Show DUAL BANK SYSTEM b FAVORED BY BANKER I j State and National Institutions Institutions Institutions Supplement E Each a c h hOther 5 Other in Serving Financial Financial Financial Finan Finan- cial Needs r d R. R RECENT suggestions that all banks In the United States be under Federal jurisdiction doing away with the chartering of ot banks by the he various states recalls the opposition to this plan presented at the recent convention of the American Bankers Association by R. R S. S Hecht of New Orleans Chairman Chairman Chair man of ot Its Economic Policy Com Com- mission Mr 11 Hecht said There are Just as good reasons why there should be state as well as national banks as RI that there sho ld be state as well as a ana na national na- na government I 1 do not think that analogy logy la is far tar The states should not surrender all political po O- O juris jurisdiction to the central government and the local business life lite of ot the states should not be made to surrender all iH control over financial functions to national fi financial financial financial fi- fi instrumentalities Tb There re are many variations of business business' conditions from state to state and there are special fiscal requirements requirements require require- requirements ments of the various arlous states stales It Is entirely logical therefore that the sl states tes should retain the right to charter banks bauks so as to mold mold and direct their affairs in ac accordance accordance ac- ac with the he states states' governmental governmental governmental govern govern- mental and business requirements and keep them then adapted to localized localized local local- I d sentiment and conditions Federal Reserve System The liThe argument Is sometimes advanced advanced advanced ad ad- that the dual system jeopardizes Jeopardizes jeopardizes the life lite of ot the Federal Reserve Reserve Re Re- serve System because under It there Is ha a large group of banks that are free to remain out of or orto orto orto to withdraw from the system Facts and figures prove that this is a specious argument nt It is true that there has been some shifting from national to tos s state ate charters especially In cases of mergers of ot 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 retained re rev tanned their membership In la the system on a voluntary basis Moreover the records show that state bank banc members are just as asgood asgood asgood good members of the system as national national national na na- na- na banks and the ratio of state bank resources In the Federal Reserve Reserve Re Re- Reserve serve System is constantly grow grow- ing In 1922 national banks held beld about 65 per pel cent of ot the resources of oi reserve members and state banks about 35 per cent while cent while In 1929 the nationals held beld only 60 per percent percent percent cent and state banks 40 per cen cent Reciprocally the state and national national na na- na banks systems have helped each other If It the national banking bankIng bank bank- Ing law has served In some respects respects respects re re- re- re as something of a model code toward which state banking laws more and more have approached approached approached ap ap- year by year so have bave the state codes developed valuable reforms reforms reforms re re- re- re forms which have suggested i improvements improvements im im- a- a for the national laws A great many undesirable competitive tive live Inequalities have been wiped out by this mutual evolutionary process and further progress alo along lg the line linG of uniformity so far as Is desirable is anticipated Two Systems Desirable However I do not believe that it is a disadvantage to have tw two banking codes that differ in some respects It Is quite probable that the state banking code codo In many Instances instances In in- stances represents a closer adjustment adjustment adjustment adjust adjust- ment 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 between between be be- tween the two banking codes Competition Competition Competition Com Com- petition should be between banks themselves and not between the laws under which they operate The effort to offer oller too great grent allurements allurements allurements allure allure- ments In ono one code as against the theother theother theother other could lead only to weak bankIng bankIng bank- bank Ing fug laws But I do think that there should be the time alternative opportunities opportune that that now exist which banking Institutions and local business Interests interests In in- may choose so that they can function or conduct their busi bus business business ness relationships under that bankIng banking bank bank- Ing code which best meets the conditions conditions con con- of the times and oj of the place as they see them This has tas been Illustrated In both directions In states stales where such unsound measures as the guarantee of deposits were operative state banks had the opportunity to escape escape es es- cape the baleful effect of or such laws Oil In n the time other hand baud when a court decision was handed banded down in Worcester Worcester Worcester Wor Wor- cester Massachusetts which rendered rendered ren ren- dered uncertain the time position of oC trust assets acquired by a national bank through a merger with a state bank balik 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 permanent perma perma- nent basis as circumstances make expedient In my opinion bankers national as well as state should combat th the thought that conceives of depriving ing lag us of time the vitalizing benefit d et dour our dual system fo A |