Show WOULD PROTECT BANKING FIELD FIELDIN IN RURAL AREAS American Bankers Association Association Association tion Would Combat Return of Excess Number of Banks CITES LAX CHARTER POLICIES IN THE PAST Finds Find a Chief Cause of Bank Failures Failure Was Vas Too Many Banks Existing Sound Bantu Banks Serving ing ng Communities Well Wen NEW YORK Existing sound banks especially the small banks In tn the rural districts which are servIng serving servo ing their communities well should be protected prote from an any return of ot the ver banked local conditions caused I by toy former lax chartering policies which were mainly to blamo blame for the unfavorable failure record of the past says sas the Economic Policy Polley Commission Com Corn mission of the American Bankers Association This Is brought out in tn ina ina a report covering an investigation In by the tho commission of bank failures and chartering policies The Commissions Commission's study gives an impressive revelation of how great greal greata a part mistaken public policies s Inthe in inthe the chartering of banks played in creating the unsound banking structure ture which finally collapsed with the Bank Holiday In March 1 1933 Robert V. V Fleming president of th association says In a foreword production Overproduction on of banks literally liter ally by bJ thousands over man many years in the face o of Insistent warnings not noi only from bankers and md others who recognized the danger but even eyen more so from the mounting records of bank failures themselves Is clearly shown to have constituted as a whole one of the greatest single economic errors In the history of the Nation A Recurrence Feared He refers to tears fears of or a recurrence of over banking recently expressed by Federal banking authorities to the powers given ghen the Federal Deposit Insurance Corporation by the provision provision pro pro- vision of the Banking Act of 1935 over the admission of banks to membership mem memo In the Insurance fund Cund to strengthened state laws and to the policies now being followed by both national and state supervisory au authorities aimed to safeguard the na nation lion tion against over But sound laws and officials are not of themselves always alwa's sufficient safeguard in an any field of our complex national life unless un less lern the they have the active support of public opinion he adds acIds It is the purpose ose of oC the American Bankers Association to aid In marshaling public opinion In support of oC both na national national na- na and state supervisory authorities ties in their efforts to strengthen and protect the banking structure The Economic Policy Polley Commission summarizes its findings as follows The facts show a distinct causal relationship between the over char of banks and the abnormal bank failure conditions that prevaIled prevailed prevailed pre pre- pre pre- from 1920 to tu the bank holiday In 1933 It is desirable that studies be made on the basis of experience to develop standards governing go the number of banks Such a study would embrace the question whether banking facilities can best be supplied to the rural dl dir by small unit banks or b bj branches from banks of ot capital in larger centers sound Jound banks which are serving theli communities well should be pro protected protected protected from any return of the over banked local conditions caused II li lithe the past by lax chartering policies Banking Officials Queried An Inquiry among state com corn missioners shows a n opinion against increasing materi materially ally aUy the number of ot banks coupler with the fact tact that present laws gh them sufficient discretion to a 1 repetition of or errors of the past Under prevailing abnormal coi cm with the Federal Government extensively exercising loaning pow powers era ers in competition with the banks md tad with industry Itself so largely largel supplied with funds as to render it to toi toL i L great degree Independent of normal norma bank borrowing the thc banking structure ture c even ch with Its present reduced numbers finds it difficult to support Its Us existing capital Investment and operating el These are new factors In Ing the need tor highly prudent am anc restrictive chartering policies We W urge he retirement of the Federal v Government fr from the banking bus busl business ness a as l ormal conditions warrant t |