Full text of The Northwestern Banker : December 9, 1968, No. 1133

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Advocate Broader Bank Taxation Bill
Rep. Bertrum L. Podell (D.,
N. Y.) has been urged to broaden
the scope o f legislation he
plans to Fe-introduce next year
to make national banks subject
to state and local sales and
use taxes.
At an informal hearing in
New York last week conducted
by Rep. Podell, New York State
Superintendent of Banks Frank
Wille advocated that the mea­
sure be expanded to make na­
tional banks subject to “ all
forms of state and local tax­
ation” other than the kinds that
are specifically forbidden from
being assessed under the Na­
tional Bank Act.
“ Many other forms of state
and local excise taxes exist
today and others may be im­
posed in the future,” Wille
said. “ Any revision enacted by
the Congress at the 1969 s e s­
sion should resolve this prob­
lem for the future and not be
limited merely to the context of
sales and use taxes.”
Supt. Wille also said Con­
gress should make it clear
“ such nondiscriminatory taxes”
apply to national banks in any


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state or locality in which they
operate —not only the state in
which they have a principal
office.
“ Many banks, both state and
national, lend to borrowers out­
side the state in which they
are domiciled, and it appears
under the Supreme Court’ s re­
cent decision (in the Massachu­
setts sales tax case) that these
other states and their localities
would also be prohibited from
imposing even a nondiscrimina­
tory tax on national banks
domiciled
elsewhere,
while
such a tax could be imposed
on state banks chartered by
other states,” he continued.
The New York official as­
sailed the 1968 Supreme Court
decision in the Massachusetts
case, which held that national
banks are exempt from state and
local sales and use taxes be­
cause of their “ Federal instru­
mentality” status.
He said such an exemption
is “ unconscionable now and
likely to become even more un­
fair in the future.” For example,
he reasoned, national banks
cannot perform any more ser­

vices or functions for the Fed­
eral government than state banks
belonging to the Federal Re­
serve System, which are subject
to state and local sales and
use taxes.
One of the consequences of
Congress not acting quickly to
remove this inequity, he warned,
is that there may be “ an in­
creasing number of conversions
by commercial banks from state
to national charter.”
Rep. Podell, who figures the
national bank exemption costs
states about $50 million annual­
ly, called the hearing to lay the
groundwork for convincing the
House Banking Committee , which
failed to act on his bill this
year, to consider the leg is­
lation after Congress recon­
venes in January. He also is
surveying state tax commis­
sioners in all 50 states on the
matter.
A spokesman for Rep. Podell
said the response from the
states so far has been “ quite
prolific in favor of the b ill.”
In addition, this spokesman
said that House Banking Com­
mittee Chairman Wright Patman
(Continued on Page 4)

has moved into its new bank build­
ing. The new building includes an
enclosed bookkeeping room, two
private o ffice s , lobby officer area,
employee lounge and meeting room.

W e're here to help
you g e t w h a t you w a n t

MINNEAPOLIS: Gerald L. Knips,
president, chairman and director of
the First Hennepin State Bank, has
resigned, effective January 1, to
join the o fficia l staff in the liaison
division of First Bank System here.
James E. Dorsey, Jr., v ice pres­
ident at the bank, has been e le c ­
ted to replace Mr. Knips in all
three cap acities.

IOW A-DES M OINES
NATIONAL BANK
Jerry Nelson

Member Federal Deposit Insurance Corporation

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IOWA NEWS

the bank building to be used as
a parking lot.

APLINGTON: Lee W. Davidson,
president of the Swea City State
Bank; Wayne O. Hopkins, president
of the Citizens State Bank, Webb;
and E. W. Y ouell, Jr., president o f
the Manson State Bank, have pur­
chased controlling interest in the
State Savings Bank here.

WEBSTER CITY: W. G. Stewart,
former v ice president and cashier
of the First National Bank in
Humboldt, has been named vice
president of the First State Bank
here. He had been associated with
the Humboldt bank for over 14
years.

FORT DODGE: Application of the
Union Trust and Savings Bank to
establish a facility at Duncombe
has been approved by the Federal
Deposit
Insurance
Corporation.

WHITTEMORE: Open house was
held Friday, December 6, at the
Farmers State Bank, in its new
building.

MINNESOTA NEWS
HAMPTON: Ivan D. Davis of Hamp­
ton has purchased the interest of
Mr. and Mrs. W. S. Norton in the
Hampton State Bank. Mr. Davis,
who has been elected v ice pres­
ident, will take over the active
management o f the bank on Janu­
ary 1. No other personnel changes
are anticipated.
ONAWA: The Onawa State Bank
has purchased property adjoining

CLARA CITY: An application to
change the location of the Citizens
State Bank of Clara City from 10
Center Street to 17 Main Street
here has been approved by the
Federal Reserve.
DEEP RIVER: The First National
Bank of Deer River recently ce le ­
brated its 60th anniversary.
LAKEFIELD: The First State Bank

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MINNEAPOLIS: William J. Bing­
ham, Jr., has been named v ice
president for manpower planning,
training and compensation at First
Bank System. Frank E. Porter has
been named secretary and corporate
counsel. Mr. Bingham . has been
vice president and personnel di­
rector for the National Bank of
Detroit, Mich. Mr. Porter is former
counsel for General Mills subsid­
iaries.

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MINNEAPOLIS: Earl S. Sanford has
been elected vice president of
Kidder, Peabody and Company,Inc.
Mr. Sanford has been resident man­
ager o f the firm’ s Minneapolis of­
fice sin ce 1963 and will continue
in that position.
MINNEAPOLIS: Kenneth R. John­
son, vice president of the First
National Bank of Minneapolis, has
been named head of the estate
division in the bank’ s trust depart­
ment, succeeding Lee A. Short,
v ice president and trust officer,
who becom es a senior consultant
in the trust department until his
retirement in March.
MINNEAPOLIS: The following Min­
neapolis banks are following the
lead o f New York’ s Chase Man­
hattan Bank, N .A ., in increasing
their prime interest rates for large
corporate borrowers from 6*4% to
6%%: First National Bank, North­
western National Bank, Midland
National Bank and National City
Bank. National City, which had
the lowest prime rate in the coun­
try at 6%, will increase its rate by
y2 of i%.
NEW ULM: Application of the Farm­
ers and Merchants State Bank of
New Ulm to change its location
from 200 North Minnesota Street to
322 North Minnesota Street here
has been approved by the Federal
Reserve.
S T . PAUL: Walter V. Dorle, pres­
ident of the Northwestern State
Bank, has been elected president

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of the St. Paul Chamber of Com­
merce for 1969-

SOUTH DAKOTA NEWS

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HURON: The 1968 South Dakota
Bankers A ssociation Bank Person­
nel Seminar will be held on
Wednesday, December 11, at the
Plains Hotel here. Registration
will begin at 8 a.m., with official
opening of the conference at 9 a.m.

ILLINOIS NEWS
MARION: Grand opening was held
recently at the drive-up, walk-in
facilities of the Bank of Marion.

*
PARK RIDGE: Three workshops on
supervisory training, federal in­
come taxation and EDP systems
analysis will be held concurrently
at the Bank Administration Insti­
tute’ s
headquarters here today
through December 11. Day-long
workshops will be conducted today
and tomorrow, with a morning
session only on December 11.

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SANDWICH: Construction has be­
gun on the new bank building
of the Sandwich State Bank at
100 West Church Street.
TOLONO: Application of The C iti­
zens Bank of Tolono to withdraw
from membership in the Federal
Reserve System has been approved.

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NATIONAL NEWS
MONTREAL, CANADA: J. Leonard
Walker, senior executive v ice pres­
ident of the Bank of Montreal, has
been elected president of the bank.
Marcel Vincent, chairman and ch ief
executive officer of Bell Telephone
Company of Canada, has been
named to the bank’ s board of di­
rectors. The bank has substan­
tially completed its planned pur­
chase of up to 10% of the outstand­
ing shares of the Royal Trust Com­
pany.
NEW YORK: Donald B. Riefler and
Frank Sandstrom have been e le c­
ted senior v ice presidents of

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Morgan Guaranty Trust Company.
Mr. Riefler heads the bank’ s port­
folio department, and Mr. Sandstrom
is a member of the credit com­
mittee. Both were formerly vice
presidents.

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Everett P. Brown
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NEW YORK: Secretary of the
Treasury Henry H. Fowler has an­
nounced his plans to become a
general partner of the New York
investment banking firm of Gold­
man, Sachs and Company on Janu­
ary 1.
ST. LOUIS: John B. Mitchell, 51,
president of First National Bank,
died recently after an illness of
three months. Mr. Mitchell joine*d
the bank in 1955 and had been
serving as president and a member
of the board of directors sin ce
1962.
SPRINGFIELD, OHIO: Consolida­
tion of assets and operations of
the Guardian Bank of Springfield
and the New C arlisle National
Bank has been recommended by
directors
of both institutions,
su bject to the approval of stock ­
holders of both banks and approval
of various state and federal agen­
cie s . The combined facility will
provide two offices in Springfield
and five o ffice s located in more
populous areas of Clark County.

Personal Attention
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Correspondent Needs
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activity of a bank simply by de­
fining it as a branch.
In the first bank service case
appealed to the high court, attor­
neys for the First National Bank of
Plant City contend that the U. S.
Fifth Circuit Court of Appeals, in
ruling that such messenger ser­
v ices
were
illegal,
depended
heavily on a “ distorted and errone-

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NORTH DAKOTA NEWS
MINOT: Application of the Ameri­
can State Bank to exercise trust
powers has been approved by the
FDIC.

Messenger Service Ruling
'Disruptive 9 Court Told. . .
The U. S. Supreme Court has
been told that if an appeals court
decision that a national bank’ s
armored car messenger service
constitutes illegal branch banking
is allowed to stand, each state
could prohibit any off-premises

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OMAHA


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ous extension” of the decision in
the 1966 Utah branch banking ca se.
The appeals court decision to
adopt state law in deciding what
activities a national bank may
conduct away from the premises
will be “ profoundly disruptive” of
the operations of national banks
throughout the country, the bank
contends.

banks that announced quarter-point
rises in their prime rate to 6)4%
shortly after the Chase announce­
ment.
Most major banks in the North­
western Banker area have also
raised their prime rates to 6)4%.
On September 24 Chase Manhat­
tan lowered its prime rate to 6%
from 6)4%, but most other major
banks —led by First National City
Bank of New York —cut their rates
by only a quarter of a point to 6%%.
The disparity in the prime rate
structure continued until Novem­
ber 12 when Chase Manhattan an­
nounced a
point increase to
bring it in line with the other major
banks.

Bank Taxation
(Continued from Page 1)

Banks Raise Prime Rate. . .
Chase Manhattan Bank, N .A .,
New York, which led a move to ­
ward a lower prime interest rate
for large corporate borrowers in
September, now has led a move in
the opposite direction.
Chase,
one of the nation’ s
largest banks, announced last
week it had raised its prime lend­
ing rate to 6y2% from 61/4%»effective
immediately.
Chemical Bank New York Trust
Company, Irving Trust Company,
Morgan Guaranty Trust Company
and Manufacturers Hanover Trust
Company were among New York

CENTRAL

NATIONAL

BANK

(D ., T ex .) is backing the measure
now.
Another front on which the na­
tional bank state and local sales
and use tax issue is still alive is
the Supreme Court, which in the
wake of the Massachusetts d e ci­
sion is being asked by New York
State to review the “ substantial
unresolved issu e ” of whether Con­
gress has the power under the U .S.
Constitution to give national banks
immunity from certain state taxes
if they do not perform as “ Federal
instrumentalities.”
The Supreme
Court has yet to decide whether
it will review this appeal.

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No. 1133 Northwestern Banker is published five times monthly by the Northwestern Banker Company, 306 Fifteenth Street, Des
Moines, Iowa 50309. Subscriptions 50tf per copy, $6 per year. Second class postage paid at Des Moines, Iowa. Address all mail
subscriptions,
changes of address (Form 3579), manuscripts, mail items to above address.

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