and, (2) the methods by which branches should be established
A first requirement of banks for the establishment and operation
of branches is that their capital funds should be adequate to meet
their responsibilities.

Provisions of the present national banking

statutes recognize this requirement and stipulate the minimum capital
of national banks establishing branches outside the head office city
and the statutes of several States likewise specify minimum capital
for State banks operating branches.

As they stand, however, the stat

utes are defective in several respects and an analysis of them will r
veal some of the problems in connection with capital requirements at
the present time.
Present Capital Requirome its. - The National Bank Act contains
two provisions which stipulate special capital requirements for banks
establishing branches outside the head office city.

One of these pro

visions fixes a minimum capital based on the population of the State
and of the largest city in the State for banks establishing branches
outside their head office cities.




It reads as follows:

"No such (national banking) association shall establish a branch outside of the city, town, or village in which
it is situated unless it has a paid-in and unimpaired Capital stock of not less than $500,000: Provided, That in
States with a population of less than one million, and
which have no cities located therein with a population
exceeding one hundred thousand, the capital shall be not
less than $250,000; Provided, That in States with a population of loss than one-half million, and which have no
cities located therein with a population exceeding fifty
thousand, the capital shall not be less than $100,000."

- 1U3 The second provision requires the capital to he fixed also with
reference to the nunher of branches operated and the nunber of places
in which they are situated.

It roads as follows:

"The/aggregate capital of every national banking association and its branches shall at no tine be less than tho
aggregate minimum capital required by Law for the establishment of an equal nunber of national banking associations
situated in the various places where such association and
its branches are situated,"
B o t h o f t h e above p r o v i s i o n s a r e a p p l i c a b l e a l s o t o S t a t e bank nemb e r s of t h e F e d e r a l R e s e r v e

System.

The s e c o n d p r o v i s i o n o f t h e N a t i o n a l Bonk Act q u o t e d above h a s b e e n
c o n s t r u e d t o mean t h a t a n a t i o n a l bank o p e r a t i n g one o r more b r a n c h e s
s i d e i t s h e a d o f f i c e c i t y must h a v e one " u n i t " o f c a p i t a l

(that

is,

out-

the

sane a s i s r e q u i r e d f o r a n o n - b r a n c h n a t i o n a l bank) f o r t h e h e a d o f f i c e
c i t y and f o r e a c h o t h e r c i t y
interpretation

i n w h i c h i t h a s one o r more b r a n c h e s .

This

i s c o n s i s t e n t w i t h t h e r u l i n g t h a t a n a t i o n a l bank w i t h

b r a n c h e s o n l y i n t h e h e a d o f f i c e c i t y i s n o t r e q u i r e d t o h a v e any more
c a p i t a l t h a n one w i t h no b r a n c h e s
Capital

requirements f o r S t a t e banks o p e r a t i n g branches v a r y

widely that i t
applicable

whatever.

is difficult

to g e n e r a l i z e about t h e n . l /

S t a t e laws i n d i c a t e s ,

however, that

so

A survey of

i n o n l y lU St a t o s i s

the
there

a minimum c a p i t a l r e q u i r e m e n t f o r b r a n c h s y s t e m s , a p a r t from a

require-

ment b a s e d on t h o number o f "branches o r t h e amount o f d e p o s i t s ;

in only

5 of t h o s e S t a t e s

(Maine, Oregon, W a s h i n g t o n , Alabama, and C o n n e c t i c u t )

i s t h e r e q u i r e m e n t a s h i g h a s $500,000.

In 1 1 S t a t e s tho a b r o g a t e

mum c a p i t a l must be t h e amount r e q u i r e d t o o r g a n i z e b a n k s l o c a t e d i n
h e a d o f f i c e and b r a n c h

minithe

cities,

1 J Appendix I I c o n t a i n s a t a b u l a t i o n comparing "Minimum C a p i t a l S t o c k a n d / o r
S u r p l u s R e q u i r e d t o E s t a b l i s h Out-of~Town B r o n c h o s i n V a r i o u s S t a t e s
under S t a t e Law and under P r e s e n t P r o v i s i o n s of S e c t i o n 5 1 5 5 o f R e v i s e d
S t a t u t e s of United S t a t e s . "




- lUU -

In about 10 States there are no statutory provisions whatever requiring additional capital to establish branches.
Effect of Fro sent Requirements. - 'The present provision of the
National Bank Act, that no national bank located in a State with a
population of 1,000,000 or more may establish any branches outside
the head office city unless it has a capital of at least $500,000,
effectively prevents the establishment of national bank facilities
in small communities, even in the same county, which are deprived
of all banking facilities.

It does so, furthermore, in spite of the

fact that, except in 5 States, State banks are not subject to such
high capital requirements.

In Arkansas, Iowa, and Wisconsin, State

banks may establish additional "offices" for the receipt and payment
of deposits without being required to increase their capital at all.
In contrast, a national bank in any of these States with a capital of
$50,000 would have to increase its capital tenfold to establish a
branch office in an adjoining town.
The effect of this provision of law is not so restrictive in the
case of a national bank located in a State with a population of less
than 1,000,000 and no city larger than 100,000, and even less restrictive in the case of a State with a population below 500,000 and no city
larger than 50,000.

In the latter case a national bank located in a

small city and having a capital of $100,000 may establish a branch in
another small city without increasing its capital, if State banks are
allowed to establish such branches.

'The law as it stands not only

discriminates seriously against national as compared with State banks,
but as between national banks which happen to be located in different
States.




- i+ l5

Of even greater immediate importance is the fact that soioe State
"banks are precluded from joining the Federal Reserve System solely
by reason of the fact that State bank members may establish branches
outside their head office cities only on the same terms as national
banks.

Furthermore, no State bank being admitted to membership may

retain any such branches established after February 25, 1927> the
date of the passage of the McFadden Act, unless it meets the capital
requirements above referred to.

In a recent case an application for

membership is reported to have been dropped as soon as the restrictive
provisions of lav; were called to the attention of the inquiring bank.
A recent survey Indicates that out of something over Hoo nonmember banks
(other than mutual savings banks) operating one or more branches outside
the head office city, over 300 are ineligible for membership by reason
of the special capital requirements applicable to such branch systems.
This figure includes 93 banks in Iowa, mostly with only one branch office, which would have to increa.se their capital stock from the present
aggregate amount of

570*000 to an aggregate of $H6,500,000, in spite

of the fact that their deposits -amounted on December 31» 1935»
$71,000,000.

only

In Wisconsin there are 58 nonmember banks in the same

situation, in North Carolina 2b, in Indiana 21, and in Virginia IS.
Some of the nonmember branch operating banks have deposits of
over $1,000,000 and would, therefore, be automatically deprived of
deposit insurance after July 1, 19^2, because of being ineligible for
Federal Reserve membership unless the Board waived the high capital
requirements.

If, for example, a State bank in Iowa with a capital

of $100,000 and deposits of $1,000,000 and operating one branch in




- i+ l6
an adjoining snail city wished to have its deposits insured after July 1,
19^2, it would have to "become a member of the Federal Reserve System.

In

order to be eligible for membership from the standpoint of capital requirements, it would have to increase its capital from $100,000 to $500,000 -unless the Board waived the capital requirement.

If the Board did waive the

capital requirement and admitted the bank with a capital of only one-fifth
of the minimum prescribed by law, the b m k apparently could continue to
operate the branch it already had, but after becoming a member bank it
could not establish even one additional branch without increasing its
capital to $500,000.
Furthermore, although the Board could, under the existing provisions
of law, waive the capital requirements for a bank with deposits of $1,000,000 or more, it could not do so in the case of a bank having lower deposits.
As a consequence, another bank in Iowa with a capital of $100,000 and deposits of, say, $500,000 and operating an out-of-city branch could not come
into membership under the waiver provision; that is to say, the smaller bank
would be required to have a Capital of at least $500,000 to be admitted to
membership, while the larger bank might, through the exercise of the waiver
by the Board, be admitted with a capital of only $100,000.
Not only are the special capital requirements applicable to branch systems such as to render numerous

nOHnenber banks ineligible far membership

in tho Federal Reserve System but these requirements also discriminate
against national banks as compared with State banks, and against a
national bank in a populous State as compared with a national




-il+147-

"bank in a State with less population.

These provisions, moreover, defi-

nitely make it impossible for both national and State member banks to
establish branches in locations Hiore it might be desirable to provide
such facilities either de novo or in replacement of existing small banks,
Possible Modifications in Capital Requirements of Federal Law. Because of the inequities with respect to the capital requirements for
national and State member banks which establish branches, modifications
in the law have been suggested from tine to time.

For exajnple, it has

been proposed that the law be amended eliminating the requirements:
(l) that a national or State member bank which establishes branches outside the head office city have a minimum capital of $500,000, $250,000,
or $100,000, depending on the size of tho State of location; and (2)
that the aggregate capital of a bank and its branches shall not be
less than the aggregate minimum capital required for the establishment of an equal number of national banks in the various places where
tho bank and its branches are located.

For the provisions eliminated,

the proposal would substitute tho legal requirements:

(l) that a bank

having branches shall have capital adequate in relation to its deposit
liabilities and other corporate responsibilities; and (2) that such
capital shall not be loss in any case than, the amount required by State
law of State banks operating tho sane nunber of branches in the places
whore the bank*a branches are located.
A provision of the latter character is appropriate if the Federal
Government continues its policy of permitting each State to define the
extent to which national banks may operate branches within its border®
Ift on the other handf the Federal Government should determine upon a



- lUs -

national policy with respect to "branch hanking, it would not he consistent to allow individual States to specify capital requirements with
respect to national hanks operating branches.

In such a circumstance

any State could effectively prevent the establishment of branches by
a national bank within its boundaries by setting unreasonably high
capital requirements.

If Federal authorities were required to fix

different capital requirements in different States because of provisions of State laws, the capital requirements would not be determined
solely on the basis of adequacy.
Methods of Establishing Branches. - As has been pointed out,
methods by which branches are to be established are particularly important because of the problem that arises of safeguarding existing
banks.

The two methods by which branches can be established are by

organization de novo

and by consolidation with an existing bank by

purchase of assets or otherwise.

National banking statutes contain

no provisions as to methods by which branches may be established, but
statutes in several States specify that branches can be established
in certain places where there are banks only by consolidating with an
existing institution.

Many States, however, have no provisions regard-

ing the methods by which branches may be established.
It would seem that problems as to the methods by which branches
should be established could best be handled by leaving a decision in
each case to the supervisory authorities under general legislative instructions that branches should be established only with due regard to
the needs of the community for banking facilities and according to the
methods most appropriate at the time and place.




lUg -

A t t i t u d e s Toward E x t e n s i o n o f B r a n c h B a n k i n g . lems,

as thus d e s c r i b e d ,

t h a t would a r i s e

i n t h e e x t e n s i o n of

b a n k i n g do n o t a p p e a r t o b e i n s u r m o u n t a b l e ,
i n mind t h a t

the extent

Although the

it

is

important

prob-

branch

to b e a r

to which l e g i s l a t i o n e x t e n d i n g branch banking

can b e a d v a n c e d i n C o n g r e s s o r i n S t a t e l e g i s l a t u r e s h a s depended more
i n t h e p a s t on t h e a t t i t u d e s o f b a n k e r s and o t h e r s t o w a r d b r a n c h b a n k i n g than i t h a s on i t s m e r i t s a s a t y p e o f b a n k i n g s t r u c t u r e .
p r a c t i c a l matter,

therefore,

it

is

As a

i m p o r t a n t t o s t u d y the o p i n i o n s

of

some o f t h e b a n k e r s and o t h e r s who h a v e e x p r e s s e d t h e m s e l v e s

recently.

E x c e r p t s from s t a t e m e n t s o f

their

these in recent y e a r s

indicating

o p i n i o n s on b r a n c h b a n k i n g a r e g i v e n i n Appendix V.
I n v i e w of t h e n a t u r e o f t h e b r a n c h b a n k i n g c o n t r o v e r s y ,
c i r c u m s t a n c e s under w h i c h i t h a s d e v e l o p e d ,
to attempt a b r i e f

and a c c u r a t e

it

i s extremely

and t h e
difficult

summary of t h e v i e w s o f t h o s e who h a v e

e x p r e s s e d t h e m s e l v e s w i t h r e f e r e n c e to t h e e x t e n s i o n o f b r a n c h e s .
when t h e s i t u a t i o n i s v i e w e d b r o a d l y c e r t a i n t h i n g s a p p e a r f a i r l y
In t h e f i r s t p l a c e t h e g r e a t e s t
two e x t r e m e s o u r c e s -

(l)

clear.

o p p o s i t i o n up t o now ha.s come from

c o u n t r y b a n k s i n s m a l l e r p l a c e s and (2)

banks i n m e t r o p o l i t a n a r e a s o f New Y o r k and C h i c a g o .
Mr. Edmund P i a t t

Yet

large

W r i t i n g i n 1932

commented w i t h r e f e r e n c e t o t h i s p o i n t a s f o l l o v / s :

" . . . . I t i s somewhat amusing t o f i n d t h a t b r a n c h b a n k i n g w h i l e
v o c i f e r o u s l y o p p o s e d b y some c o u n t r y b a n k e r s h a s a l s o b e e n
s t r o n g l y opposed b y many o f t h e b i g c i t y b a n k e r s , i n c l u d i n g
New Y o r k b a n k e r s ( s e e t h e t e s t i m o n y o f Mr. TTigaun, Mr. D a v i son, and Mr. M i t c h e l l b e f o r e S e n a t o r G l a s s 1 C o m m i t t e e ) .
The
c o u n t r y b a n k e r s a r c a f r a i d of t h e c i t y b a n k s and t h e c i t y b a n k s
are a f r a i d of the country banks.
In r e a l i t y , t h e l a t t e r h a v e
much t h e more r e a s o n t o b e a f r a i d .
C o n s o l i d a t i o n of c o u n t r y
b a n k s c a n and would t a k e some o f t h e i r b i g b u s i n e s s . " 1 /

if

"Branch Banking:
A R e p l y , " J o u r n a l o f the American B a n k e r s Associa*t i o n , A u g u s t 1932, p . 6U.




- 150 At the present tine it appears on the basis of the statements
quoted, in Appendix V that opinions with reference to an extension
arc somewhat as follows:




1. Metropolitan bankers in Nov/ York are no re favorable
to an extension of branch banking within limited
areas and those in Chicago are less opposed than
formerly. Roccnt evidence, however, in Chicago is
much loss adequate than in Now York. Some of those
in Now York and Chicago who formerly strongly opposed branch banking arc no longer in important
positions and the views of their successors appear
to be different.
2. Majority opinion among group bankers appears to
favor branch banking as preferable to group banking. In the West and South tho larger group bankers prefer branch banking while those in the East
arc loss favorable to branch banking.
3. Bankers in several reserve cities soon favorable
to an extension of branches under proper safeguards.
4. Opinion of country bankers is divided but the opposition appears somewhat loss violent than in tho
past. In two of tho most important anti-branch
banking States - Iowa and Wisconsin - modified
branch bank legislation has boon adopted recently
to replace facilities lost through ban!: suspensions. In 1936, however, tho anti*-branch bankers,
under the protection of deposit insurance, increased their efforts to regain their rccent'ly
lost ground by using tho organization of independent bonkers to vigorously oppose branch banking.
5. Some parts of the banking press aro boconing increasingly militant against the growth of branch
banking and arc promoting organizations ariong independent bankers t o o p p d s c ;iore vigorously tho
further extension of branches. In one or two
instances the more militant press is influenced
greatly by editors known to bo very antagonistic
to branch banking.




- 151 ~

6 . Numerous S t a t e b a n k e r s 1 a s s o c i a t i o n s ns w e l l a s
s p e c i a l g r o u p s o f u n i t "bankers have e x p r e s s e d
o p p o s i t i o n to a p r o p o s a l introduced in Congress
i n t h e s p r i n g o f 1937 to p e r n i t n a t i o n a l b a n k s
to operate branches over State l i n e s .
This b i l l ,
which was i n t r o d u c e d b y S e n a t o r McAdoo on May 6 ,
1 9 3 7 , would a l l o w a n a t i o n a l bonk t o e s t a b l i s h
and o p e r a t e a new b r a n c h a t any p l a c e w i t h i n t h e
F e d e r a l R e s e r v e d i s t r i c t i n w h i c h such b a n k h a s
i t s p r i n c i p a l o f f i c e , w i t h t h e e x c e p t i o n t h a t no
b r a n c h n a y be o p e r a t e d i n any S t a t e u n l e s s t h e
l a w s o f such S t a t e a u t h o r i z e S t a t e b a n k s t o o p e r a t e
branches.
The i n t e r i n c o n n i t t e e of t h e American
B a n k e r s A s s o c i a t i o n and t h e p r e s i d e n t o f t h e S t a t e
Bank D i v i s i o n of t h e American B a n k e r s A s s o c i a t i o n
have a l s o e x p r e s s e d t h e i r o p p o s i t i o n to t h i s p r o posal.
The i n t e r i m committee f a v o r s t h e c o n t i n u a t i o n o f S t a t e autonomy i n t h e e x t e n s i o n o f b r a n c h
banking.




1 -

APPENDIX




APNI I
P E DX
FEDERAL AND STATE LAT7S RELATING- TO BRANCH BANKING-

PROVISIONS OF THE NATIONAL B A M ACT, 1927-19^, AND OF
DIFFERENT DRAFTS OF THE GLASS BILL, 1932-1935, M P
~BANKING ACT "OF" 1933 RELATING TO BRANCH BANKING

McFadden Act, 1927
Sec» 5155® The conditions upon which a national
hanking association may retain or establish and operate
a branch or branches are the following:
(a) A national banking association may retain
and operate such branch or branches as it may have in
lawful operation at the date of the approval of this
Act, and any national banking association which has
continuously maintained and operated not more than
one branch for a period of more than twenty-five years
immediately preceding the approval of this Act may continue to maintain and operate such branch®
(b) If a State bank is hereafter converted into
or consolidated With a national banking association,
or if two or more national banking associations are
consolidated, such converted or consolidated association may, with respect to any of such banks, retain
and operate any of their branches which may have been
in lawful operation by any bank at the date of the
approval of the Act®
(c) A national banking association may, after
the date of the approval of this Act, establish and
operate new branches within the limits of the city,
town, or village in which said association is situated
if such establishment and operation are at the time
permitted to State banks by the law of the State in
question.
(d) No branch shall be established after the date
of the approval of this Act within the limits of any
city, town, or village of which the population by the
last decennial census was less than twenty-five thousand.
No more than one such branch may be thus established
where the population, so determined, of such municipal
unit does not exceed fifty thousand; and not more than
two such branches where the population does not exceed
one hundred thousand* In any such municipal unit where
the population exceeds one hundred thousand tho determination of the number of branches shall be within the
discretion of the Comptroller of the Currency.

- iii Appendix I




(e) No "branch of any national "banking association
shall " e established or moved from one location to another
b
without first obtaining the consent and approval of the
Comptroller of the Currency.
(f) The term "branch" as used in this section shall
be held to include any branch bank, branch office, branch
agency, additional office, or any branch place of business located in any State or Territory of the United
States or in the District of Columbia at which deposits
are received, or checks paid, or money lent.
(g) This section shall not be construed to amend
or repeal section 25 of the Federal Reserve Act, as amended,
authorizing the establishment by national banking associations of branches in foreign countries, or dependencies,
or insular possessions of the United States.
(h) The words "State bank," "State banks," "bank,"
or "banks," as used in this section, shall be held to
include trust companies, savings banks, or other such
corporations or institutions carrying on the banking
business under the authority of State laws.
Drafts of the Glass Bill
s.

32^;(c) A national banking association may, after the
date this paragraph as amended takes effcct, establish
and operate new branches within the limits of the city,
town, or village, or at any point within the State in
which said association is situated, if such establishment
and operation are at the time permitted to State banks by
the law of the State in question; except that no such association shall establish a branch outside of the city, town,
or village in which it is situated unless it has a paid in
and unimpaired capital stock of not less than $1,000,000.
Every such association which shall establish any such
branch outside of the city, town, or village in which the
association is situated shall set aside for the use of
that branch a total amount of capital at least equal to
the minimum capital required by law for the organization
of a national banking association in the place in which
such branch is situated. The aggregate capital of every
national banking association and its branches shall at no
time be less than the aggregate minimum capital required
by law for the establishment of an equal number of national

- iv -

Appendix I




"banking associations situated in the various
places where such association and its branches
are situated.
S« Ull5
(c) A national banking association may, with
the approval of the Federal Reserve Board, after the
date this paragraph as amended takes effect, establish and operate new branches within the limits of the
city, town, or village, or at any point within the
State in which said association is situated, if such
establishment and operation are at the time permitted
to State banks by the law of the State in question:
Provided, That, if by reason of the proximity of such
an association to a State boundary line, the ordinary
and usual business of such association is found to oxtend into an adjacent State, the Federal Reserve Board
may permit the establishment of a branch or branches
by such association in an adjacent State but not beyond
a distance of fifty miles from the seat of the parent
bank. Ho such association shall establish a branch
outside of the city, town, or village in which it is
situated unless it has a paid-in and unimpaired capital
stock of not less than $500,000. The aggregate capital
of every national banking association and its branches
shall at no time be less than the aggregate minimum
capital required by law for the establishment of an equal
number of national banking associations situated in the
various places where such association and its branches
are situated.
S. bkl2
(c) A national banking association may, with the
approval of the Federal Reserve Board, establish and
operate new branches within the limits of the city, town,
or village, or at any point within the State in which
said association is situated: Provided, That, if by
reason of the proximity of such an association to a State
boundary line, the ordinary and usual business of such
association is found to extend into an adjacent State,
the Federal Reserve Board may permit the establishment
of a branch or branches by such association in an adjacent
State but not beyond a distance of fifty miles from the
place where the parent bank is located. No such association shall establish a branch outside of the city, town,
or village in which it is situated unless it has a paidin and unimpaired capital stock of not less than $500,000.

- v
Appendix I




S e c t i o n 5^55 R e v i s e d S t a t u t e s as amended "by B a n k i n g
A c t of 1933 a M B a n k i n g Act o f

1935*

S e c , 5155®
The c o n d i t i o n s upon which, a n a t i o n a l
b a n k i n g a s s o c i a t i o n may r e t a i n o r e s t a b l i s h and o p e r a t e
a b r a n c h o r b r a n c h e s a r e the f o l l o w i n g :
(a)
A n a t i o n a l b a n k i n g a s s o c i a t i o n may r e t a i n
and o p e r a t e s u c h b r a n c h o r b r a n c h e s a s i t may h a v e i n
l a w f u l o p e r a t i o n a t t h e d a t e o f t h e a p p r o v a l of t h i s
A c t , and any n a t i o n a l b a n k i n g a s s o c i a t i o n w h i c h h a s
c o n t i n u o u s l y m a i n t a i n e d and o p e r a t e d not more t h a n one
b r a n c h f o r a p e r i o d o f more t h a n t w e n t y - f i v e y e a r s
i m m e d i a t e l y p r e c e d i n g t h e a p p r o v a l of t h i s A c t may c o n t i n u e t o m a i n t a i n and o p e r a t e s u c h b r a n c h ,
(b)
I f a S t a t e bank i s h e r e a f t e r c o n v e r t e d i n t o
or c o n s o l i d a t e d w i t h a national banking a s s o c i a t i o n ,
o r i f two o r more n a t i o n a l b a n k i n g a s s o c i a t i o n s a r e
c o n s o l i d a t e d , such c o n v e r t e d or c o n s o l i d a t e d a s s o c i a t i o n
may, w i t h r e s p e c t t o any of s u c h b a n k s , r e t a i n and o p e r a t e
any o f t h e i r b r a n c h e s w h i c h may h a v e been i n l a w f u l o p e r a t i o n by any bank a t the d a t e o f the a p p r o v a l o f t h e A c t ,
(c)
A n a t i o n a l b a n k i n g a s s o c i a t i o n may, w i t h t h e
a p p r o v a l of the C o m p t r o l l e r of the Currency, e s t a b l i s h
and o p e r a t e new b r a n c h e s : ( l ) W i t h i n t h e l i m i t s of t h e
c i t y , town o r v i l l a g e i n w h i c h s a i d a s s o c i a t i o n i s s i t u a t e d ,
i f s u c h e s t a b l i s h m e n t and o p e r a t i o n a r e a t t h e time e x p r e s s l y a u t h o r i z e d t o S t a t e banks by t h e law of t h e S t a t e i n
q u e s t i o n ; and ( 2 ) a t any p o i n t w i t h i n t h e S t a t e i n w h i c h
s a i d a s s o c i a t i o n i s s i t u a t e d , i f s u c h e s t a b l i s h m e n t and
o p e r a t i o n a r e a t t h e time a u t h o r i z e d to S t a t e banks by t h e
s t a t u t e law o f t h e S t a t e i n q u e s t i o n by l a n g u a g e s p e c i f i c a l l y
g r a n t i n g s u c h a u t h o r i t y a f f i r m a t i v e l y and n o t m e r e l y by imp l i c a t i o n o r r e c o g n i t i o n , and s u b j e c t t o t h e r e s t r i c t i o n s
a s t o l o c a t i o n imposed by t h e law o f the S t a t e on S t a t e
banks.
I n any S t a t e i n w h i c h S t a t e banks a r e p e r m i t t e d by
s t a t u t e law t o m a i n t a i n b r a n c h e s w i t h i n c o u n t y o r g r e a t e r
l i m i t s , i f no bank i s l o c a t e d and d o i n g b u s i n e s s i n t h e
p l a c e where the p r o p o s e d a g e n c y i s t o be l o c a t e d , any
n a t i o n a l b a n k i n g a s s o c i a t i o n s i t u a t e d i n s u c h S t a t e may,
w i t h t h e a p p r o v a l o f t h e C o m p t r o l l e r of t h e C u r r e n c y , e s t a b l i s h and o p e r a t e , w i t h o u t r e g a r d t o the c a p i t a l r e q u i r e ments of t h i s s e c t i o n , a s e a s o n a l a g e n c y i n any r e s o r t
community w i t h i n t h e l i m i t s o f t h e c o u n t y i n w h i c h the main

~ vi Appendix I




office of such association is located, for the purpose
of receiving and paying out deposits, issuing and cashing checks and drafts, and doing business incident thereto: Provided, That any permit issued "under this sentence
shall he revoked upon the opening of a State or national
bank in such community. Except as provided in the immediately preceding sentence, no such association shall
establish a branch outside of the city, town, or village
in which it is situated unless it has a paid-in and unimpaired capital stock of not less than $500,000: Provided, That in States with a population of less than one
million, and which have no cities located therein with
a population exceeding one hundred thousand, the capital
shall bo'not less than $250,000: Provided, That in States
with a population of less than one-half million, and which
have no cities located therein with a population exceeding
fifty thousand, the capital shall not be less than $100,000,
(d) The aggregate capital of every national banking
association and its branches shall at no time be less than
the aggregate minimum capital required by law for the establishment of an equal number of national banking associations situated in the various plaices where such association and its branches are situated,
(e) Ho branch of any national banking association
shall be established or moved from one location to another
without first obtaining the consent and approval of the
Comptroller of the Currency,
(f) The term "branch" as used in this section shall
be held to include any branch banl>, branch office, branch
agency, additional office, or any branch place of business
located in any State or Territory of the United States or
in the District of Columbia at which deposits are received,
or checks paid, or money lent,
(g) This section shall not be construed to amend or
repeal section 25 of the Federal Reserve Act, as amended,
authorizing the establishment by national banking associations of branches in foreign countries, or dependencies,
or insular possessions of the United States,
(h) The words "State bank," "State banks," 1tbank,"
or "banks," as used in this section, shall be held to include trust companies, savings banks, or other such corporations or institutions carrying on the banking business
under the authority of State laws.

- vii

-

SUMMARY o? STATE; .LAWS REQUIRING OH NOT BEQU1RING TgaT BaNK BRANCHES OH OFFICES
m ESTABLISHED ONLY BY CONSOLIDATION OR,, IN. PLaCES WITHOUT ANOTHER BANK
June I, 1936
States where may
not
-established
except by consol
idation

States where may
not be established except in
places without another bank
B

States where may
States without requirenot be established ments as to consolidation
except by consol- or existence of another
idation or in
bank
places without another bank
D
C

Montana
•N.J. (out-of-town
Arkansas 2
*Conn. (out-of-town) Ala.
for banks and
*Ind.(out-of-town) Idaho 5
Arizona
trust companies) Iowa 2
•Me. (outside same
Calif.
•Conn, (intra-city)
•Ohio (outside
•Miss.(places
or adjoining
Del.
same county and
under 3100 for
counties) 6
outside contigbranches, under *Mass.{out-of-town) D.C.
3500 for offices) *N.Y.(out-of-town) Ga.
uous city) 1
•Ore.(places below •Ind. (intra-city)
*Vt.(intra-city) •N.C*(offices)
La.
50,000)
•Va.(out-of-town •N.Mex. (outside
same county) 2 •Pa.(out-of-town) S •Me. (same or adjoining
places under
counties) 6
50,000)
•S.D.(offices) 3 •S.D. (places under
Wis. k
15,000) 3
iI.
/d
•Utah (cities not c£ •Mass. (intra-city) 7
"first class") 9
Mich.
•Wash. (out - of--1 own) •Mi s s.
(places over
3100 for branches,
10
over 3500 f°r offices)
Nev.
•N.J. (intra-city for
bks., tr.cos. and
svgs. bks.)
•N.Mex. (same county) 2
•N. Y. (intra-city)
•N. C. (branches)
•Ohio (same county or
contiguous city) 1
•Ore. (places above
50,000)
•Pa. (intra-city) 7
E.I.
S.C-.
S.D. (places over

15,000) X 3

Undv^Iicated
1
Also in col.D J L
Total
5

Unduplicatod
3 Unduplicated
1
Also in col.D
b aIbo in col.D g
Also in cols.C&D 1 Also in cols.5 1
,
&D
Total
3 Total
10

(See notes on next page)



Tenn.
•Utah (cities of the
"first class") 9
• Vt. (out-0f-1own)
•Va. (intra-city, outof-town places
over 50,000)
"'Wash, (intra-city) 10
Un duplicated
13
Also in col. A
4
Also in col. B
1+
Also in col. C
8
Also in cols.B&C
1
Total
30

- viii -

(Limitations as to size of city or area in which tranches may he established not shown except to extent necessary to explain appearance of State
in more than one column. The term "consolidation" is used to include
mergerf purchase of assets, etc. The term "office" is used to include
all additional hanking offices which have limited powers. States having
provisions for offices are identified in footnotes. Provisions regarding
Morris Plan banks and industrial banks are not shown. Certain provisions
of State law are ambiguous or susceptible of different construct ions, and
the classifications in this summary do not necessarily represent authoritative interpretations of the various statutes*)
* Indicates States appearing in more than one column.
1 May not establish outside same county or outside contiguous city, except
may "maintain and operate as a branch bank" a bank, which on Jan. 1, 1935»
was "affiliate" as defined in Fed. Bkg. Act 1933•
2 Offices only.
3 May not establish branch in place under 3i000 with existing bank except by
consolidating with all "banks in place, or in place between 3>000
15*000
with 2 or more banks except by consolidating with a bank. Offices also permitted but must bo discontinued if bank authorized in same place.
U Offices only; in place "not having adequate banking facilities", but not
permitted within k miles of another bank or office.
5 May n o t e s t a b l i s h i n p l a c e w i t h a n o t h e r bank e x c e p t by c o n s o l i d a t i n g w i t h
a bank o r o b t a i n i n g c o n s e n t o f a l l banks i n p l a c e .
Bank i n p l a c e w i t h
o t h e r banks may n o t be c o n s o l i d a t e d as b r a n c h u n l e s s i n o p e r a t i o n 5 y e a r s .
6 May not establish outside same or adjoining counties in place where there
is State bank except by taking over a unit bank or branch.
7 May not establish out-of-town branches except by consolidation or in place
"not having commercial banking facilities,"
8 May not establish out-of-town branches unless corxiunity is "without banking
facilities or * * without banking facilities other than an institution"
taken over in establishing branch.
9 May not establish in place with another bank except by consolidating with
a bank or obtaining consent of all banks in place; but such consent not
necessary "in cities of the first class". Unit bank in place with other
banks may not be consolidated as branch unless in operation 5 years.
10 Provisions regarding mutual savings banks not clear and not covered.




- Ix SUIiMARY 0? STATE LAWS REGAKDING SIZE 0? PLACE IN WHICH BANK
BRANCHES OR OFFICES MAY BE ESTABLISHED
June
1936
(Indicates only actual prohibitions based upon size of place where branch or
office is to be established. Does not show mere restrictions such as restriction that branches or offices be established in places of certain size only
by consolidation or where no other bank. Limitations as to area of branch
banking not shown, except to extent necossary to indicate actual prohibitions
based upon size of place# The tern "office" is used to include all additional
banking offices which have limited powers. Certain provisions of State law
are ambiguous or susceptible of different constructions, and the classifications in this summary do not necessarily represent authoritative interpretations of the various statutes•)
States restricting establishment to places of certain size
Alabama 1

Delaware 2
Georgia, 3
Indiana k
Mississippi (offices and
branches) 5
New Jersey 6
New York 7
Pennsylvania 8
Virginia 9
Wisconsin (offices) 10

Total - 10

States with no le gislation restricting
establishment to places of certain size
Arizona
Nevada
Arkansas (offices)
New Mexico (offices)
North Carolina
California
Connecticut
Ohio
District of Columbia
Oregon
Rhode Island
Idaho
Iowa (offices)
South Carolina
Louisiana
South Dakota
Maine
(offices and branches)
Maryland
Tennessee
Mas s achus e 11 s
Utah
Michigan
Vormont
Montana
Washington
Total - 25

1 Intra-county branches not permitted except in counties over 250,000.
2 Intra-city branches not permitted except in places over 100,000.
3 Intra-city branches not permitted except in places between SO,000 and 125,000,
and in places over 200,000.
b Intra-city branches not permitted except in places over 50,000.
5 Not clear, but apparently intra-city offices prohibited in places under 10,000,
and apparently intra-city branches prohibited in places under 3<100.
6 Not clear, but apparently intra-city branches of banks and trust companies
prohibited in places under 20,000 and intra-city branches of savings banks
prohibited in places under 25,000.
7 Not clear, but apparently intra-city branches of banks and trust companies
not permitted except in places over 50,000; apparently branches of savings
banks prohibited, except that one intra-city branch permitted in "city
of first class."
8 Not clear, but apparently intra-city branches prohibited except in "city of
the first class or the second class."
9 Branches outside sane or adjoining county not permitted in places under 50*000.
10 Offices only. Not clear but apparently may not establish offices outside
home office trade area which is also within 25 iriles of home office, except
nay establish in own county and also in any adjoining county under l6,000.




SUMMARY OF STATE LAWS REGARDING MINIMUM CAPITAL REQUIREMENTS
FOR ESTABLISHING BANK BRANCHES OR OFFICES
June lf 1236
States with minimum capital (or capital and surplus) requirements to "begin
branches or offices irrespective of requirements based on
individual branches or offices.
States requiring States requiring States requi ring States requiring States requiring
$200,000 to
$100,000 to
$500,000 to
$1,000,000 and .
$50,000 to
over
i^9,999
$999#999
$99,999
*Me. (tr. cos.
•Ala. g
•Wash. (same
•Idaho 5
•Ariz. 1
outside sane
•Conn. (bks.
county)
•Miss.(branches)
•La. 2
or adjoining
and trs. cos.)
•S.D. (branches)
Mont.
counties) 7
•Utah 6
•Ore. (bks. —
•Nev. 3
•Ore. (tr. cos.
outside cerVa.Ij.
without detain area or
posits —
if home county
outside cerover 200,000)
tain area or
if home county
over 200,000)
•Wash.(outside
sane county)
Unduplicated 2
Duplicated
1
Total
5

Unduplicated 0
Duplicated
4
Total
4

Unduplicated 0
Duplicated
1.
Total
1

Unduplicated 0
Duplicated
3.
Total
3

Unduplicated 0
Duplicated 3.
Total
3

States requiring agStates requiring
gregate capital (or States having mi seel- capital and/or sur- States without adcapital and surplus) 1 ane ous re qui r encnt plus equal to perditional capital res
necessary to organize based upon individu- centage (10fo unless quirements to estabotherwise indicated); lish branches or ofbanks in locations
al branches or ofof deposits if bank
fices
of head office and
fices
branches or offices
has branches or offices
•Calif.(out-of-town •Ala. g
•Conn.(savings bks. Ark. (offices)
•Mass.
Del.
branches of bk.) 9 ••Ariz.l
•Calif.(intra-city
•N.J.(sav.bks.)lU
D.C.
*Conn.(out-of-town
and out-of-town bis. *N.C.(brs. and of- Ga.
branches bks. or
of tr.cos.; intrafices)l6
•Ind.(except intra-city
tr. cos.)
city brs.of bks.l9 •Ore.(foreign bks.
*Idaho 5
brs. in places over
•Ind. (intra-city trs. with branches in
Md.
50,000) 12
in places over
State)
•His s• (branche s)
Iowa (offices)
50,000)12
Ohio 10
•La. 2
•Me. (sav. bks.) 7
•Ore.
•Me. (tr. cos.—sane
•Mass. (sav. bks.)
Penn. 11
or adjoing coun•Miss, (offices)
S. C.
ties) 7
N.M.(offices)
•s. D. (branches)
Mich. 13
R. I.
* Wash.
•Nev. 3
•S. D. (offices)
Tenn.
•N.J. (bks.,tr.cos.,
Vt.
savings banks) lU
N.Y. 15
Wise, (offices)
•N.C.(branches) l6
•Utah 6
Unduplicated k
Unduplicated 0
Unduplicated 10
Unduplicated 2
Duplicated
J
Duplicated J^
Duplicated
J^
Duplicated
10
Total
Total
5
11
Total
15
Total
12
(Notes for this table on following page)



— xi —
(Limitations as to area of branch banking not shown except to extent necessary
to explain appearance of State in more than one column. The term "office" is used
to include all additional banking offices which have limited powers. Certain provisions of State law are ambiguous or susceptible of different constructions, and
the classifications in this summary do not necessarily represent authoritative
interpretations of the various statutes.)
* Indicates States appearing in more than one column.
1 $50,00p capital and surplus, plus $15*000 capital and surplus for each branch.
2 $50,000 capital to establish one branch, with sliding scale for additional
branches until seven branches are permitted with capital between $250,000 and
$300,000, and one additional branch for each additional $100,000.
3 $60,000 capital and surplus to establish one branch in head-office county,
$25,000 additional capital and surplus for each additional branch in head-officc
county and for each branch outside head-office county.
4 $50,000 capital and surplus to establish intra-city branches, not clear as to
other situations.
5 Present n a t i o n a l oank requirements incorporated by reference. This requires
aggregate capital sufficient to establish national banks in places of the home
office and branches and, with present population (445,000) of Idaho and largest
city therein (21,544), $100,000 minimum capital in any event.
6 $50,000 capital and $100,000 capital and surplus; not more than one branch for
each $50,000 capital.
7 Trust company to establish branches in sane or adjoining counties, must have
capital sufficient to organize in place with a population as great as the total
populations of the places where the hone office and all branches are located; to
establish branches outside sane or adjoining counties must have $500,000 capital.
Ho additional capital required for brs. savings banks.
8 $1,000,000 capital and surplus, plus $250,000 capital and surplus for each branch.
9 To establish intra-city branches of bank or of trust company, or out-of-town
branches of trust company, must have $50,000 capital for each branch in addition
to capital required to organize in place where head officc is located. To establish out-of-tCT/n branches of bank, in addition to capital required to organize
in place where head office is located, must have sufficient capital to organize
banks in places where branches are located.
10 In addition to capital required to organize in place where head office is located,
must have specified
amount for each branch, which amount is based upon size of
place where branch is located and is same as that required to organize a bank in
such place.
11 Por each branch in place under 5t0G0, only 50$ of capital and surplus required to
establish bank in that place need be added.
12 Not more than 1 intra-city branch in place over 50,000 permitted for each $225,000
capital and surplus. Apparently no requirement for other branches.
13 Caoital and surplus sufficient for a bank "in the larger of any city in which
such branches or its principal office may be established."
14 Although not clear, apparently in addition to capital required to organize in
place where head office is located, must have $50,000 capital for each branch
if a bank, $100,000 capital for each branch if a trust company. Savings bank
establishing branch must have surplus equal to 51° of deposits and, in addition,
$50,000 surplus for each branch,
15 Although not clear, apparently in addition to capital required to organize in
place where head office is located, rust have $100,000 capital for each branch.
16 With $1,000,000 capital and 5O/S surplus may establish any number of branches;
with less must have at least $25,000 capital for parent bank plus specified
amount for cach branch based on size of place where branch located. However, no
bank may establish additional branches unless it maintains one to ton ratio of
capital and surplus to deposits. With one to ten ratio of capital and surplus
to deposits, officcs may be established in places without banking facilities.



— xia MINIMUM CAPITAL STOCK AND/OR SURPLUS REQUIRED TO
ESTABLISH OUT-OE-TOWN BRANCHES IN VARIOUS STATES
UNDER STATS LAW A!© UNDER PRESENT PROVISIONS OF
SECTION 5155 OP REVISED STATUTES OE UNITED STATES.
( L i m i t a t i o n s as to the s i z e or p o p u l a t i o n of a c i t y or a r e a in which a
p a r e n t i n s t i t u t i o n must he l o c a t e d b e f o r e "branches nay b e e s t a b l i s h e d
a r e not shown i n t h e f o l l o w i n g summary.
The summary a l s o d o e s not show
l i n i t a t i o n s as to the s i z e or p o p u l a t i o n of a p a r t i c u l a r c i t y or a r e a
i n which b r a n c h e s nay be e s t a b l i s h e d , r e s t r i c t i o n s a s t o number o f
b r a n c h e s , o r r e s t r i c t i o n s t h a t b r a n c h e s nay b e e s t a b l i s h e d i n p a r t i c u l a r p l a c e s o n l y -under c e r t a i n c i r c u m s t a n c e s , such as by c o n s o l i d a t i o n , absence of banking f a c i l i t i e s i n proposed l o c a t i o n s of b r a n c h e s ,
etc.
The amounts o f c a p i t a l s t o c k a n d / o r s u r p l u s m e n t i o n e d a s b e i n g
r e q u i r e d under t h e S t a t e l a w s have b e e n d e t e r m i n e d o n l y upon t h e b a s i s
o f i n f o r m a t i o n w h i c h i s a v a i l a b l e from t h e p r e s e n t r e c o r d s of t h e Bonrd
o f G o v e r n o r s o f t h e F e d e r a l R e s e r v e System, and c e r t a i n p r o v i s i o n s o f
t h e S t a t e l a w s a r e ambiguous o r s u s c e p t i b l e o f d i f f e r e n t c o n s t r u c t i o n s .
A c c o r d i n g l y , the i n f o r n a t i o n as to the s i t u a t i o n in the v a r i o u s S t a t e s
nay not b e c u r r e n t l y r e p r e s e n t a t i v e i n a l l c a s e s and d o e s n o t n e c e s s a r i l y r e p r e s e n t a u t h o r i t a t i v e i n t e r p r e t a t i o n s of the S t a t e s t a t u t e s . )

State

Minimum c a p i t a l s t o c k and/or
s u r p l u s r e q u i r e d o f nonmember
b a n k s and t r u s t companies t o
e s t a b l i s h out-of-town branch
under S t a t e l a w .

Minimum c a p i t a l s t o c k (no
surplus necessary) required
o f S t a t e member b a n k s and
t r u s t companies and n a t i o n a l
b a n k s t o e s t a b l i s h one o u t o f - t o w n b r a n c h under s e c t i o n
5155 of R e v i s e d S t a t u t e s f l /

Alabama

$ 1 , 2 5 0 , 0 0 0 c a p i t a l s t o c k and
s u r p l u s f o r b a n k s and t r u s t
c o m p a n i e s . 2/

$500,000

Arizona

$65,000 c a p i t a l s t o c k and s u r p l u s f o r b a n k s and t r u s t
c o m p a n i e s , 3J

$250,000

Arkansas
(Branches p r o h i b i t e d ; but o u t of-town o f f i c e s
w i t h l i m i t e d banking f u n c t i o n s permitted)

$10,000 c a p i t a l s t o c k f o r
banks;
$50,000 c a p i t a l s t o c k
f o r t r u s t c o m p a n i e s . U/

$500,000

$100,000 " c a p i t a l " f o r b a n k s
not t r a n s a c t i n g t r u s t
b u s i n e s s . J2/
$150,000 " c a p i t a l " f o r t r u s t
companies.

$500,000

California




- xib -

State

Minimum c a p i t a l s t o c k and/or
s u r p l u s r e q u i r e d of nonmoriber
b a n k s and t r u s t companies t o
e s t a b l i s h o u t - o f - t o w n branch
under S t a t e l a w .

Minimum c a p i t a l s t o c k
(no s u r p l u s n e c e s s a r y )
r e q u i r e d o f S t a t e memb e r b a n k s and t r u s t
companies and n a t i o n a l
b a n k s t o e s t a b l i s h one
out-of-town branch
under s e c t i o n 5^55 ° f
R e v i s e d S t a t u t e s , 1/

Colorado
(Branches prohibited)
$1,200,000 c a p i t a l s t o c k and s u r p l u s f o r banks (other than s a v i n g s
b a n k s ) and t r u s t c o m p a n i e s , 6/
Surplus not l e s s than l / l O of d e p o s i t s f o r s a v i n g s bank t o e s t a b l i s h "one o r more b r a n c h e s " .
A p p a r e n t l y s a v i n g s b a n k s may "be
organized without c a p i t a l s t o c k .

Connecticut

$500,000

$500,000

Delaware
(Out-oftown b r a n c h e s n o t
authorized)
D i s t r i c t o f Columbia
(Out-of-town branches not a u t h o r i z e d )
Florida
(Branches

prohibited)

Georgia
(Establishment of
out-of-town branchos a p p a r e n t l y p r o hibited)
Idaho

$100,000 c a p i t a l s t o c k f o r b a n k s
and t r u s t c o m p a n i e s . J j

$100,000

Indiana

$25,000 c a p i t a l s t o c k f o r b a n k s
and t r u s t c o m p a n i e s . 2/

$500,000

Iowa
(Branches p r o h i b i t e d ; but o u t - o f
town o f f i c o s w i t h
l i m i t e d banking
functions permitted)

$10,000 c a p i t a l s t o c k f o r b a n k s
and t r u s t c o m p a n i e s . 2 /

$500,000

Illinois
(Branches prohibited)




xic -

State

Minimum capital stock and/or
surplus required of norm ember
"banks and trust conpanies to
establish out-of-town branch
under State law.

Minimum capital stock
(no surplus necessary)
required of State member banks and trust
conpanies and national
banks to establish one
out-of-town branch
under section 5155 o f
Revised Statutes. 1/

Kansas
(Branches prohibited)
Kentucky
(Branches not authorized by law)
Louisiana

$50,000 capital stock for banks
and trust companies.10/

$500,000

Maine

$100,000 capital stock for trust
company, including one with
banking powers. 11/
No additional capital stock required of savings banks and
apparently savings banks may be
incorporated without any capital
stock!

$250,000

Maryland

Apparently $50,000 capital stock
and $10,000 surplus for banks.12/
Apparently $125,000 capital stock
and $25,000 surplus for trust
conpanies. 12/

$500,000

Massachusetts

;?50,000 for trust company to establish "one or noretr branches,
provided its aggregate capital &
surplus is not less than l/lO of
its total deposit liability. 15/
No particular amount of capital
stock specified for savings banks
to establish "one or more" "branches, and apparently savings banks
may be incorporated without any
capital stock.

$500,000

Michigan

$200,000 capital stock and $H,000
surplus for one or more branches
of banks, lb/
Trust companies as such apparently not authorized to establish out-of-town branches.

$500,000

$125,000 for banks and trust
companies. 15/

$500,000

Minnesota
(Branches prohibited)
Mississippi




- Minimum c a p i t a l s t o c k (no
surplus necessary)required
o f S t a t e member b a n k s and
Mininun c a p i t a l s t o c k and/or
s u r p l u s r e q u i r e d of nonmember t r u s t companies and n a t i o n a l
banks t o e s t a b l i s h one o u t hanks and t r u s t companies t o
o f - t o w n b r a n c h under s e c t i o n
e s t a b l i s h out-of-town branch
5155 ° f R e v i s e d S t a t u t e s . 1/
undor S t a t e l a w .
- xie

State

Pennsylvania

A p p a r e n t l y b a n k s n u s t h a v e $75j~
000 c a p i t a l s t o c k and s u r p l u s
ecrual t o 50$ o f common c a p i t a l
stock.
2y
A p p a r e n t l y t r u s t companies must:
have $150,000 c a p i t a l s t o c k and
s u r p l u s e q u a l t o 50 P e r c e n t o f
common c a p i t a l s t o c k .
23J

$500,000

Rhodo I s l a n d

No a d d i t i o n a l amount o f c a p i t a l
stock or s u r p l u s r e q u i r e d of
b a n k s and t r u s t c o m p a n i e s .
A p p a r e n t l y , no p a r t i c u l a r
amount of c a p i t a l s t o c k o r s u r plus specified f o r organization
of bank o r t r u s t company.

$500,000

South C a r o l i n a

South Dakota

Tennessee

Apparently $50,000 capital
stock for banks. 2H/
Trust companies apparently not
authorized to establish branch
banks.
Apparently $130,000 for banks.
25/
$20,000 capital.stock for
banks. 25/
$100,000 capital stock and
a p p a r e n t l y $20,000 surplus for
banks executing trusts. 26/

$500,000

$250,000

$500,000

Texas (Branches pi^ohibited)
Utah

Vernont

"Paid-in capital of not less
than $50,000 and a paid-in
capital and surplus of not less
than $100,000" for banks.2j/
Establishment of out-of-town
branch by "loan and trust corporatian" - >r0hi'bitcd.
No particular amount of capital
stock or surplus required for
savings banks. 28/
$25,000 capital stock for trust
companies. 2S/

Virginia,

$50,000 capital stock for
banks and trust companies. 29/

Washington

$200,000 capital stock for
banks and trust companies.50/

$500,000

$100,000

$500,000

$500,000

West Virginia
(Branches prohihi t e d )

v/ r ui u c J auv;viv. uu
_
i U


a.uuui. yj\jx a y ^ j

uxuoo

WJ. x u w a u x v u i

- xid -

State

Minimum capital stock and/or
surplus required of nonmember
banks and trust companies to
establish out-of-town branch
under State law.

Minimum capital stock
(no surplus necessary)
required of State member banks and trust
companies and national
banks to establish one
out-of-town branch
under section 5^-55 of
Revised Statutes* 1/

Missouri
(Branches prohibited)
Montana

$75>000 capital stock for banks
and trust companies.

$250,000

$60,000 capital stock and surplus for bank and trust
company. l6/

$100,000

New Jersey

$100,000 capital stock for banks;
$200,000 capital stock for trust
companies. 17/

$500,000

New Mexico
(Branches prohibited;
but agencies with
limited banking
functions permitted)

$25,000 for bank, and $100,000
for trust company. 1,6/

$100,000

New York

$125,000 capital stock for bank;
$200,000 capital stock for
trust company. 19/

$500,000

North Carolina

Apparently $50,000 capital stock
for banks and trust companies.2C/

$500,000

$70,000 "capital" for banks.
Apparently $135,000 "capital "fortrust companies transacting only,
"a trust business" 21/

$500,000

Nebraska
(Branches prohibited)
Nevada

New Hampshire
(Branches not
authorized)

North Dakota (Branches
not authorized)
Ohio

Oklahoma (Branches
not authorized)
Oregon




Apparently $25,000 capital stock
plus $25s000 capital stock and/or
surplus for "bank or trust company." 22/

$500,000

— xif -

State

Wisconsin
(Branches prohibited;
but "receiving and
paying station" with
limited banking
functions permitted)

Minimum capital stock and/or
surplus required of nonmember
"banks and trust companies to
establish out-of-town branch
under State law,

$30,000 capital stock for banks,

Minimum capital stock
(no surplus necessary)
required of State member banks and trust
companies and national
banks to establish one
out-of-town branch
under section 5^55
Revised Statutes, 1/
$500,000

P
$50,000 capital stock for "trust
company banks", 31/

Wyoming
(Branches not authorized)

1/SECTION 5155 OF REVISED STATUTES, - The aggregate capital of every
member bank (State and national) and its branches shall at no time be
less than the aggregate minimum capital required by law for the establishment of an equal number of national banks situated in the
various places where such member bank and its branches are situated,
2/ALABAMA, - $250,000 additional capital stock and surplus for each
additional branch.
3/ARIZONA, - $15,000 additional capital stock and surplus for each
additional branch.
^/ARKANSAS* - No additional capital stock or surplus is required to
establish out-of-town office with limited banking functions. Bank
may be organized in "towns" of less than 1,500 population with capital
stock of $10,000, Trust company in "county" of less than H0,000 people
may be organized with capital stock of $50,000. A higher proportion of
capital stock is required for organization if tho population exceeds
these figures, until a maximum of $200,000 is required for banks in
cities with 50,000 or more inhabitants, and $100,000 for trust companies in "county" of over 50,000 population.
5/CALIFORNIA. - Bank not transacting a trust business, in addition to
"capital" required to organize in place where head office is located,
must have "capital" required for organization of banks in locations of
branches. Trust company must have $50,000 "capital" for each branch,
in addition to "capital" required for organization in place where head
office is located. Bank may be organized with capital of $50,000 in
1f
city or locality" in which population does not exceed 25,000 persons.
Trust company nay be organized with capital of $100,000 in "city", the
population of which does not exceed 100,000 persons. In larger places,
a higher proportion of capital is required for organization, until a
maxinum of $300,000 is required for banks in a city of over 200,000
people, and $200,000 for trust companies in a city which has in excess
of 100,000 persons.






- xig 6 / C ONNEC TI CUT. - For each branch, hank (other than savings bank)
and trust company must have capital stock and surplus sufficient
to operate bank or trust company in place of establishment of
branch, in addition to combined capital and surplus of $1,000,000.
Bank ana trust company may be organized with common capital stock
of $100,000 and surplus of $100,000 in "towns or cities" of less
than 50,000 inhabitants; for places in excess of 5°,000 population
a common capital of $200,000 and a surplus of $200,000 is required
for the organization of a bank and trust company.
7/IDAHO. - State law incorporates by reference requirements of
section 5^55 of Revised Statutes.
g/lNDIAHA. - Apparently no additional capital stock or surplus is
required to establish out-of-town branch. Banks and trust companies
may be organized with capital stock of $25,000 in places not exceeding 3,000 inhabitants. In larger places, a higher proportion of
capital stock is required for organization, until a maximum of
$200,000 is reached for "a city or town" of more than 75,000
inhabitants.
9/I0WA. - Ho additional capital stock or surplus is required to
establish out-of-town office with limited banking functions. Banks
and trust companies may be organized with capital stock of $10,000
in places not exceeding 3,000 population. A higher proportion of
capital stock is required for organization in places with a larger
population, 'until a maximum of $100,000 is necessary for "cities
and towns" having over 15,000 people.
IP/LOUISIANA. - $50,000 of capital stock to establish one branch,
with larger sliding scale of capital stock required for additional
branches, until seven branches are permitted with capital stock
between $250,000 and $300,000. For each additional branch, $100,000
more capital stock is necessary.
ll/MAINE. - A trust company must have capital stock required for
organization in place with a population as great as the total populations of the places where the hone office and all branches are
located. A trust company may bo organized with a capital of $50,000
in a town or city of not more than 5,000 inhabitants. Higher percentages of capital stock are required to organize a trust company
in larger places, until a maximum of $200,000 is necessary for a
"town or city" of more than 30,000 inhabitants.
12/MARYLAHP. - In case a bank establishes "a branch or branches"
outside of the city in which it is located, the capital stock and
surplus requirements for the organization of a bank "shall be complied with, by adding to the capital and surplus of the parent
institution, the amount that would be required" under such requirements "if such branch or branches were separately incorporated".
A bank may be organized with a capital stock of $25,000 and a surplus
of $5,000 in places of less than 15,000 inhabitants. A higher capital
stock and surplus is required for organization as the population increases, until a maximum of $500,000 capital stock and $100,000 surplus is necessary for a city or town of more than 150,000 population.




- xih "In the event that any trust company hereafter establishes
a branch or branches outside of the city, town or village in which
it is now located, it shall add for each branch established, to its
paid-in-capital the following suns and twenty per cent (20fo) thereof
as additional surplus"; $25,000 in towns or villages having less than
15,000 inhabitants; $75$000 in towns or villages having less than
15,000 and up to 50,000 inhabitants; $100,000 in towns or cities having more than 50,000 and less than 150,000 inhabitants; and $500,000
in cities having nore than 150,000 population; "unless tho surplus
and paid-in-capital of such trust company is already sufficient
under the present conditions of the law to provide the surplus and
capital required by a trust company hereunder doing business in the
city, town or village in which it may be located, and for branches
in cities, towns or villages in which it proposes to establish
branches".
A trust company nay be organized with a capital of $100,000 and
a surplus of $20,000 in a city or town the population of which does
not exceod 25,000 inhabitants. A higher proportion of capital stock
and surplus is required to incorporate in larger cities or towns,
until a maximum of $750*000 capital stock and $150,000 surplus is
necessary for a city of 250,000 or nore population.
15/MASSACHUSETTS. - Trust company nay be organized with
of $50,000 in "town" not exceeding 6,000 population. A
portion of capital stock is required in larger "city or
a maximum of $200,000 is required for city or town over

capital stock
higher protown", until
50,000 people*

lU/MICHIGAN. - To establish out-of-town branches, bank must have
"capital and surplus of an amount sufficient *** to transact its
business and maintain offices in the larger of any city in which such
branches or its principal office nay be established". Bank nay be
organized with capital ®tock of $20,000 p nd surplus of $4,000 in
place of 1,500 or less population. A higher proportion of capital
stock and surplus is required for larger places, until a maximum of
$500,000 capital and $100,000 surplus is necessary for places over
300,000 people.
15/MISSISSIFPI. - For each branch, bank and trust company must have
$100,000 of capital stock, plus capital stock equal in "an amount not
less than the minimum required capital for a unit bank in the municipality in which the branch bank shall be established". A bank or
trust company nay be organized with a capital of $25,000 in a place
of 6,000 or less population; a capital of $35»000 in a place of nore
than 6,000 but not nore than 10,000 people; and a capital of $50,000
in places exceeding 10,000 population. Banks and trust companies nay
also establish out-of-town "offices" under certain circumstances "and
no additional capital shall be required thorefor".
16/HEVADA. - $25,000 additional "capital and surplus" for each additional branch.
17/NEW JERSEY. - Although not clear, apparently in addition to capital
stock required to incorporate, bank must have $50,000 capital stock,
and trust company $100,000 capital stock, for each branch. Bank
apparently required to have $50,000, and trust company $100,000, of
capital stock to incorporate, regardless of location.

IS/NEW MEXICO * - No additional capital stock is required for "bank
and trust company to establish "an Agency or Agencies" with United
banking functions. Bank and trust company, wherever located, nay
be organized with capital stock of $25,000 and $100,000, respectively,
19/NEW YORK. - Although not clear, apparently in addition to capital
stock required to organize in place where head office is located, bank
and trust company must have $100,000 capital stock for each branch.
Bank may be organized with capital stock of $25,000, if located in
place of 2,000 or less population. Trust company may be organized
with capital stock of $100,000, if place of its location has a population not exceeding 25,000 inhabitants. A higher proportion of
capital stock is required for larger places, until the maximum requirement for banks is $100,000, if located in place exceeding 30,000
people, and for trust companies $500,000, if located in place with
population in excess of 250,000,
20/NORTH CAROLINA, - Although not clear, apparently bank and trust
company must have at least $25,000 capital stock, plus (l) $25,000
capital stock for each branch established in place of 3»000 or less
population; (2) $30,000 for each branch established in place of more
than 3,000 but less than 10,000 population; (3) $50,000 for each
branch established in place of more than 10,000 but less than 25,000
population; (U) $100 ,000 for each branch established in place with
population exceeding 25,000.
2l/0HI0e - In addition to "capital11 required to organize in city or
village where head office is located, bank must have specified amount
of "capital** for each branch, which amount is based upon size of place
where branch is located and is sane as that required to organize a
bank in such place, A bank may bo organized with a "capital" of $35tOOO
in a village of 5*000 or less population. A higher proportion of organization capital is required of banks in larger "towns and cities", until
a maximum of $100,000 is necessary for cities having over 25,000
inhabitants*
Although not entirely clear, apparently a trust company transacting only "a trust business", in addition to the capital required for
organization ($100,000 wherever located), must have for each branch the
sane additional capital specified for a bank to establish a branch in
the particular location.
22/OREGON. - "Any b ank or trust company" nay "establish one or nore"
branches within the designated areas, "provided, that the unimpaired
capital and surplus of such bank or trust company is equal to the
aggregate mount which would be required by law to organize banks in
those places where the nain office and branches are to be located".
Apparently, no surplus is required for the organization 0 f "banks";
but a"bank or trust company" nay be organized with a "cash capital
stock" of $25,000 in citios and connunitios having a population of
3,000 inhabitants or less. Higher percentages of "cash capital stock"
are required to organize a "bank or trust company" in larger places,
until a maximum of $200,000 of "cash capital stock" is necessary in
cities and communities having a population which exceeds 50,000
inhabitants.



- xij 25/PENNSYLVANIA. - "Unimpaired capital and -unimpaired surplus,
respectively", of "bank or trust company must not " e "less than
b
the aggregate capital and surplus, respectively, required ***
for the incorporation of such number of similar institutions, as
is equal to the total number of its places of business, including
such branch bank". However, "if any place of business included
in such total number is located or is to be located in a borough
or township" of 5»000 or less population, not more than 50 per
cent of "the capital and surplus, respectively, required ***noed
be included for such particular place of business in the aggregate
capital and surplus respectively required".
A bank or a trust company may be organized in a "borough
or township" of 6,000 or less persons with a capital stock of
$50,000 and $100,000, respectively, and "a surplus equal to at
least fifty per centum of its common capital". The requirements
for organization are higher in larger places, until a maximum capital of $200,000 for bmks, and $300,000 for trust companies, together with a surplus of 50 per cent of common capital, is necessary
for a "city, borough or township" which has a population of more
than 50,000.
SOUTH CAROLINA. - Although not clear, apparently bank, in addition
to its then existing capital stock, must have, "for each branch established", capital stock required to organize bank in places where
branches are located. A bank may be organized with a "capital" of
$25,000 in places of 3i000 or less inhabitants. Higher proportions
of capital are required in larger places, until a maximum of $100,000
is necessary for cities with more than 10,000 inhabitants.
25/SOUTH DAKOTA. - A bank must have a "capital stock of not less-than
the aggregate minimum Capital required by law for tho establishment
of an equal number of batiks, situated in the various places whore such
bank and its branches are situated and not less than one hundred
thousand dollars". A bank may be organized with a capital of $15,000
in cities or towns of 1,500 or less inhabitants. In larger places,
higher percentages of capital are required for the organization of
a bank, until a maximum of $50,000 is necessary for cities over 5>C00
inhabitants. It is not clear whether trust companies nay establish
branches, but "any bank or trust company" may "establish an office"
with limited banking functions, apparently without any additional
capital stock or surplus.
26/TENNESSEE. - No additional capital stock or surplus is required
to establish out-of-town branches. A bank as such may be organized
with a capital stock of $20,000 in towns or villages of less than
1,000 inhabitants. Higher percentages of capital stock are required
in larger places for the organization of a bank as such, until a
maximum of $200,000 is necessary in towns or cities having 50,000 or
more population. A bank executing trusts apparently must have a
capital of at least $100,000 "and a surplus equal to twenty per cent,
of its capital stock11 to orgaiize, regardless of its location.







- xik -

27/UTAH. - "No "bank shall establish more than one branch for
each $50,000 of its paid in capital."
2S/VERMONT. - No additional capital stock or surplus is required
to establish out-of-town branches. Apparently, savings banks may
be incorporated without any capital stock. Trust companies, regardless of location, may be organized with a capital stock of not
less than $25,000.
29/VIRGINIA. - No additional capital stock or surplus is required
to establish out-of-town branches. A bank may be organized with a
capital stock of $50>000 in a place of 2'5,000 or less inhabitants.
To organize a bank "in any place, the population of which exceeds
twenty-five thousand inhabitants, the minimum capital stock required
to issue a charter shall be increased above fifty thousand dollars
in the ratio of five thousand dollars additional capital stock for
each ten thousand inhabitants by which the population of such place
may exceed twenty-five thousand inhabitants". A trust company, regardless of location, may be incorporated with a capital stock of
at least $50,000#
3fl/WASHINGTON. - Tho aggregate capital stock of "every bank or trust
company operating branches shall at no time be less than the aggregate
of the minimum capital required by law for the establishment of an
equal number of banks or trust companies in the cities or towns wherein the principal office or place of business of such bank or trust
company and its branches are located".
A bank may be incorporated with a capital of $25,000 in cities
of less than 5*000 population. A trust company may be incorporated
with a capital of $50,000 in cities or communities of less than
25,000 persons. Higher percentages of capital are required for the
incorporation of banks and trust companies in larger places, until
a maximum of $150,000, in the case of a bank, and $200,000, in the
case of a trust company, is necessa,ry for cities having a population
of 100,000 or more.
31/WISCONSIN. - No additional capital stock or surplus is required to
establish receiving and paying stations with limited broking functions.
A bank may be organized with a capital of $30,000 in towns or villages
having 5i000 or less inhabitants. Higher percentages of capital stock
are required for the organization of a bank in larger places, until
a maximum of $200,000 is necessary for a city having a population of
200,000 or more inhabitants. A trust company, in order to organize,
must have a capital stock of not less than $50,000 in cities of less
than 100,000 inhabitants, and a capital of at least $100,000 but not
exceeding $5,000,000 in cities of 100,000 or more inhabitants.

TABLE 1 .

States c l a s s i f i e d acTotal
c o r d i n g t o l a w (June 1, number
of "
1936) r e g a r d i n g "branch,
all
"banking
"banks

APPENDIX I I
NUMBER OF 3AMES
RANCHES OR ADDITIONAL OFFICES BY STATES
December 3 1 . 1 9 3 5

Total'

Number o f "banks o p e r a t i n g "branches or a d d i t i o n a l o f f i c e s
Outside head o f f i c e c i t y
Confined to
head o f f i c e
Confined to
Beyond h e a d o f f i c e
Beyond head o f f i c e
Total
city
head o f f i c e
county i n c o n t i g u c o u n t y i n nonconcounty
ous coun t i es
tiguous counties

I . States authorizing
State-r/ide branch
"banking
A r i zona
California
Connecticut
D i s t r i c t o f Columbia
Idaho
Maine
Maryland
Michigan
Nevada
North C a r o l i n a
Oregon
Rhode I s l a n d
South C a r o l i n a
South Dakota ( 3 )
Utah
Vermont
Virginia
Washington
T o t a l - 18

15
2H9
121
21

60
71
1S6
^73
10
21U

94
23

10H

199
59
76
320

ISO
2,^75

(Notes for this table on page




5
3S
U
11
5
19
23
36
2

36
3
11
5
5
U
S
37
s
260

izi.
cvi)

-

9
3
11
-

2
S
20
-

3
-

3
l

5
29
1
-

-

7

-

—

-

-

-

*

5
17
15

1
8
10

16

12

2

33
3
g
k

1
11
1
f
O
1
-

-

-

-

1
k
1

2

IS

U
s
30

l

-7
1

6s

192

9
H

2
7

1

lH

2
1
s

_

2

l

1

2
-

1
2

2

3
1

1
5
20

3
g

2

2

2

3

99

2

-

39

i

APPENDIX II
TABLE 1 .

NUMBER OF BANKS ( 1 )AND BRANCHES OR ADDITIONAL OFFICES BY STATES ( c o n t i n u e d )
December
1935
Total
Number of b a n k s operating; b r a n c h e s or a d d i t i o n a l o f f i c e s
States c l a s s i f i e d acConfined in
Outside head o f f i c e c i t y
c o r d i n g t o law (June 1, number
head o f f i c e
Total
of
C o n f i n e d to
Beyond h e a d o f f i c e
1936) r e g a r d i n g b r a n c h
Beyond head office
city
Total
all
county i n contiguhead o f f i c e
county in nonconbanking
ous c o u n t i e s
banks
county
\
—
—
- • -• * tiguous counties
« *<<

II.States authorizing hranrehes within limited areas
Arkansas(2)
Iowa ( 2 )
Mississippi (3)
Von t a n a
New M e x i c o ( 2 )
Hew Y o r k
Ohio
Pennsylvania
Wisconsin (2)
Total - 9
Alabama
Indiana
Louisiana
Massachusetts
IJev J e r s e y
Tennessee
Total - 6
Delaware
Georgia
Total - 2

Total -

17

(Notes f o r t h i s




S t a t e s permitting; "branches beyond countydTfroad o f f i c e h u t n o t
—
6
k
221
6
65S
70
93
93
209
21
21
13
—
120
U
kl
2
6U
12
762
76
7
6ss
21
20
3^
13
k
1,091
32
37
5
6os
61
kh
6
67
jm
223
115
332
U.39S
S t a t e s l i m i t i n e : b r a n c h e s; t o c o u n t y o f h e a d o f f i c e
216
2
3
3
22
21
8
511
30
150
26
6
20
19
20U
1+2
6
7
35
us
12
10
36
395
k
20
322
16
13
169
SO
i,79S
S9
71

U5
250
325
6,521

S t a t e s limiting: branches to c i t y of head o f f i c e
6
H
2
1
2
k
9
7

State-wide
-

2
-

—

1

1

5
l
l
17
55

-

-

-

1

H "" "

M
V'
M
"

-

1

c

l

-

-

l
l
l
U

15

k

11

5

3
2
5

522

208

31*

2^0

6k

t a b l e on p a g e x i x . )

l

1
23
6

" "

1
-

1
2
5
-

1

l
10

A P i DX II
P E' I
T

/T ^
[•ABLE 1.

NUMB30B OF BAnKS

BRANCHES OH ADDITIONAL OFFICES BY STATES (continued)
December 31, 1935

States c l a s s i f i e d acTotal
Number of "banks operating branches or additional offices
Outside head office city
Confined in
c o r d i n g t o l a w (June 1 , number
Beyond head o f f i c e
of
Beyond h e a d o f f i c e
1936) r e g a r d i n g branch
Confined to
Total
head o f f i c e
county in nonconTotal
county i n c o n t i g u all
city
head o f f i c e
banking
tiguous counties
ous c o u n t i e s
county
banks
I I I . S t a t e s p r o h i b i t i n g b r a n c h banking b y s t a t u t e
Colorado
Florida
Illinois
Kansas
Minnesota
Missouri
Nebraska
Texas
West V i r g i n i a
Total - 9

156
1U9
£32
72U
625
69U
^37
SgU
ISO
U,79i

IV* S t a t e s w i t h no
K e n t u c k y (H)
New Hampshire
ITorth D a k o t a
Oklahoma
TJy omi ng
Total - 5

Total - A l l

States

(Notes f o r t h i s




2

2

-

2

2

-

2
6

1
5

1
1

1
1

10
1
1
X

7
-

12

519

l e g i. s l a t i o n re^ardinR b r a n c h b a n k i n g
U
lU
T
X
65
1
203
Uo^
59
16
k
1,16^5

8'0U

t a b l e on p a g e x i x . )

285

-

-

-

-

—

-

-

-

3
l

-

-

-

1

7

k

1

3^7

122

50

TABLE 1 .

NUMBER OE BANKS

States c l a s s i f i e d acTotal
c o r d i n g t o law (June 1 , number
of
1936) r e g a r d i n g b r a n c h
hanking
all
b anks

Total

APPENDIX I I
AND BRANCHES OR ADDITIONAL OFFICES BY STATES ( c o n t i n u e d )
December 31> 1935
Number o f b a n k s o p e r a t i n g b r a n c h e s or a d d i t i o n a l o f f i c e s
Confined to
Outside head o f f i c e c i t y
Beyond head o f f i c e
Beyond h e a d o f f i c e
Confined to
head o f f i c e
county i n nonconcity
Total
head o f f i c e
county in c o n t i g u tiguous counties
out c o u n t i e s
county

G e o g r a p h i c d i v i s i o n s of
United S t a t e s (Census)
Hew E n g l a n d
50O
Middle A t l a n t i c
2,24s
East North Central
3,1^2
West N o r t h C e n t r a l
3,600
South A t l a n t i c
1,499
East South C e n t r a l
1,130
TJest S o u t h C e n t r a l
1,660
Fountain
520
Pacific
52^
Total-United States 1 M 5 2

S5

l6l

132

167

U7

129

35
g
6

103
5S
32

20

U9
goU

h

-

10
2S5

U2

25

29

21

16
21

2

99
9U

97
70
Hg

50
26
20

25
32

35
23
7
t

H
lH
5

120

39
519

7

10
1
U
6

1
1

2
9

3^7

122

12
50

31
23
293
3^7

12
12

22
6

21

Types of b a n k s
5,326
1,001

National
S t a t e member
Nonm ember
Total - State

1M52

Mutual s a v i n g s
Private

567
13s

A l l banks - U n i t e d
States totals
15,657

181

65
Hi

2S5

519

SO

66

lH
k

11
!+

3

—

-

—

537

362

125

k

sss

(Notes f o r t h i s t a b i c on page x i : i . )




116
102
67

1^3
HgO
SOU

-

351

U13

98

122

22
50

50

3
1

TABLE 1.

States classified according to law (June 1,
1936) regarding branch
banking

APPENDIX II
NUMBER OF BANKS ( 1 )AND BRANCHES OR ADDITIONAL OFFICES BY STATES (continued)
December J>I, 1935

J1
Total

Head
office
city

Number of branches or additional offices
Outside head office city
rTotal
Contiguous
Head office
Noncontiguous
county
counties
counties

I. States authorizing
St a t e - w i d e branch
banking
A r i zona
California
Connecticut
D i s t r i c t of
Idaho
Maine
Maryland
Michigan

21
79^
Columbia

Nevada
North C a r o l i n a
Oregon
Rhode I s l a n d
South C a r o l i n a
South D a k o t a ( 3 )
Utah
Vermont
Virginia
Washington
Total - 18

9

30
26
58
76

Ikl
1
29
U2
3S

21

2U1
k
30
3
35
120
1
7
11
17

15
10
12
64

1
-

21

W
1,11-97

(Notes for this table on page




—

lb

508
izi.
cvi)

21
553
5

r
O
7S
1

11

108
k

—

—

26

2

8

55
hi

30

25
lU

r

17

21

O

82
31

21

18
15
9

12

bj>
30
989

21

2
2+
>
2

lU
1
k
1
9
31
k
2U7

2
3

3U

b

U
367
—

16
—

6
2

l
2b

26
3

1

16
6

b
3

H

K
j

10

—

9

2
17

2b8

U9U

TABLE 1.

APPENDIX II
m
NUMBER OF ^ A N K S U J M D BRANCHES OR ADDITIONAL OFFICES BY STATES (continued)
December 31»

States classified according to law (June 1,
193b) regarding branch
b anking

Head
office
city

Total

1935

Number of branches or additional offices
Outside head office city
Noncontiguous
Contiguous
Total
Head office
counties
county
counties

II. States authorizing branches within limited areas
Arkansas (2)
Iowa ( 2 )
Mississippi (3)
Montana
New M e x i c o ( 2 )
New Y o r k
Ohio
Pennsylvan!a
Wisconsin (2)
Total - 9
Alabama
Indiana
Louisiana,

Massachusetts
New Jersey

States permitting branches beyond county of head office but not State-wide
_
6
k
6
1
125
9£
27
125
Ho
Uo
19
13
-

5
606
169
91
IO^

-

591

130
85
IS

Total - 6

-

5
15
39

3
9
3b
k

6

IS
2U5

392

^50

Total -

17

2

2U
3b

10

12

10
lH
2U

1,575

1.0S1

ksk

12

(Notes f o r this t a b l e on page x i x . )




k

361

j

Q

1
-

3

-

2

110

of head

-

6

lH

to c i t y

g

1

69

87

S t a t e s limi t i n e branches
Delaware
Georgia
Total - 2

-

S2U
2'42
323
1,1^7
S t a t e s limiting; branches to county of head o f f i c e
22
19
3
28
kl
19
27
26
25
23
51
110
18
91
19
Ilk
21
91
23

ks

Tennessee

-

-

-

1
-

-

18
71

10

5

9

1
2
1
l

7
17

—

-

n
X
-

1
9

20

office

6

2

-

8

7
7

96

37

TABLE 1 .

APPENDIX I I
m
NUMBER OF BANKS^ 'AND BRANCHES OR ADDITIONAL 05FICES BY STATES
December 31» 1935

States c l a s s i f i e d acc o r d i n g t o l a w (June 1,
1 5 3 6 ) r e g a r d i n g "branch
banking

Total

Head
office
city

I I I . S t a t e s p r o h i b i t i n g b r a n c h b a n k i n g by
Colorado
Florida
Illinois
Kansas
6
6
Minnesota
Fissouri
Nebraska
2
8
Texas
West V i r g i n i a
2
1
Total - 9
10
9

Number of b r a n c h e s or a d d i t i o n a l o f f i c e s
Outside head o f f i c e ci ty
Contiguous
| Noncontiguous
I Total
Head o f f i c e
!
counties
j
counties
county

i

statute

-

-

-

-

-

-

-

-

1
1

4

IV% S t a t e s w i t h no l e g i s l a t i o n r e g a r d i n g b r a n c h b a n k i n g
30
11
K e n t u c k y (U)
19
}Te vr Harnp s h i r e
1
1
1
Horth Dakota
1
Oklahoma
Wyoming
Total - 5
32
19
13
Total - All

States

(Notes f o r t h i s




3,11^

t a b l e on page

1,617

xix.)

(continued)

1,%7

1
g

-

-

-

3

-

1

s
617

-

-

1

U

1

3Ug

532

TABLE 1 .

APPENDIX I I
n x
NUMBER OF BANKS( ^AND BRANCHES OR ADDITIONAL OFFICES BY STATES ( c o n t i n u e d )
December 31» 1935

States classified acc o r d i n g to law (June 1,
1936) r e g a r d i n g b r a n c h
banking

Total

Number of branches or additional offices
Outside head office city
Noncontiguous
Total
Contiguous
Head office
counties
counties
county

Head
office
ci ty

Geoe*rauhic d i v i s i o n s of
United S t a t e s (Census)
New E n g l a n d
Kiddle Atlantic
East North Central
West N o r t h C e n t r a l
South A t l a n t i c
E a s t South C e n t r a l
West S o u t h C e n t r a l
Mountain
Pacific
Total-United States

22S
811
U62
1U9
318

1U0
57
69

880

3. n1*

115
767
287
8
109
4o

113
44

72
34
l49

23
2
266
1,617

34

67

6i4

29
i4
s4

1.497

617

686
770

643
182

175
l4i

102

209
100

87
46

38
9
24
32
67
28
3

3
l

2

7
55

26
2

27

120
34g

26
4io
532

115

432

Types of banks
National
S t a t e member
Nonmember
Total - State

1,329
952
8VS
^llH

Mutual s a v i n g s
Private

129

A l l banks - United
States totals

Ii

3,2^7

161
1,617
ill
-

1,728

_

612

96
84
_

JBZ_ -

66

167

32
68

532

617

348

18
4

i4
4

4

—

-

-

1,513

635

352

532

(l) Mutual savings and private banks are excluded in State totals.
( 2 ) S t a t e s a u t h o r i z i n g b y s t a t u t e o n l y the o p e r a t i o n of " o f f i c e s , 1 1 " a g e n c i e s , " o r " s t a t i o n s " f o r l i m i t e d
p u r p o s e s , a s d i s t i n g u i s h e d from " b r a n c h e s . "
( 3 ) S t a t e s a u t h o r i z i n g b y s t a t u t e the o p e r a t i o n o f " o f f i c e s , " " a g e n c i e s " or " s t a t i o n s " f o r l i m i t e d p u r p o s e s
and b r a n c h e s w i t h f u l l p o w e r .
(H) States permitting by judicial decision the operation of "offices," "agencies," or "stations" for limited
purposes.



APPENDIX III

TABLE la. - NUMBER OE BANKS OPERATING BRANCHES AND NUMBER AND LOCATION OF BRANCHES
BY CLASSES AND STATES, DECEMBER 31, 1935
Number of Banks

State

Alabama
Arizona

Arkansas
California
Connecticut
Delaware
Dist.of C o l .
Georgia
Idaho
Indiana
Iowa
Kentucky
Louisiana
Maine
Maryland
Mas s achus e 1 1 s
Michigan
Minnesota
Mississippi
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New Y o r k




To- Na- S t a t e ?Ton
t a l tion- mem- memal
ber ber

3
5
6
3S
4

6
11
9
5
30
93
i4

26
19
23
42
36

2

21

2
2

1

1
?

11
2
5
3
3
5
3
5
3

2

is

11
2
1
2
2
1

US i 4
4
76

1

27

8

1
1

r

22
D
^
21 15
5 ' 6
19 79U 615
4
4
3
1

9

3

30
24

17
15

12
26

24

93

125

10

30
51
53
76

20
11

10

10

110

60

16

l4i
6

53
6

35

Ho

6
i4

7
l
32

1

27
25
35
52

1
2

7

2
1

12
4
i4

2
5

17
27
4

9

li4

163

8

17

3
3
36

1

9
71

3
3-5

3

10
3
2
30

125
12
23
27
46
15

36
39

6

2
2

58

24

379

5
45

4

7
4

72
2
5
4

5
17
21
1
5
57
44
6

1
1

3
3
7

2

l

1

^

I
I
18

33

5

2
1

6

1

24
1
4
2

13

4
4

Noncontiguous
j comities
0
^
1
1

l

9

6

8

1

1
3

12

11

1

2
1
1

12

2

15

2

27

15
21
4

1

l
27
3

10

98
8
22

1

1

51

7
10
25

11
1

6

9

12
1
1

18

23
24

1

13

8

1
2

1

1

2

1

5

606 182

3

6

l

5

15
6
6

136

5

17

22

1

12

5
4
i4

20

Location of Branches
Nonmember
member
Con- Non- Head Head Contigcon- o f - o f tigf i c e f i c e uous
uous t i g CO'J/i- councoun- uous
ties
counties
!ty
ties

State
National
Na- S t a t e Non Head Headj Con- Non- Head Head
Totigof- ofcon- o f - o f t a l t3m- mem- nemal
b e r b e r f i c e f i c e uous t i g - f i c e f i c e
coun- coun- uous
county
ties
county
ties

1

?

2
2
3
1
1

Number of Branches

2

24

7

176

3

3
l
l
3

l

Us

374

1

9
U

1

19
4i

5
3

2

APPENDIX III
TABLE l a . ( C o n t i n u e d ) NUMBER OF BAMS OPERATING BRANCHES AND NUMBER AND LOCATION OP BRANCHES
BY CLASSES AND STATES, DECEIIBER 3 1 , 1935
Number o f Brinks
State

N o r t h Carolina
North D a k o t a
Ohio
Oregon
Penn s y l v a n i a
Rhode I s l a n d
South C a r o l i n a
South D a k o t a
Tennessee
Utah
Vermont
Virginia
Washington
West V i r g i n i a .
Wisconsin
TOTAL
ALL STATES




. Number of B r a n c h e s

lion
To- Na- Stria
Tomemtal
t a l tion- mentier b e r
al

36
1

2

2

3^
3
37
11

8
2
16
3
1

10

5
20

b

b
b

12
2
1

3
2
6
5

2
1

2

b

Bob 1 8 1

1*3

s
37
8
2
67

32
1
16
1
9
6
3
1
16
1
6
29
2
2
61

S9
1
169
U2
91
3S
21
15
Ug
10
12

bb
2
105

National
NaS t a t e Non Head Head Cont i o n - mem- n em- o f - o f - t i g al
ber ber f i c e f i c e uous
coun- counties
ty
5

7

33

115

37
2
15

39
19
l

bi

ib

17
9
2

lb

37

7
5

lb

5

km 3,11^ 1 , 3 2 9

952

77
l
21
1
15
11
5
1
31
l
10
>3
+
2
2
g6

1
29
11
36
6
l

1

1
1
2
\t

9
11

1
1
1
3
2

22

3

3

2
H

ib
5
1

18
1
1
6
1

3

b

2

3
1
2
7

13

l

1

ib

35
6
l

2
6

lH
6

115

3

3

b
17

H32

l
3

770

gU

18
1

l
1
7
1

2

32

9

0

8
28
1
1
66

18

161

1-+37

167

6

1

66

Non~
contiguous
connties

33

l
2

1

6
3
2

96

b

2

26

ib

S33 686

of B r a n c h e s
Nonmenb er
memb e r
ConNon- Head Head Concon- o f - o f - t i g tiguous
t i g - f i c e f i c e uous
cout>- councoun- uous
counties
ties
ty
ties

9g

3

ii

"r
-

16
1

Location
State
Non- Head Head
con- o f oftig- fice fice
counuous
county
ties

g
1

1

60

APPENDIX II
TABLE 2. LOANS iND INVESTMENTS AND DEPOSITS 0? ALL BA^KS AND OF BJfiTES 0PI3ATING
BRANCHES OR ADDITIONAL 0 ^ 1 CIS ?Y STATES l /
December 31,1935
(Dollar amounts in thousands of dollars)

All
b anks

Loans and Investments
Banks operating branches or additional offices
Outside head office city
Confined to
Total
Confined to Beyond head office [Beyondhaadoffice
head office
head office county in contigu- county in nonconTotal
city
county
1 ous counties
jtiguous counties

States authorizing: Stato-vride branch banking
42,605
Ari zona
California
3,117,079
Connecticut
415,136
District of Columbia
207,010
5d,OHU
I daho
Maine
171,^72
449,561
Maryland
855,946
Mi chigan
Nevada.
15,024
255,64g
North Carolina
Oregon
185,212
Rhode Island
263,750
South Carolina
76,765
64,734
South Dakota (3)
Utah
94,354
101,374
Vermont
Virginia
375,422
Washington
293,517
Total - i s

7,046,656

28,668
2,630,576
106,161
158,623
32,103
67,-357
265,151
564,316
11,436
120,458
135,osU
223,IUO
33,925
15,210
32,562
l£,666
135,440
125,103
U,76^79

(Notes for this table on page xxvii.)




—

4o6,S67
76,560
155,623
-

7,oi6
223,591
1*55,656

28,668
2,223,709
29 , 601
-

32,103
6o,g4i
41,560

55,211
2,721

10E,660
11,436
109,l4i
135,054
213,130
29,492
15,210
32,562
15,666
50,229
152,352

1,411,999

3,352,4so

11,317
-

10,010
4,427
-

3,950
189.923
-

2,069
16,235
29,601

—

-

7U9

-

19,I4O

41,701

10,364
97,522
1,325
4,034
720
99,636
1,5S4

24,697
3,94s
-

12,302
-

7,156
9,96s
19,130
10,367

19,751
705
1,576
12,129
5,69s
25,960
13,237

475,715

215,909

22,619
2,017,491
-

31,354
-

6,499
7,130
10,111
92,505
134,364
93,743
27,209
13,334
13,277
-

32,139
15S,77S
2,660,553

APPENDIX III
TABLE 2. LOANS AND INVESTMENTS AND DEPOSITS OE ALL BANKS AND 0? BANKS OPERATING
BRANCHES OR ADDITIONAL OFFICES BY" STATES l/( continued)
December 31, 1935
(Dollar amounts in thousands of dollars)

Loans and Investments
All
b anks

Total

Banks operating branches or additional offices
Outside head office city
, Confined to
[
7
Confined to Beyond head office
head office
Total
head office eounty in contigucity
ous counties
county

Beyond head office
county In noncontiguous counties

II. States authorizing branches within limited areas
Arkansas (2)
Iowa (2)
Mississippi (3)
Montana
New Mexico (2)
New York
Ohio
Pennsylvania
Wisconsin (2)
Total - 9
Alabama
Indiana
Louisiana
Massachusetts
New Jersey
Tennessee
Total - 6

Delaware
Georgia
Total - 2

States permitting; branches beyond county of head
1,862
l,g62
UO6,2S2
54,7S7
54,787
113,127
15.387
15,387
S3,S6U
27,082
1,699
1,899
8,373,026
10,562,22H
g,725,64o
352,614
305,844
1,^91,120
80S,990
503,i46
1,238,644
3,732,^79
181,955
1,420,599
214,278
600,21U
178,127
36,151
17,110,576
10,095,641 1 , 1 4 7 , 8 0 1
11,243,442

547
184,778
280,909
21,359
27,130
560,916

28S
167,836
222,237
1oO,596
9,021
580,936

4i3
4,472
l,o64
x*
H

5,949

s tates limiting branches to cotmty of head office
39.704
39,704
173,290
3S.752
115,430
100,352
15,07s
14,471
503,969
162,2U1
146,518
15,723
13,136
255,973
52^,063
60,912
57,005
883,975
1,3^5,2SU
349,586
287,240
326,47s
676,064
1,339,^55
72,696
40,077
131,679
58,983
309,379

3,907
19,101
7,124

20,137
11,782

1,492,215

30>739

35,45S

27,£60
1,605

47,565

29,465

47,865

64i,i4o

89,272

3,927,£50

2,009,093

516,878

450,631

States limiting branches t 0 city of head office
55,242
122,Sll
85,612
30,370
2, 5 1 c
150,815
2 08,89'S
101,345
161,336
10,521
b 5> 7 b 3
246,94s
151,185
391,709
103,855

Total - 17
2 1 , 4 3 0 , 1 3 5 . 13 U99,4S3
1
Notes for this table on riaeo rrrvi. . J



office but not State-wide
1,290
159
15,270
39,517
5,386
5,529

11,653,619

1,845,864

1,115,452

952
607
2,587

TABLE 2 .

APPENDIX I I
LOAMS AND INVESTMENTS ArTD DEPOSITS OF ALL BANKS AND OF
BRANCHES OR ADDITIONAL OFFICES BY STATES % } { c o n t i n u e d )
December 3 1 , 1935
( D o l l a r amounts i n thousands of d o l l a r s )

All
banks

Loans and I n v e s t m e n t s
Banks o p e r a t i n g b r a n c h e s or a d d i t i o n a l o f f i c e s
Outside head o f f i c e c i t y
Coafined to
C o n f i n e d t o Beyond head o f f i c e Beyond h e a d o f f i c e
head o f f i c e
Total
h e a d o f f i c e county i n c o n t i g u - c o u n t y i n nonconcity
ous c o u n t i e s
tiguous counties
county

Total

I I I . S t a t e s p r o h i b i t i n g b r a n c h banking by s t a t u t e
Colorado
129,313
Florida
186,1+22
Illinois
2,595,4.0
Kansas
24J,4EI
Minnesota
191,221
630,016
Ki s s o u r i
229,355
Neb r a s k a
220,485
io,597
Texas
779,659
West V i r g i n i a
1,520
199,622
Total - 9

I V . S t a t e s w i t h no l e g i s l a t i o n
Kentucky ( 4 )
ile'.7 Hampshire
North Dakota
Oklahoma
WyomingTotal - 5

Total - A l l states

-

1

10,597

ft

916

6o4

202,734

6o4

b04

93,232

12,027
521

2.309

H
-

6o4

1
1
-

r e t a r d i n g branch banking

34^,287
72,341

105,8bR
521

54,670
253,075

68

757,227

106,454

93,232

12,6l6

2,309

4,239

6s

35.173,351

15,573,754

13,362,190

5,211,564

1,$00,0S3

S6l,28S

2,750,193

3,712
521

68

6s

34,1+54

( N o t e s f o r t h i s t a b l e on psv?o x x v i i . )




191,221

.203,338

5,932,733

OPERATING

APPENDIX III
TABLE 2 . LOANS AM) INVESTMENTS AED DEPOSITS OF ALL BANKS AI© OF BANKS OPERATING
BRANCHES OR ADDITIONAL OFFICES 3Y STATES l / ( c o n t i n u e d )
December 3 1 , 1935
( D o l l a r amounts i n thousands o f d o l l a r s )

All
banks

Total

Geographic d i v i s i o n s
of U n i t e d S t a t e s (Census)
New E n g l a n d
Middle A t l a n t i c
E a s t North C e n t r a l
TJest North C e n t r a l
South A t l a n t i c
E a s t South C e n t r a l
West South C e n t r a l
Mountain
Pacific
Total-United States
Types of banks
National
S t a t e member
Nonmember
Total - State
Mutual s a v i n g s
Private

2,369,357
15,634,158
6,049,729
2,513,923
2,142,159
939,523
1,332,891
545,743
3,595,208
35,173,351

18,949,650
10,985,110
5,238,591
35,173,351
9,833,434

1,300,320
10,822,303
1,703,014
271,S83
962,065
292,635
164,103
106,668
2,950,763
12,573,754

8,602,36s
8,6b2,44o
1,308,937
12,573,754

Loans and I n v e s t m e n t s
Banks o p e r a t i n g b r a n c h e s o r a d d i t i o n a l o f f i c e s
Confined to I
O u t s i d e head o f f i c e c i t y
C o n f i n e d t o Beyond head o f f i c e Beyond head o f f i c e
head o f f i c e
city
head o f f i c e c o u n t y i n c o n t i g u - county i n nonconj Total
1
tiguous counties
county
ous c o u n t i e s

|

9l6,64g
9»96l,256
1,039,979
201,818
519,848
166,53^
146,518

104,179

13,362,190

185,749
323,671
861,O47
^93>377
420,092
663,035
70,065
39,517
442,217
139,571
126,101
92,524
14,426
17,525
106,66S
13,757
201,070
2,541,175
5 , 2 1 1 , 5 6 4 1,600,083

5,522,354
7,140,526
639,310
13,362,190

-

4O9,588

3^7,533
235,213
17,1^6
96,129
16,371
159
i4,4s6
29,472

93,7^3
20,13
7,130
13,402
206,517
17,206
3,000
72,425
2,310,633

S6l,28S

2,750,193

659,451
3,020,014
1,521,923
573,329
669,627
367,303
5 , 2 1 1 , 5 6 4 1,600,083

151,002
513,209
197,077
861,288

2,209,561
435,325
105,247

90,859
2,684

25,351

1,693,626

886,639

528,331

4,511,935
2,634

4,395,725
_

116,210
2,68b

A l l banks - U n i t e d
States totals
45,535,116

23,088,373

17,757,915

5,330,45g

(Notes f o r t h i s t a b l e on pago r c c v i i . )




-

2,750,193
-

—

2,750,193

,

r,:
,

APPENDIX I I
TABLE 2 . LOMS i\ND INVESTMENTS AND DEPOSITS OF ALL BANKS MD OE 5 J Z S OPERATING
BRANCHES OR ADDITIONAL OEFICES BY STATES l/(continued)
December 31»1935
( D o l l a r amounts i n thousands o f d o l l a r s )

All
b nnks

I,

Total

Dcposi t s
Banks o p e r a t i n g b r a n c h e s or a d d i t i o n a l o f f i c e s
Outside head o f f i c e c i t y
Confined to;
C o n f i n e d to (Beyond h e a d o f f i c e |3eyond h e a d o f f i c e
head office
Total
h e a d o f f i c e |county i n c o n t i g u - county i n nonconcity
tiguous counties
county
i ous c o u n t i e s

S t a t e s a u t h o r i z i n g S t a t e - w i d e branch b a n k i n g

A r i zona
California
Connecticut
D i s t r i c t of
Idaho
Maine

63,75S
3,537,312
502,722
Columbia

Maryland
Michigan
Nevada
North C a r o l i n a
Oregon
Rhode I s l a n d

South Carolina
South Dakota (3)
Utah
Vermont
Virginia
Washington

T o t a l - IS

1+2, 3U6
2,967,251
1^2,256

292,35^
SO,826

218,557

229,122
128,239
S3,829
136,270
100,170
US9,gU5
382,6sU

218,557
1+2, OSU
71,971
321,523
828,233
16,677
l6l,150
172,397
251,050
52,039
22,072
'45,696
18,060
200,162
239,3^6

91,31+6
3,792

3,6H4,OlH

5,819,1+70

1>S33,63H

iS7,oo6

53S/4U3
1,198,510
25.£13
359,^17

2Ui,6qU

(Notes for this table on page iczvii.)




1157,651
103,220

7,028
271,316
650,615
-

-

10,353
U,909
-

5+2,3U6
2,509,630
39,036
-

i+2,05l+
6l+, 9U3
50,207
175,21s *
16,677
1^6,303
172,397

2U0,697

9,522
21+0,065
-

3,370
is,177
39,036

5,913
1,099
105,331
1,9^1

-

1+5,810
33,097
6,016
-

17,527
-

235,55^

12,172
9,118
21,399
15,262

21,252
1,033
2,752
15,860
8,91+2
1+2,532
19,609

3,935,236

621,252

275,013

53,130

22,072

1+5,696
is,060
105,Sl6

-

-

—

1,018
19,133
io,93^
l6i+,^99
1,^+26

29,1+5^
2,21+8,388

1+1,016
-

6,176
7,703
15,251
122,863
171,29s
llU.iiU
50,156
19,320
17,66U
1 4U,S85

200,683

3,088,971

TABLE 2.

APPENDIX II
LOAMS AMD IN7ESTKENTS AND DEPOSITS OF ALL BANKS AMD OF BANKS OPERATING
BRANCHES OR ADDITIONAL OFFICES BY STATES (continued)
December 31, 1935
(Dollar amounts in thousands of dollars)

Deposits
Banks operating branches or additional offices
Confined to
All
Outside head office cit;v
"banks
Total
head office
Confined to Beyond head office Beyond head office
Total
ci ty
head office county in conti.pil- county in noncontiguous counties
county
ous counties
[I. States authorizing branches within limited areas
States permit ting branches beyond county of head office but not State-wide
Arkansas (2)
Iowa (2)
Mississippi (3)
Montana
New Mexico (2)
lier York
Ohio
Pennsylvania
Wisconsin (2)
Total - 9

3,374
70,546

3,374
70,s46
20,653

1^,959
S26,S79
156,977
133,170
43>967
13,226,533
1,895,012
^,187,256
744,172

2,808
11,232,324 10,833,633
1,050,119
413,287
1,717,147
1,461,772
287,124
245,431

21,122,525

i4,3S4,395 12,954,123

20,653

_

-

2,508
398,691
636,532
255,375
41,693
1,4-30,272

2,642

194

53S

51,515
6,397

19,331
7,64s

6,60s

-

1,165
207,270
333,656
25,022
31,641
659,30s

-

366
191,421
303,176
230.353
10,052
762,541

—

-

1,277
-

-

S.423

States limiting branches to county of head office
Alabama
Indiana
Louisiana
Massachusetts
New Jersey
Tennessee

674,673
37^,517
1,761,533
1,594,346
432,092

Total - 6

5,021,407

244,240

439,531
96,510

52,593
19,473
23,535
75,228
405,516
50,545

50, S6-2
13,788
IS,387
74,059
360,245
55,690

4,169
23,o46
9,346

22,225
15,809

2,037,543

660,490

578,031

37,246

45,213

79,619

52,593
160,362
24O,I44
1,221,932

l40,S8'9
216,609
1,143,704

S45.347
177,355
2,695,033

s tates limiting branches to ci ty of h ead office
95,265
63,642
31.623
131,927
2,35S

-

6s 5
-

2,031
-

5, l4s
-

322,951

229,405

15,555

213,853

132,372

29,265
1,562

514,272

324,673

79,197

245,476

134,730

31,127

79,619

Total - 17
26,715,510 1 7 , 4 0 7 , 1 0 1 1 5 . 0 7 0 . s 6 3
(Notes for this table on -oa-°:o r r v i )
iri

2,336,235

1,372,069

830,914

133,255

Delaware
Georgia
Total - 2




-

TABLE 2.

APPENDIX II
LOANS M D I'TEST-'MTS AND DEPOSITS OF ALL 3ANFS
OF 3ATKS OPERATINGB3ANCHFS CP. ADDITIONS OFFICES "BY STATUS 1/(continued)
December 31, 1935
(Dollar amounts in thousands of dollars)

Total
-

-

III. States prohibiting branch "banking "by statute
Colorado
291,535
Florida
269,630
Illinois
3.5^1,033
357,624
Kansas
Minnesota
209,303
24s,642
Missouri
1,296,163
Ne~b raska
310,97s
13.017
1,171,969
Texas
246,483
1,753
West Virginia
325,21?
263,412
Total - 9

Deposits
Banks operating branches or additional offices
Confined to
Outside head office city
head office
Confined to Beyond head office Beyond head office
city
head office county in contigu- county in nonconTotal
tiguous counties
ous counties
county

?4s, 642

l,o64

6S9

262,723

639

IV. States vdth no legislation regarding "branch tanking
Kentucky (4)
407,366
121,466
13S,335
New Hampshire
76,124
521
North Dakota
71,665
131
Oklahoma
356,093
Wyoming
57.-079
Total - 5

Total - A H States

6s9
6S9

16,369
521
131

9.421

7,44s
521
131

99S,927

138,9^7

121,466

17,521

9,421

7.969

131

44,636,969

23,628,970

17,288,6s6

6,340,284

2,004,031

1,113,896

3.222,357

(Notes for this table on page iczvii.)




ft
H
-

13,017

APPENDIX II
TABLE 2 . LOMS AND INVESTMENTS AND DEPOSITS OF ALL BAITS AND OF BANKS OPERATING
BRANCHES" OR ADDITIONAL OFFICES BY STATES l / ( o o r i t i a u e d )
December 3 1 , 1935
( D o l l a r amounts i n t h o u s a n d s o f d o l l a r s )
Deposits
All
b anks

Oeo&raphi c d i v i s i ons
of United S t a t e s (Census)
2,922,677
New E n g l a n d
Middle A t l a n t i c
I9,0bg,735
E a s t N o r t h C e n t r a l 8,056,1+00
West N o r t h C e n t r a l 3,1+80,9^1
South A t l a n t i c
2,339,2 5
E as t S o u t h C en t r a l l,2U0,651
Test South C e n t r a l 2 , 0 7 7 , 5 3 Noun t a i n
S 3 3 , 018
Pacific
1^161,690

Total

Banks operating "branches or additional offices
Outside head office city
Confined to
Confined to "Beyond head office Beyond head office
head office
ci t y
Total
head office co-cmty in contigu- county i n nonconcounty
tiguous counties
ous counties

1,26^,305

207,6^1

119,730
W + , 820

llU,nl+
22,225

319,929
22,083
125,316

7,703
19,1+51

3,379,02U

U61,1+1+3

UUi, ^-85
1,059,582
876,216
93,0^9
6oU,62i
171,260
26,909
lU^Sl
2 , 5 1 7 , : 51

•UU, 656,969

23,625,970

17,2-55,656

6,3Uof2sU

2,004,031

1,113,896

3,222,357

2k,SOI,793
13,631/456
6,233,720
1+1+, 606,969

7,716,1+25
5,865,069

3,65^,093
1,579,^07
506,7SU
6,3HO,2SH

isU,533
692,600
236,763
1,113,596
26,650

2,566,62s
517,089
135,6*40

9,955,3§2
1+65,213

11,370,521
10,7^,1+76
1,513,973
23,628,970
U,5U9,i'45
2,7^5

A l l banks-United
States totals 55,110,56^

28,150,566

1,11+0,576

T o t a l - U n i t e d States
Types of banks
National
S t a t e member
Nonrnember
Total- State
Futual savings
Private

1,705,790
13,79^,815
2,326,1+38
35^,708
1,285,S57
359,236
2^3,515

12,735,236
1,1+50,222
261,659
681,236
217,976
216,609
-

592,537
5l+8,5S!+
51,515
175,6O0
122,370
21,029
25,323
259,k2b

-

123,1+59
2, r k z

902,932
669,718
1+31,351
2,00^,031
9b,809
2,7^5

2i,7l,4,3^5

6, .U66,521

2,103,55S

707,159
17,255,6So
k, '425, 659

2k,kk2

191+
19,596
37,756

-

303,699
2U,W+8
5,656
10U,6o2
2,620,369

3.222,357
-

3,222,357

( 1 ) F u t u a l s a v i n g s and p r i v a t e b a n k s a r e e x c l u d e d i n S t a t e t o t a l s .
( 2 ) S t a t e s a u t h o r i z i n g b y s t a t u t e o n l y t h e o p e r a t i o n s of " o f f i c e s , 1 1 " a g e n c i e s , " o r " s t a t i o n s " f o r l i m i t e d
p u r p o s e s , a s d i s t i n g u i s h e d from " b r a n c h e s . "
( 3 ) S t a t e s a u t h o r i z i n g b y s t a t u t e the o p e r a t i o n o f " o f f i c e s , " " a g e n c i e s " e r " s t a t i o n s " f o r l i m i t e d p u r p o s e s
and b r a n c h e s w i t h f u l l p o w e r .
(H) S t a t e s - p e r m i t t i n g b ^ . j u d i c i a l d e c i s i o n the o p e r a t i o n o f " o f f i c e s , " " a g e n c i e s , " or " s t a t i o n s " f o r l i m i t e d p u r p o s e s .



ii
<
1

APPENDIX III
TABLE 2 a . - LOANS AND INVESTMENTS AND DEPOSITS OP BANKS OPERATING BRANCHES
BY CLASSES AND STATES, DECEMBER 3 1 , I935
( I n t h o u s a n d s of

dollars)

Loans and I n v e s t m e n t s
State

Alabama
Arizona
Arkansas
California
Connect i c u t
Delaware
D i s t . o f Columbia,
Georgia
Idaho
Indiana
Iowa
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Nebraska
Nevada
New Hampshire
New J e r s e y

New Mexico
New Y o r k
North C a r o l i n a

North Dakota




Total

39.704

2S,66S
1,862

2,630,576
106,161
85,612
158,623
161,336
32,103
115,430
5^,727

105,365
162,241

67,257
265,151
833,975

564,316
191,221
15.327
10,597

11,436
521

676,064
1.299
8,725.640

120,453
6
8

National

State
member

22,250
-

-

92,442
143,713
12,632
57,092
-

80,308
1^3,953
12,064

160,6o4

652,888
353,644

191,221
1,234
10,597
11,436
521
209,764
—

2,792,925
6,357

Nonmemb er

952

17*4

32,572
1,333,470
59,24o

Depo s i t.s

-

529,527
-

55,242
51,230
11,223
17,^33
25,456
-

13.530
3,257

26,580

56,311
197,791
l4s,878
—

-

6,418
1,262
217,519
46,921
30,370

14,951
800
1,928
32,832
5'^,727
12,027
i4,431

29,213

48,236
33,296

61,79!+
-

14,153

-

-

-

-

-

-

3^2,576
-

5,736,506
55,330
-

Total

52,893
42,346
3,37^

2,967,281
142,256
95,265
213,557
229,403
42,054

160,362
70,346
132,335
24O,I44
71,971

321,523
1,221,932
828,833
248,642
20,653
13,017
16,677
521
345,347
2,303

117,724
1,299
190,149

11,232,324

63

161,150
131

58,221

National 1
|
50,555
% 32,548

i
j
j

State
member

_

307

-

2,116,869
81,274
-

132,020
211,330
16,323
34,320
-

109,267
213,395
13,081
195,311
932,431
552,172
248,642
1,3^0
13,017

16,677

521
280,592
-

3,226,990

10,232
-

621,343
-

63,642

67,862
17,016
23,060
30,828
-

12,199
6,713
27,715
75,73*+
241,955
IS9,212
-

-

-

Nonmember
2,031
9,792
3,374
229,064

60,922
31,623
12,675
1,062
2,671
45,214
70,846

16,869
20,036
31,175
50,473
41,546
20,837
-

19,313
-

-

-

-

-

421,716
-

7,195,252
71,551
-

143,039

28 8
,0
210,082
79,367
131

APPENDIX I I
TABLE 2 a .

( C o n t i n u e d ) LOANS AND INVESTMENTS AND DEPOSITS OF BANKS OPERATING BRANCHES
BY CLASSES AND STATES, DECEMBER 3 1 , 1935
( i n t h o u s a n d s of

dollars)

Loans and Investments
State

Ohio
Oregon
Pennsylvania
Rhode I s l a n d
South C a r o l i n a
South D a k o t a
Tennessee
Utah
Vermont

Virginia
Washington
West Virginia
Wisconsin

TOTAL
ALL STATES




Total

sos,990
135,os4
1,420,599
223,140
33,925
15,210
131,679
32,562

IS,666
135,440
185,103
1,520
2l4,27S
IS.573.75^

National

307,590
134,364
604,325
43,o;30
19,841
15,084
106,367
31,553
1,615
75.332
171,351
-

State
member
452,708
-

723,086
113,494
4,427
—

3S.5H
11.153
-

143,362

4o,716

8,602,36s

8,662,449

Deposits
Nonmember

1

Total

National

1,050,119
172,397
1.717,147
251,050
58,039
22,072
177,355
45,696
18,060
200,162
239,346
1,753
287,124

385,59s
171,298
823,733
50,539
34,946
21,915
143,658
44,636
1,788
122,528
218,974

1,308,937 23,628,970

48,692
720
93.188
66,616
9,657
126
25,312

i,oo4

17,051
21,591
2,599
1,520
30,200

State
member
613,740
-

800,926
135,366
4,909

Nonmember
50,781
1,099
92,488
65,145
18,184

199.995

52,371

157
33,697
1,060
16,272
24,385
3,173
1,753
3^,758

11,370,521

10,744,476

1,513,973

-

-

-

53.249
17,199
-

APPENDIX III
TABLE 3 .

Name o f bank

FIFTY LARGEST BARES IN THE UNITED STATES AND THE NUMBER OF THEIR BRANCHES
DECEMBER 3 1 , 1935

Location

New York C i t y
1 . C h a s e N a t i o n a l Bank
New York C i t y
2 . N a t i o n a l C i t y Bank o f New Y o r k
New York C i t y
3 . G u a r a n t y T r u s t Company
San F r a n c i s c o
4 . Bank of A m e r i c a N . T . & S . A .
5 . C o n t i n e n t a l 1 1 1 . N a t ' l B k . & T r . C o . Chicago
New Y o r k C i t y
6 . B a n k e r s T r u s t Company
Chicago
7 . F i r s t N a t i o n a l Bank
New York C i t y
8 . C e n t r a l Hanover B k . & T r . Co.
Boston
9 . F i r s t N a t i o n a l Bank
New York C i t y
1 0 . I r v i n g T r u s t Company
New York C i t y
1 1 . M a n u f a c t u r e r s T r u s t Company
New York C i t y
1 2 . C h e m i c a l Bank & T r u s t Company
Los Angeles
1 3 . S e c u r i t y - F i r s t N a t i o n a l Bank
New York C i t y
Bank o f t h e Manhattan Company
1 5 . F i r s t N a t i o n a l Bank o f t h e
C i t y of New Y o r k
New York C i t y
1 6 . J . P . M o r g a n and Company
New York C i t y
1 7 . P h i l a d e l p h i a N a t i o n a l Bank
Philadelphia
I S . T h e N a t i o n a l Bank o f D e t r o i t
Detroit
19.New Y o r k T r u s t Company
New York C i t y
2 0 . C l e v e l a n d T r u s t Company
Cleveland
2 1 . N o r t h e r n T r u s t Company
Chicago
2 2 . M e l l o n N a t i o n a l Bank
Pi ttsburgh
2 3 . C o r n Exchange Bank T r u s t Company New Y o r k C i t y
Pittsburgh
.Union T r u s t Company
San F r a n c i s c o
2 5 - A m e r i c a n T r u s t Company
* Bankers

Directory.




Loans and
investments

$ 1 , 3 5 0 , 205,4o4
1,112, 1 1 1 , 9 7 6
1,112, 156,000
1 , 0 6 8 , 552,650
782, 1 1 5 - 3 4 8
694, 635,000
555, 857,201
6 4 i , 361,000
379, 4 3 7 , 5 6 5
433, 667,000

502, 189,000

435, 747,000
466, 824,668
3^6, 282,000
4O4,O67,739
*4O7,845,000
267,241,687
241,246,493
3l4,4is,ooo
223,755.000
250,029,000
268,579,258
203,366,000
281,210,000

217,783,000

Deposits

$2,006 , 5 5 0 , 7 2 2
1 , 4 1 7 ,709,698
1 , 4 3 5 ,228,000
i , l 4 g ,751,997
1,007 ,332,458
277 ,536,000
S60 , 4 0 9 , 7 4 3
821 ,020,000
575 ,305,299
591 ,307,000
55« ,305,000
525 ,609,000
525 ,127,111
483 , 1 7 3 , 0 0 0
479,351,272
472,757,000
403,523,696

368,059,814
365,458,000
303,176,000
294,692,000
300,293,147
284,443,000
246,198,000
242,652,000

O u t s i d e head o f f i c e c i t y
O u t s i d e head
o f f i c e county
Head
Number
Head
Nonoffice office
of
Conconcity
branches
c o u n t y t iguous
t iguous
counties
counties
"38
73
420

32
73
2
43

13
24
8
55
13
119
63

13
24
8
55
13
64
63

2
27

27

54

42

73
1
70

73
1
25

2

2

60

29

317

18

2
2

32

13

APPENDIX I I
TABLE 3 .

Name o f

FIFTY LARGEST BANKS IN THE UNITED STATES AND THE NUMBER OF THEIR BRANCHES
DECEMBER 3 1 , 1935

bank

26.Pennsylvania Co.for Insurances^.
2 7 . W e l l s F a r g o B k . & U n i o n T r . Co.
2 2 , F i r s t N a t i o n a l Bank
2 9 . A n g l o C a l i f o r n i a N a t i o n a l Bank
3 0 . B a n k o f New Y o r k & T r u s t Co.
3 1 . F i r s t W i s c o n s i n N a t i o n a l Bank
3 2 . H a r r i s T r u s t & S a v i n g s Bank
3 3 ' ^ r s t N a t i o n a l Bank
3 4 . N a t i o n a l Shawmut B a n k
35•Commerce T r u s t Company
36.San F r a n c i s c o Bank
3 7 - M a r i n e T r u s t Company
35.Mercantile-Commerce Bk. & Tr.Co.
3 9 . P u b l i c N a t i o n a l B a n k & T r u s t Co.
U o . F i r s t N a t i o n a l B a n k & T r u s t Co.
4 1 . F i d e l i t y U n i o n T r u s t Company
4 2 . F i r s t N a t i o n a l Bank
4 3 . C e n t r a l U n i t e d N a t i o n a l Bank
C r o c k e r F i r s t N a t i o n a l Bank
4 5 . S e a t t l e - F i r s t N a t i o n a l Bank
46.National C i t y Bk.of Cleveland
4 7 . C i t y N a t i o n a l B a n k & T r u s t Co.
4g.Farmers & Merchants N a t ' l Bk.
4 q . F i r s t N a t i o n a l Bank
50.Northwestern N a t ! l Bk. & Tr.Co.
T o t a l 50 b a n k s
T o t a l banks o p e r a t i n g branches
T o t a l a l l banks in U n i t e d S t a t e s
* B s n k e r o j)i r o o t .



(Continued)

Location

Philadelphia
San F r a n c i s c o
St.Louis
San F r a n c i s c o
New Y o r k C i t y
Milwaukee
Chicago
Baltimore
Boston
Kansas C i t y
San F r a n c i s c o
Buffalo
S t . Louis
New Y o r k C i t y
Minneapolis
Newark
S t . Paul
Cleveland
San F r a n c i s c o
Seattle
Cleveland
Chicago
Los Angeles
Ka.nsas C i t y , M o .
Minneapolis

L o a n s and
investments

$160,596,000
190,UU5,000
147,072,914
151,075.940
139,918,000
131,195.279
146,397,000
140,998,999
121,228,491
77,729,000
* 153,183,000
138,321,000
105,783,000
110,073,301
107,100,350
116,284,000
96,252,273:
116,279,912
112,272,730
103,303,327
94,921,655
59,683,523
107,473,147
69,546,894
84,166,250
15,941,990,634
12,573,75^,000
45,477,697,000

Outside : head o f f i c e c i t y
O u t s i d e head
Number
o f f i c e county
Head
Head
Deposits
of
office
NonConoffice
city
branches
con—
c"unt'r t iguous
t iguous
1
counties
counties
2
$230,353,000
10
8
1
1
224,531,000
—
—
217,460,073
185,170,764
1
7
9
17
180,600,000
1
1
179,922,057
13
13
—
188,236,00c
1
2
2
169,289,633
>i
16
16
£
169,139,13^
—
156,244,000
I
155,920,000
5
5
2
155,468,000
33
31
—
-—
l43,042,000
134,784,150
30
30
133,318,082
3
3
2
8
133,524,000
10
—
—
132,343,061
8
2
131,325,066
10
—
—
125,760,102
1
1
16
123,490,467
7
7
1
1
122,311,674
—
121,480,511
—
—
117,112,536
—
H7,O4I,OI3
115,32-3,775
3
3
20,462,339,055
23,628,970,000
55,170,721,000

1,230
3,il4
3,247

716
1,617
1,728

45
617
635

107
34s
352

362
532
532

APPENDIX III

RATIO OP LOANS TO DEPOSITS OF UNIT BAKES AND BRANCH BANKS
BY COUNTIES IN CALIFORNIA
December 3 1
«
County
Alameda
Amador
Butte
Calaveras
Colusa
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern
Zings
Lake
lassen
Los Angeles
Madera
Marin
Mendocino
Merced
Modoc
Monterey
Napa
Nevada
Orange
Placer
Plumas
Riverside
Sacramento
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Mateo
San Luis Obispo
Santa Barbara




Branch hanks

Unit hanks
1.97?

1933,., 1

71.7
—

U2.1
77-9
217a
69.0

59. s
—

35.8
52.3
70.7
55.6

1933

19^

19^

60.0

59.2
34.1
70.7
24.3
4 l .2

47.6

41.7
24.3
40.2
20.9
29.6
46.7
28.7

—

38.5
45.1
49.1
52.2

—

—

—

__

—

—

50.2
69-3

51.?61.9
—

59-6
69.7

11.3
65.5
—

72.7
47,6
69.5
—

77.6
50.2

32.8
46.0
42.6
4i.9
—

3^.7
44.4
43.2
7.1
40.0
28.6

67.O
27»2
6l.g
—

37.2
38.6
34.2
13.6
36.9
63.6
66.1
29.0

67.8
—

58.1
42.9

56.9
35.9

54.9
35.2

51.8
30.8
53-9
44.4
48.2

—

—

94.2
47.5
137.4
69.8
49.3
67.6
54.3
77.1
43.2
72.1
73.2
69.6
47.3

32.7
46.9
36.9
34.5

8S.3

45.7
46.2
49.4
37.6
64.6
4o,6
53.4
60.5
52.9
37.6

59.4

42.5
52.4
4l,l

53.1
55-0

50.4
33-5

59.4

54.8

39.2
32.0
59.4
48.5
103.0

26.2

46.3

21.7
23.7
46.5
32.9
18.7

25.6

27.6

5.4
43.5

24.8
39.2
32.9
69.4
6.7
39.2

60.8

44.6

45.0

7S.7
64.2
52.2
bg.7

40.2

7.8

60.7
33-9

55.9

65.1
103.4
72.0

56.8

16.7
69.6
63.2
—

69.7
29.4
104.1

75a
52.7
69.9
67.6

29.9

56.2
52.8

36.I
33.1

70.4

19.8

52.4
32.9

55-5
34.8
37.6

35-3

4g.9
43.8

13.5
31.5
36.5

51.1
51.5

17.5

62.2
49.6
42.6

71.3
42.0
69.6
41.5
48.3

29.1

s

.2

1+6.6
41.5
49.5

35.5
32.4
40.9
4g.i
43.8
14.6
32.0

38.5

52.6
4g.7
21.7
60.2
40.6
39.0
65.4
43.6
64.3
36.3
41.7

APPENDIX III (Continued.)
RATIO OF LOANS TO DEPOSITS OF UNIT BANKS AND BRANCH BANKS
BY COUNTIES IN CALIFORNIA
December 31
County

Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Tulare
Tuolumne
Ventura
Yola
Yuba
California




,

1933

61.5
73.1
52.9
I23.I
25.5

28.0
67.8

72.8
83.1
79.8

B r a n c h "banks
1934
1933

U n i t banks
19^ 1
U7.2
56.6

70.8
19
53-1

65.O
52.5

52.8

43.9
54.4

50.6

30.0
48.1
7b.4

52.8

1935

80.2

54.9
35.6

51.6
31.9

26.6

64.2
31.1
59.1
60.9

41.9

80.5

49.3

48.5
51.9

71*6
79.2

28.9

51.7
50.4
19.3

44.6
46.8
22.0

61.5

44.0

42.1

59.3

38.9

3b.2
51.9
75.3

78.1
54.3
81.7
65.3

30.6

48.3
30.5
52.8
32.8
25.4
47.7
59-8
32.3
49.7
56.6

33.8
29.8
44.6
29.8
49.4
30.6
32.9
34.2

52.6

31.6
44.5
51.3

- xxxii ~

•APPENDIX IV

TABLE 1 .

BRANCHES OR ADDITIONAL OFFICES OF BAMS OPERATING BRANCHES
SUSPENDED 1 9 2 1 - 1 9 3 6 , BY THE SIZE OF TOWN OR CITY
IN WHICH BRANCHES WERE OPERATED

B r a n c h e s or o f f i c e s
l o c a t e d in c i t i e s
and towns h a v i n g
a p o p u l a t i o n of -

Under 25O
250 - 1+99
500 - 999
1,000 - 2.U99
2 , 5 0 0 - 2,999
3,000 - 4 , 9 9 9
5,000 - 5 , 9 9 9
6,000 - 9 , 9 9 9
10,000 - 24,999
25,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 and over
Total

Number., o f branches. or. a d d i t i o n a l o f f i c e s
Outside' head o f f i c e c i t y
Head
Head
Total o f f i c e
NonContiguous
office
contiguous
city
counties
county
counties
61
8b
113
110
20
3S
6
21
33
39
35
219
456
1,287

-

1
1
2
1
3
13
31
79
217
454
802

45
63
68
49
7
14
1
4
5
3
3
2
1
265

12
9
21
36
7
8
1
8
2
-

5
l4
3
6
13
5
3

-

-

1

—

105

115

NOTE: Mutual s a v i n g s and p r i v a t e b a n k s n o t i n c l u d e d i n t h i s




4
14
24
24

tabulation.

- xxxiii APPENDIX IV
TABLE 2.

BRANCH-OPERATING BANKS, SUSPENDED 1921-1936, BY NUMBER OF T O M S
OR CITIESj M D COUNTIES IN WHICH BRANCHES OR ADDITIONAL
OFFICES HERE OPERATED AT DATE OF SUSPENSION

Number of
cities or
towns

Total banks
operating
branches

Total banks Total number
Total number Number
operating of branches
of
of branches
or offices
counties branches
or offices

1

300

854

1

345

2

37

72

2

17

57

3
4

20

79
36

9
4

48

9
4

3
4
5

2

17

9
10

1

15

2

33

1,009

29

6

1

49
6

7
8

2

18

1

8

12

1

9
11

1

20

1

15
20

1

9
11

26

1

44

12

1

12

5

13

1

13

15
20

2

30

2

4o

42

1

44

323

1,227

323

1,287

NOTE: Mutual savings and private banks not included in this tabulation.




APPENDIX III
TABLE 3

-BANKS OPERATING BRANCHES, ACTIVE DECEMBER 31, 1935, AND SUSPENDED 1921-1936,
BY SIZE OP LOANS AND INVESTLiENTS

( D o l l a r amounts in thousands)
Banks
Suspensions of banks
operating branches
operating branches
(Banks classiDecember 31. 1935
192] 1 9 3 ^
fied according
Amount
Amount
to amount of
Number Number of loans Amount Number Number of loans Amount
loans and
of
and inof
of
and inof
of
of
investnents) banks branches vest| deposits banks branches vestj
deposits
(000 omitted)
ments i
ments
.
.
.
Sise of "banks

Under
100
100
1H9
150
2U9
250
499
500
999
1,000 _ 1 .999
2,000 4,999
5,000 - 9 033
'
10,300 - 4c,O
/99
50, OCX)
and over
Total

6
13
65

122
116

75

125

84
137

61

so4

$507
$387
1,644
2,454
13,073
12,474
57,827
43,832
105,273
S3,831
189
103,9% 125,121
108
406,333 493,149
224
664,319 307,24I:
203
3,071,174 3,900,148
596
1,555 i4,135,036 35113,797
6
13
72
l4g

3,ii4

18,573,754^628,970

9

9

$666

63,609

66.7

132,714

54.4
"64,3

20.3
37.8
45»0
78.7
80.4
70.4
63.4

85

46,53/

50
68
54

35
180
143

74,004
217,920
378,294

328,576

47

9

15

56

1,202

2,75s

17,522

2"l.5
38.5
53.4

327

9*0,537
1,077,620
1,192,995

45.3
13.1

1,287

3,150,5192,691,059

47.6

62

373

6
383

1,215,621

Note:—Llutual savings and private "banks not included in this tabulation.




150.0
69.2

62

9

Amount
Number Number of loans
and inof
of
banks branches vestments

150.0
69.2

$S37
886
2,276
15,552
38,402

14

Ratio of suspended banks operating
branches to all banks with branches

131.4
73-1

22.1

Amount
of
deposits

94.4

36.1

12.6

39.9
550

26.9
36.5
50.8

36.7
40.7

21.0

53-6
56.9
39-7
8.4

41.3

17.0

11.4

71.2

25.1
5.9

- XXXV ~

APPENDIX IV
TABLE

SUSPENSIONS OP BANKS OPERATING BRITCHES OR ADDITIONAL OFFICES
1 9 2 1 - 1 9 3 6 , ACCORDING TO NUMBER OF BRANCHES OPERATED

Number of
tranches
per bank

Number of
banks

(Dollar amounts in thousands)
Amount of
Number of
loans
branches
and
investments

3
5
l
3
1
l
2
2
1
2
1
3
1
1
1
1
1

203
130
10s
10s
1+0
24
28
24
45
10
33
12
13
30
32
17
36
19
6g
21
33
44
52
147

3S3

1,287

209
65
36
27

1
2
3

s

5
r
0
7
s
9
10
11
12
13
15
16
17
IS
is
20
21
39
44
58
1U7
Total

$

574,204
255,6so
214,729
271,235
95.22S
64,972
91,914
34,si4
106,100
23,553
54,691
14,971
3,509
23,042
5S,210
57,832
170,186
47,932
7S,IO4
183,563
109,556
17,000
213,403
373,7SS

3,150,519

Amount of
deposits

$

471,556
199,557
154,646
192,430
76,550
51,096
67,523
28,194
91,586
20,156
54,203
12,596
3,676
22,4s3
45,167
30,642
155,007
44,497
74,000
194,906
105,103
23,139
161,000
373,360

2,691,059

NOTE: Mutual savings and private banks not included in this tabulation.




- xxxvi -

APPENDIX IV
TaBLE 5 .

SUSPENSIONS OF BANKS OPERATING BRANCHES OR ADDITIONAL OFFICES
1 9 2 1 - 1 9 3 6 , BY SIZE OF TOW OF LOCATION OF HEAD OFFICE

S i z e of

town

Towns c l a s s i f i e d
a c c o r d i n g to populat i o n 1930 c e n s u s
Under 250
250 - 499

500 - 999
1,000 - 2,499
2,500 - 2,999
3,000 - 4,999
5,000 - 5,999
6,000 - 9,999
10,000 - 24,999
25,000 - 49,959
50,000 - 99,999
100,000 - 499,999
500,000 and over

Total
NOTE:




( D o l l a r amounts i n thousands of do]L i a r s )
Amount
Amount
Number
Number
of loans
of
of
of
and
depos i t s
branches
banks
investments
9
7
30
42
8
34
15

16

35
22
52
51

11
9
33

68

11
52

21

52
104

$

2,067
2,633

$

14,683
31,426

1,387

2,020
10,634
27,491
5,3^3

7,031
30,353

26,216
20,226

35,s4i

31,35^
101,398

24,850

117,o4s
100,271

62

171
246
466

809,128
1,551,759

77,71s
3U9,15s
670,035
1,367,479

3S3

1,287

3,150,519

2,691,059

423,429

Mutual s a v i n g s and p r i v a t e b a n k s n o t i n c l u d e d i n t h i s

tabulation.

- xxxvii -

APPENDIX IV
TABLE 6.

SUSPENSIONS OP BANKS OPERATING BRANCHES OR ADDITIONAL OFFICES
1921-1936, BY STATES
Number
of
banks

I

21

S t a t e s a u t h o r i z i n g S t a t e - w i d e branch banking
Arizona
California
Connecticut
D i s t r i c t o f Columbia
Idaho
Maine
Maryland
Michigan
Nevada
North C a r o l i n a
Oregon
Ehode I s l a n d
South C a r o l i n a
South D a k o t a 1/
Utah
Vermont
Virginia
Washington
Total

II

Number
of
branches

10
19

States c l a s s i f i e d according
to law (June 1 , 193&) r e g a r d i n g
"branch b a n k i n g

7

11
IS

46

31
—

97

265
—

30
1
1

16

76
1
3
79

- —
—

12
2
154

65s

5
32
6

—

A r k a n s a s 2/
Iowa 2/
M i s s i s s i p p i 1/
Montana
New M e x i c o 2/
New Y o r k
Ohio
Pennsylvania
W i s c o n s i n 2/

23

3
23
5

S t a t e s p e r m i t t i n g b r a n c h e s beyond c o u n t y
h e a d o f f i c e but n o t S t a t e - w i d e




3

(13)

S t a t e s a u t h o r i z i n g branches w i t h i n l i m i t e d

Total

3S

—

— -

2

areas
of

—

20
31
37
(9)

124

107

149

95

_£
400

'

- xxxviii APPENDIX IV
TABLE 6 .

SUSPENSIONS OF BANKS OPERATING BRANCHES OR ADDITIONAL OFFICES
1 9 2 1 - 1 9 3 6 , BY STATES (Continued)
States classified according
to law (June 1, 193&) regarding
branch banking

Number
of
banks

Number
of
branches

States limiting branches to county of head office
4
6

Alabama
Indiana
Louisiana
Massachusetts
New Jersey
Tennessee

IS
g
86

33
17
17
JL

Total (6)

sU

33

29
g

182

States limiting branches to city of head office
—

——

ii

Delaware
Georgia

IS

Total (2)
Total (17)
m

M

225

S t a t e s p r o h i b i t i n g b r a n c h b a n k i n g by

620

statute

Colorado
Florida
Illinois
Kansas
Minnesota
Missouri
Nebraska
Texas
West V i r g i n i a
Total
IV

(9)

S t a t e s w i t h no l e g i s l a t i o n r e g a r d i n g b r a n c h b a n k i n g
K e n t u c k y 3/
New Hampshire
N o r t h Dakota
Oklahoma
Wyoming
Total

United States

Total

4

(5)
(kS)

£

1,267
3S3

1/ See n o t e 3 , Appendix II, T a b l e 1*
2/ See n o t e 2 , Appendix II, T a b l e 1*
See n o t e k t Appendix II, T a b l e 1 .
NOTE:

Mutual s a v i n g s and p r i v a t e banks not i n c l u d e d i n t h i s




tabulation.

APPENDIX III

Opinions of Bankers and Others Regarding Extension of
Branch Bankinv
Central .Reserve City Bankers
Now YerkClty
George L. Harrison, President, Federal Reserve Bank of Iiv York.
se/
"This.implies the necessity of improving the general
character of bank management through the development of some
more liberal system of branch banking within appropriate areas."
Address, Meeting of American Academy of Political Science, April, 1936.

James H. Perkins, Chairman, National City Bank.
"In my own mind, I don't believe that our country ever
will be prepared to spread branch banking over a large area,
but I do think that an unprejudiced study brings one to the
opinion that it should bo permitted within restricted areas.
"It seems to me that development along these lines would
be boneficial in various ways• It would provide greater
diversification of risks, and, by reducing the number of
independent units, facilitate cooperative action in emergencies.
Economies would be accomplished in small localities where a
bank is needed for accommodation, but where the business is not
great enough to support an independent bank. Also, the larger
units that result from branch banking would be in a better
position to give bank officers broad training and to reward
ability than in the case with the average bank today, thus
tending to improve the general standard of bank management,"
Address before the Texas Bankers Association's Convention, 1936,
Published in American Banker, June 2, 1936.

Pierre Jay, Chairman, Fidelity Trust Company.




"Like many other supporters of unit banking, I have been
forced by recent events to change my views, and I now regard
branch banking as the only fundamental remedy for the demonstrated weaknesses of unit banking, particularly in the
smaller places. But to become an effective instrument of

~ xl -

Appendl x V

national policy branch "banking should bo permitted to develop
under conditions most favorable to its success. These conditions involve questions of (l) aroa; (2) supervision;
(3) competition with unit banks."
Papor presented at the meeting of the Academy of Political Science,
January, 1933.

S. Sloan Colt, President, Bankers Trust Co,
"Legislation (in New York) which has already been
enacted permits the development of regional systems of
branches that might serve the public effectively. If
more banking offices are required in the State they
should be established not through the chartering of
new banks, but rather by existing banks taking advantage of laws which permit branch banking within specified districts of the State,"
Address, New York State Bankers

Convention, June, 1936.

Francis II. Sisson, Vice President, Guaranty Trust Co.
"...I thoroughly believe in a reasonable extension
of branch banking and I believe that many places with
sub-standard banks would be bettered, by giving those
places the benefit of larger city banking through branch
facilities...."
Address, American Bankers Association Convention, September 23, 1933.

George V. McLaughlin, President, Brooklyn Trust Co.




"On the controversial subject of branch banking, I
think that the answer lies in a gradual extension of
branch privileges. In my opinion, it would be a
mistake to legalize, with one stroke of the pen,
nation-wide or even state-wide branch banking where
it does not now exist, since thet mieht create

nciix V

chaotic conditions. Yet, the urgent need, for new banking
facilities in many communities, coupled with the fact
that present banking conditions are not attractive to
now capital, suggests the necessity for extension of branch
banking in certain localities."
Address, American Bonkers Association Convention, September 23, 193

Thomas v . Lamont, J. P. Morgan & Company.
v
"Almost all the failures early this year of small
suburban banks around Chicago, and almost all the resultant
threats to the general banking situation, could have been
avoided if it had not been for the fact that the Illinois
statutes permit no branch banking of any kind within the
limits of the State. It was quite impossible under the law
for the large Chicago banks to attempt to serve, through
branches, the important suburbs around the city. The
lessons of such a situation must be glaringly obvious to the
whole country...there is no present effective method under the
law by which the strong institutions in our leading financial
centers can extend the benefit of their ample reserves, their
experience and ordinarily careful management to weather banks
in the outlying districts."
Address, Meeting of tho Academy of Political Science, January, 1933

Albert H. Figgin, Former Chairman, The Chase National Bank.




"Every community in this country that will support
a bank is well cared for already. The communities that are
not provided with banking facilities are communities that
cannot support a bank. We have had a very long experience
in acting as correspondent of banks throughout the country,
and we do not know of a case where a solvent bank has been
permitted to fail from lack of accommodation from its
correspondent.
"Our own preference would be not to see any extension
of branch, banking. If branch banking wore limited to trade
areas or to Federal reserve districts, it would cause, in
the New York district, a competition in tho buying of other

Appendix '7

banks in other citios, which we would dislike to see.
"...We act as tho correspondent of banks from all over
tha country and we lend those banks from, all ovor tho
country and if there was any suggestion of branch banking
to the extent of the whole country we would consider it
exceedingly inadvisable, because of tho difficulty and
impossibility of serving branches at such a distance, in
a satisfactory way.. #.,?
Testimony—Hearings, 8. Res. 71, January, 1931.

Boujamin M. Anderson, Jr., Economist of the Chase National Bank.
"The Glass Bill, with its deposit guaranty provisions,
has undoubtedly necessitated a great modification of views
with respect to the desirability and even the necessity of
a vory widespread extension of branch banking in the United
Statos. It can bo urged with great force that, if tho
banks in the financial canters are to be responsible for tho
deposits of banks all ovor the country, they should also bo
responsible for management and policies, and this consideration would involve a vary widespread application of branch
banking indeed. On the other hand, tho desirability of
preserving local financial independence in a country as
great as ours is very real. Moreover, it is certain that a
sudden, sweeping transformation of our system v/ould involve
a great many difficulties and undesirable consequences."
As a typo of branch banking for Now York, ho expressed his opinions
as follows:
"We should permit banks of certain minimum capital to
establish branches in any part of tho State, in citios of
a certain maximum population, tho maximum being set low
onough to prevent a competition of How York City banks for
control of other important financial centers in the State.
"I "chink it would be desirable to pormit banks of a
smaller, but still substantial, capitalization to take over,
as branches, other banks within their own county or within
two adjoining counties...."
Address, 40th Annual Convention, New York State Bankers A s s o c i a t i o n ,
Juno, 1933.




- xliii Appendix '7

George K. Davison, President, Centra]. Hanover Bank and Trust Co.
"Mr. Davison: No; I am not opposed to branch hanking
within definite limits. I think I ^m opposed to chain
banking of any kind."
"The Chairmen:

And group banking?"

"Mr, Davison: I think it is bad and Irresponsible.
Branch banking within definite limits, where your head
office can know the needs of a community and where the
branch is in close touch with the head office, has proven
to be a satisfactory form of banking."
"The Chairman: Would State-wide branch banking appeal to
your judgment?"
"Mr. Davison: It would not. It would be very unfortunate.
I think it would mean a remote control, which is entirely
foreign to all our Ideas and the theory end practice upon
which this country has been built up...."
Testimony - Hearings S. Res. 71, January, 1931, p. 253.

Chicago
Melvin W. Traylor, Former Chairman, First National Bank.
"I believe in the independent unit system of banking
which this country has always enjoyed. ... My conviction
is that if we were to nationalise.•.our banking structure,
that the extension of branch banking would be inevitable
and that the inevitable development of that system would
be...a very small number of large units which would control
completely the credit facilities of this country, which I
think would be extremely unfortunate."
Testimony, Hearings, S. Res. 71, February, 1931, p. 397.




- xliv Appendix V

Walter L i c h t e n s t e i n , Vice P r e s i d e n t ,

F i r s t N a t i o n a l Bank.

"...There is no suggestion in any of this that unit banks
should be forbidden and branch banking systems imposed
from above, nor would I propose that we should go from
one extreme to another and permit immediately nation-wide
branch banking. Such developments should be gradual and
in
country as large and as diversified as ours, it may
bo that wo ought never to have a nation-wide branch banking system. Possibly branch banks should be confined to
the Federal reserve districts in which the parent bank
is located; possibly even confined to a single state.
Unit banks where such are economically justified will
always be able to meet the competition of a branch bank."
Address before National Association of Bank Auditors and Comptrollers,
Louisville, Kentucky, May 8, 1936, p. 22.

Reserve City Bankers
St. J^ouijB
Vu F. Gephart, Vice President, First National Bank.
"Another thing that would help the commercial banking
situation in the United States is a properly delimited
system of branch banking which would, on the one hand,
supply adequate banking facilities for each community
and, on the other hand, reduce the present rather high
expense of commercial ban!: operation.
"We probably still have too many individual banks
in the United States, but in reducing them we should not
adopt a nation-wide system of branch banking, but limit
it to the industrial areas...."
Address, 40th Annual Convention, Indiana Bankers Association, May, 1936.




-

i-clv ~

Appendix V

Philadelphia.
0. Howard Wolfe, Cashier, Philadelphia National Bank and President,
Pennsylvania Bankers Association. 1933.
"My own feeling is that neither unit banking nor
branch banking should be set up as a golden calf for us
to worship. Personally...! am against even State-wide
branch banking, let alone branch banking that would extend over the entire country. ...modified branch banking
such as was proposed and stricken out of the Pennsylvania
Banking Code, will, given good management, solve many of
our problems."
Speech - Annual Convention of Pennsylvania Bankers Association, May, 1933.
Published in Financial Age, May, 1933.

Baltimore
Howard Bruce, Chairman, Baltimore Trust Co.
"Senator Glass: The Comptroller of the Currency, for
example, thinks the adoption of branch banking" would do
something."
"Mr. Bruce:
that."

That is all right.

I have no objection to

Testimony, Hearings, S. 4115, March, 1932, p. 477.

Charles E. Keiraan, President, Western National Bank.
"If it is desirable th-^t national banks can have
state-wide branch banking in one State, it applies to
all States, and if there over v/as a need, for branch
banking it is now, which should be developed under
Federal laws and not under State laws...."
Letter submitted as testimony, Hearings, S. 4115, March 22, 1932, p. 440.




- xlvi A); pend l

V

Now Orleans
Pudolf S. Hocht, Chairman, Hibernia National Bank.
His position is described as follows:
"He also advocated an extension of branch banking
in both state and national systems to enable strong local
financial center banks to extend support to communities
now lacking adequate banking facilities, but vigorously
(opposed granting) national banks, regardless of state
bank laws, state-wide branch powers in all states and
United inter-state branches in certain localities...."
Article, Tho Mississippi Barker, Juno, 1932.

Binaixigham
Oscar Wells, Chairman, First National Bank.
"...I am rather in favor of the development of independent
banks rather than tho development of branch banks, but I
recognize that that is not an answer to present conditions.
...I realize the conflict of interest that has arisen by
the development of branch banking in some States, and by
the development of group banking in others.
"..,! think that most group bankers will admit that they
think branch banking is desirable ae against group banking."
Testimony, Hearings, S. Pes. 71, February, 1931, pp. 421-422.

Jacksonville
Edward. Ball, Atlantic National Bank.
"...We believe branch banking would be a good thing, either
within the State or throughout the United States."
Hearings, S. 4115, March, 1932, p. 298.




- xlvii Appendix V

Gordon L. Groover, "Vice President, Citizens Southern National Bank,
Savannah,
"I do not mind telling you that 1 am in favor of
branch banking, under certain .restrictions, I think
it ought to be worked out very carefully, however."
Testimony, Hearings, K. R. (10241) 11362, March and April, 1932.

Group bankers
John K. Ottley, President, First National Bank, Atlanta.
"As between group banking and branch banking under
proper regulations, I have no hesitation in saying that
I advocate the latter."
Testimony, Hearing, S. 4115, March, 1932, p. 317.

Robert 0. Lord, President, Guardian Detroit Union Group.
"Senator Couzens: Would you be willing to abandon group
be liking if branch banking was permitted throughout the
State?"
"Mr. Lord: Yes, sir, and we would, put our banks into
one institution, a national bank."'
Testimony, Hearings, S. 4115, Mnrch, 1932, p. 131.

W. R. McQuaid, President, Barnett National Bank, Jacksonville,
"Holding companies were created because Federal
law did. not, and. many states do not, permit state-wide
branch banking.
"As a bank having affiliated banks in our State we
would welcome the opportunity to convert these separate
affiliated banks into branches and feel that other banks
having affiliated banks would do likewise.
"...My preference...would be to confine it (branch
banking) to State limits."
Testimony, Hearings 8. 4115, March, 1932, p. 290.




- xlviii -

Thomas R. Preston, President, Hamilton National Bank, Chattanooga,
expressed the opinion that it will be
"all right to abolish group banking" altogether if
it were possible to turn to branch banking.
Testimony, Hearings S. 4115, March, 1932, p. 327.

George F. Rand, President, Marine Trust Company, Buffalo.
expressed the opinion that tho record made by group
banks throughout the country has demonstrated the
economic soundness of tho principle upon which they
have been organized and that it is doubtful, if branch
banking would be a satisfactory alternative.
Hearings, S. 4115, March, 1932, pp. 480-484.

L. E. Wakefield, President, First National Bank of Minneapolis.
"I recognize that in advocating state-wide branch
banking at this time, I am departing from opinions I
expressed in my testimony before the subcommittee a year
ago. I admit that frankly. We have learned by our
experience of the last three years how much more effective
branch banking would be than group banking. I do not
think, that a year ago the people in the country districts
were ready to accept branch banking, but this sentiment
has undergone a great change, and I am certain that tho
majority of these people are not only no longer opposed
to branch banking but anxiously hope that it will be
accomplished with the least possible delay."
Mr. Wakefield also implied at the same time that he
made this statement that the group banking organisation
with which he is connected would be willing to convert
the banks of its group into branches if permitted, by law.
Testimony, Hearings, S. 4115, March, 1932, p. 341.




xlix ~

Appendix V

B. W. Trafford, Vice Chairman, First National Bank of Boston.
"Mr. Trafford: ...I do not think it is opportune to
open the country to branch banking on a large scale,
at the present time.... I do not see any need for
branch banking in New England."
"The Acting Chairman: lie (Comptroller of the Currency)
speaks of trade areas which...is a pretty indefinite
terra. It mi Mat be a radius of 100 miles in the East
and a thousand miles in the West. But whatever that
might mean, branch banking somewhat along the English
line, perhaps."
"Mr. Trafford:
areas....

We would like that.... Yes, in trade

"I, personally would prefer the branch-banking
method (of banking). It seems to me the responsibility
is more centralized (than in group or chain banking)."
Testimony, Hearings, S. Res. 71, January, 1931, pp. 243, 245, 246.

J. Cameron Thomson, Vice President, Northwest Bancorporation,
Minneapolis.
"Mr. Thomson: I think that group banking, owned by the
public and operated by the local people, is very much
preferable to a branch...system owned by an individual
or controlled by one interest, without that local
interest and management.??
"Senator Norheck: You feel that the branch-bank system
would have too much of a tendency to centralize?"
"Mr. Thomson:

There again it depends upon management...

"In our section of the country...we think that
group banking is preferable to general branch banking
in that territory."
Testimony, Hearings, S. Res. 71, p. 582.




-ccxx-

Chnln bankors
Otto Bremer, Chairman, American National Bank of St. Paul.
"I do not think it would bo a good thing for
our country at large if we had branch barking- all
over. In a few localities it may be preferable, but
as a whole I think it is un-American."
Testimony, Hearings, S. Hea. 71, March, 1931, p. 627.

Country bankers
Cjiliforaia
Richard K. Gandy, American Hation-1 Bank, Santa Monica.
"The independent banker occupies a place in the community that can not successfully be replaced by the
local manager of a branch or chain organizetion. No
other business comes so close to the vital needs of
every community; no one lias "better under standing of
the people in a coiromity or their particular problems
than the local independent banker, who has his own
funds invested in the bank and whose prosperity must
be keyed to the communityfs prosperity....
"We trust you will...t'ace an active part...toward
safeguarding the wolfarj of the independent bank."
Letter to Senator Hiraia Johnson and included in testimony, Hearings
S. Res. 71, January-march, 1931, p. 641.

I^dloim

Felix M. Mc-'Jhirter, President, Peoples State Bank, Indianapolis.




Should it (Section 19 of the third draft of the Glass
Bill S. 4412} "become effective through legislation
national banks would b - permitted to establish stateo
wide branches in every state, regardless of the branch
powers granted state banks - even, in fact, in states

~ li ~
A-oDoijdix V

where it has been specifically declared as the public
policy of the sovereign state that branch banking shall
be absolutely prohibited.
"This would be as flagrant an invasion of state
rights in the financial field by Federal political, power
as has ever been, attempted,
"It would face almost unrestricted branch banking
on the states regardless of local sentiment.
"It would give such competitive advantages to
national over state banks us to lead r .-finitely in
the direction of a sinr.l- ben king system in the country
in place of the present - y \ ; e of s ' - i 3 and national
: , r- m
tbanks."
Minarity report on Referendum Ao. 6e en the keport of the Special
Committee on Banking, Part II, Ghreiber of Commerce of the United
States, December 9, I9I52.
Iov:a_

L.

Andrew, Vice President, First Bank ar.d Trust Co., Ottuma,
"...Branch banking within metropolitan areas or within
adjoining counties may have sane foil?'dation, nut branch
banking canno t extend safely b : on d the int imate ere a i t
y
information that the officers of banks may enjoy. It
is a well demonstrated fact that ties loaning of a bank1 s
money cannot be safely dele gated outside tin; executive
officers of the institution. It has also b-oen quite
fully demonstrated during the past few years that any
institution with too many paying-tellers windows is
serious] y handicapped in time of btre-ss."

Address, Missouri .bankers Association Meeting, May, 1134-, published
in tho Proceedings of the Association, p. 99,




- lii Ann end.ix v

K.s._
gnes
H. A. Bryant, President, Kansas Bankers Association, Address delivered
at the annual meeting held in Kansas City, Mo., May 5-6, 1936.
"...Along this same line there is another matter that
bankers should be studying and thinking about. In other
states and possibly in this state, the* county-seat banks,
or larger banks in the other towns, have been sending an
employee to neighboring towns two or three times a week
to make change, cash checks and accept deposits. While
this may be quite an accommodation to the small community
without banking facilities, at the same time this r>ractiec
involves many dangerous features. To me tin first danger
would bo that such action miwht be the opening wedge for
branch banking In Kansas. This is an expensive operation,
and, first of all, if practiced, should be only on a
profitable basis. Then the robbery hazard is involved;
the question as to which banks should operate in certain
localities would enter into the plan. It is not my intention to endorse or oppose this Issue at this time, but
it is one of those things that will be coming up in the
near future and should recoivc careful study from all
sides."

Mississippi
G. M. Williams, President, Mississippi Bankers Convention.
"I advocate branch banking limited to trade areas
between fifty to one hundred miles as a means of raakina
safe and adequate banking facilities available to
communities unabio to profitably support an independent
bank. If such a system had been authorized in. Mississippi
four years ago, much of our banking difficulties since
1929 could have been avoided.Tr
PresidentTs Annual Address, May 23, 1933, Published in the
Mississippi Banker, June, 1933, pp. 3-5.




-

liii

Append ; x V
t

Mi ssour1
Charles B. Mudd, President, Missouri Bankers Association, 1932.
"The question at issue is simply whether banking...
(is) to be left to state autonomy or (is) to be concentrated
in one lar^e national organization of standardized units, I
favor a state regulation but would not be opposed to placing
national banks on a par with stste banks by giving national
banks such branch privileges as state banks enjoy in any
given commonwealth. In this way branch banking would remain
a controllable factor within each state."
President's Annual Address, May, 1932, Published in proceedings
Missouri Barkers Association.

President-elect Holderness, Missouri Bankers A s s o c i a t i o n ,

1933.

"Prohapo you exoect me to say something on a moot question,
and I have the courage to say it. I have never been in
favor of group or chain banking- I have never been in
favor of state-wide branch barking. I should be very
regretful if anything ever happened in this state to stifle
personal initiative or hamper independent banking.*.."
Remarks by Incoming President, May, 1932, Published in proceedings
of Missouri Bankers Association.

Willis W. Alexander, President, Missouri Bankers Association.




"I want to go on record here and now as boina uneauivocally
opposed to...branch bankinj.
"Most American banks are community-owned institutions. The
men who made the policies and operate the banks are permanent
citizens. For this reason the welfare of the community is
their paramount interest. As a result of this local ownership
and 1 )cr.l management of the banks, our country has developed
industrially far beyond other countries which do not have this
type of banking.
"The independent unit bank is threatened by attempts to extend,
branch banking. Shall we permit the system which has and is
now contributing so largely to this development of our country

~ liv ~

Appendix 7

to be strangled and smothered out of existence? Personally,
my answer is no. imd I am ready to wogo incessant warfare for
the preservation of our independent unit banking system."
President's Annual Address, Published in proceedings, Missouri Bankers
Association. M a Y 1935.

Pen: noylvania
Charles F. Zimmerman, President, First National Bank of Huntingdon.
"With regard to this question, of State's rights, I am
simply astounded to think thot Congress would seriously
consider the proposal to gr nt the right for a national
bank to cross State lines in, so-called trade areas....
I have a wide acquaintanceship with many bankers, not
only throughout the State of Pennsylvania but... throughout the nation, and I am at a loss to discover whore any
economic need exists for the Federal Government to grant
any branch banking privilege which controvones the
autonomy of our State banking laws....
"The branch-banking privilege accorded a national bank
should be on a parity with that accorded to the State
bank without a single exception or deviation of any kind....
"I feel that the mere mention
in that clause (S. 4115) is a
future of unit banking. I do
branch banking has proved its

of state-wide branch banking
threat more or less to the
not feel that state-wide
case in America."

Testimony, Hearings, S. 4115, March, 1932, pp. 305, 308, 309.

South^ Dakota
Arndt E. Dahl, Vice President, Citizens State Bank, Castlewood.
"Personally I am not opposed to all branch banking. I
believe that limited branch banking within a large city
is desirable. I believe that limited branch banking
within the county would not be so bad, as it would
probably be better than the cut-throat competition we
had a few years ago in South Dakota. The only bad feature
is that if branch banking is given a start that the areas
will gradually increase."
Letter to Senator Norbeck and included in testimony, Hearings,
S. Res. 71, February 1931, p. 638.




- Iv ~
Append ix_.Y

Don XL De Voy, Farmers State BanI:, l/estport.
"Tho provision in the Glass bill restricting branch
banking to those States that permit State branch banking
should be sustained...,
"States rights should be held inviolate; the people
in each State should have the power to say whether they
want branch banking...."
Letter to Senator Morbeck and included in testimony, Hearings,
S. 4115, March 1932, p. 356.

Banking press
Examples of the Journals and editors that have been particularly vocal
on the question of branch banking recently --re tho American Banker and its
Editor, Clinton B. Axford, the "Hoosier Banker" of the Indiana Bankers Association ond. the Northwestern Banker.

Mr. Axford and the American Banker are

suggesting a more effective organization of the independent bankers "on a
national scale in the defense of and for the preservation of independent
banking".

In an address at the recent convention of Independent Bankers at

St. Paul, September 5, 1936, Mr. Axford stressed th^ need for such an organization and said,
"an Independent Bank Division of the American Bankers
Association would be a good idea."
Continuing, he pointed out that,
"When it appeared before the public, the Independent Banking
Division could make it plain that it was speaking for 15,000
local banks, and local communities," 1/

1/ American Banker, September 8, 1936.




- Ivi Appendix V

At the same convention W. J". Bryan, Assistant Cashier of the Third National
Bank of Nashville, Tennessee, urged, the same thine, saying
"that a national organization of independent bankers is
needed, to combat the spread of branch banking in the
national field."
He also pointed out
"that Tennessee bankers realized that the winning of their
local fight might be fruitless if the branch bankers won
on the issue of State-wide branch b a n k i f o r national
banks. He urged that the way to meet the issue is to
adopt the methods of Nathan Bedford Forrest of the Confederate Cavalry,
there fustest with the mostest
men.'"
Similar ideas are reported to have been considered at other Western conventions earlier in the Summer and Spring and they were discussed at the annual
convention of American Bankers in San Francisco in September.
In addition to discussing the plans as thus described for expanding its
organization to oppose the extension of branch banking, the Independent Bankers
Association at its meeting in St. Paul adopted the following resolution:




"WHEREAS, The Independent Bankers Association upon
organization declared its aims and purposes to be, among
other things, to promote the general welfare and usefulness
of the unit banks, to vigorously oppose the enactment of
any laws, State or national, permitting the establishment
of branch banking in rural communities and to foster legislation for supervision of group banks, and whereas the
members of this Association and its officers and directors
have consistently since organization worked to carry out such
aims and purposes,
"NOW THEREFORE, BE IT RESOLVED, That the Executive
Council to be elected at this meeting is hereby instructed
to continue the efforts and work along such lines by oil
honorable means during the coming year in such manner as
they may decide is for the best interests of this Association and its members."

- Ivii Appendix^"

In its July, 1936, issue the "Hoosi.er .banker'' carried a lon_ editorial
under t:ae title "Branch Bankin^ as a Monopoly" and
"urged every unit and independent banker era business man
to make a sincere and earnest appeal to ov^ry candidate
for Coneress on all tickets."
The "Northwestern Banker", July, 1936, also devoted considerable attention
to recen:; developments with reference the branch banking controversy, describing and commending particularly the efforta of Frank Warner, Secretary of the
Iowa Bankers Association, for his anti-braiich oankiir work at tho Convention of
the American Bankers Association at New Origans, in 1935, -rid implying that the
controversy over tbe vice-presidential elect,ion at that time resalt-jd in a
victory for tho independent bankers.





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