| Show DUAL BANK SYSTEM FAVORED BY BANKER state and national institutions supplement each other in serving Count rys varied financial needs RECENT suggestions that all bans in the united states be under und fe eral jurisdiction doing away with the chartering of banks by the various states recalls the opposition to this plan presented at the recent conven alon ot the american bankers alon by R S hecht of new orleans chairman ot its economic policy corn mission mr hecht eald there are just as good reasons why there should be state as well as na banks as that there should be state as well as a national government I 1 do not think that analogy Is far fetched the states should not sur render all political jurisdiction to the central government and the local bul ness life of the states should not be made to surrender all control over financial functions to national financial instrumentalities there are many variations riat ions of business conditions from state to state and there are special fiscal requirements 0 the various elates it Is entirely logical therefore that the states should retain the right to charter banks so as to mold and direct their affairs in accordance with the states governmental and business requirements quire ments and keep them adapted to localized sentiment and conditions the argument Is sometimes advanced that tho dual system jeopardizes the life of the federal reserve system because under it there Is a large group of banks that are tree to remain out 0 or to withdraw from the system facts and figures prove that this is a specious argument it Is true that there has been some shifting from national to detate char especially in cases of mergers of large national banks with banks operating under state charters however the federal reserve system was not weakened in this process because the merged institutions almost universally retained their membership in the tern on a voluntary basis moreover the records show that state bank members are just as good members of the system as national banks and the ratio of state bank resources in the federal reserve system Is constantly growing in 1922 national banks held about 65 per cent of the resources of reserve members and state banks about 35 per cent while in 1929 the nationals held only 60 per cent and state banks 40 per cent banking help each other reciprocally the state and national banks systems have helped each other it the national banking law has served in bome respects as something of a model code toward which state banking laws more and more have approached pro ached year by year so have the state codes developed valuable reforms which have suggested improvements tor the national laws A great many undesirable competitive inequalities have been wiped out by this mutual evolutionary process and further ress along the line of uniformity so tar as Is desirable Is anticipated however I 1 do not believe that it Is a disadvantage to have two banking codes that differ in some respects it Is quite probable that the state banking code in many instances represents a closer adjustment to local conditions than could be had under the national banking laws and this Is a situation that should be retained there should however not be competition between the two banking codes competition should be between banks themselves and not between the laws under which they operate the effort to offer too great allurements allure ments in one code as against the other could lead only to weak banking laws but I 1 do think that there should be the alternative opportunities that now exist which banking institutions and local business interests may choose so that they can function or conduct their business relationships lation ships under that banking code which best meets the conditions of the times and of the place as they see them this has been illustrated in both directions in states where such unsound measures as the guarantee ot deposits were operative state banks bad the opportunity to escape the bale ful effect of such laws on the other hand when a court decision was banded down in worcester massachusetts chu which rendered uncertain the position of trust assets acquired by a national bank through a merger with A state bank it was a real advantage for national banks affected to take out and operate under a state charter either on a temporary or a permanent basis as circumstances make expedient in my opinion bankers national as well as state should combat the thought that conceives of depriving u of the vitalizing benefits of our dual system |
