Bankers' Dilemma

Large banks like to be the largest in some category. Until last week the Union Trust Co. of Cleveland had prided itself on being the largest bank between New York and Chicago. Also until last week the Peoples Wayne County Bank had prided itself on being the largest in Detroit. Now the status of both has changed. The Union Trust Co. of Cleveland has become the second largest between New York and Chicago; the Peoples Wayne County Bank is now but a part of the largest bank in Detroit. Largest between New York and Chicago and largest in Detroit will be a new bank, announced last week with the merger of the Peoples Wayne County Bank, the First National Bank of Detroit, the Peninsular State Bank, the Detroit & Security Trust Co. and the Bank of Michigan. Combined resources of the institutions will exceed $725,000,000.

What happened last week in Detroit was, as all the world knows, just another vortex in the maelstrom that is gradually concentrating U. S. bank control. Whirling daily at a faster rate, there are two main currents in the maelstrom. One is the expansion of single units through mergers and new branches. Of this last week's Detroit merger was an example, as was the Corn Exchange Bank and Trust Co.-National City Bank consolidation (TIME, Sept. 30). The other current is the grouping of separate units through one controlling corporation. Greatest examples of this are the Transamerica Corp., the Northwest Bancorporation, the First Bank Stock Corp., the Guardian Detroit Union group, the New Midland Marine Corp. (TIME, Sept. 30), the Bancohio Corp., organized last week and the Banco Kentucky Corp. which will shortly purchase the Brighton Bank & Trust Co. and the Pearl-Market Bank & Trust Co. both of Cincinnati.

It was the problem of this maelstrom that was of chief concern to the members of the American Bankers' Association, meeting in San Francisco last week. Old, approved methods of banking have had to be revised under the new systems while equally important to bankers is the new personal element. Once a conservative banker could be expected to remain with his institution for years. Now bankers at the convention could scarcely remember whether friends were with the same bank, or whether that bank had been swept away into some merger or whether control of it had passed to some holding corporation and its staff reorganized.

Craig B. Hazelwood. One banker not perturbed by these changes was Craig B. Hazelwood of Chicago, retiring president of the A. B. A. Banker Hazelwood has many friends among bankers, is said to keep track of their careers as closely as changes in banking trends. Known as an orator and wise counselor, Mr. Hazelwood recently warned: "Let the banker who is afraid to face facts remember that his competitor is going to face them and that progress will go on, with him or over him. A mind that is not receptive to new viewpoints is apt to be closed to human phases of business."

Carefully Banker Hazelwood saw to it that the controversy over banking methods could not escape the convention, arranged speeches that represented all possible views from the old-fashioned single, branchless unit to national group banking. At the convention Mr. Hazelwood, although known to be an enthusiast for branch banking, declined to discuss its merits and demerits, spoke on his favorite topic of bank management.

John W. Pole. Of all speeches the one most anxiously awaited was that of John W. Pole, comptroller of the currency. From small-town banks in Oregon to great banks in Wall Street, financiers listened for what Comptroller Pole--and through him, long silent Andrew W. Mellon-- would say about the boiling question of BRANCH BANKING.

Comptroller Pole arose, declared "the financial situation of the country is unquestionably sound," spoke for 23 minutes. When he had finished, the issue of branch banking, so far as the Government's administrative branch is concerned, was settled forever. Rarely has a public officer spoken on a controversial issue so unequivocally, scorning the fine distinction between "group" banking and "branch" banking, declaring that 20% of all U. S. banking offices already are branch banks, calling upon Congress this winter to name a committee to settle, not whether banks may operate outside their present limits, but how far those limits should be extended. He reassured timid one-man banks:

"It is inconceivable that any Comptroller would . . . aid a branch bank unfairly to drive a local bank out of business. . . . The successful country bank has nothing to fear. . . ."

He flayed the "group" bank as a "cumbersome," "expensive"' branch-form, pleaded for a uniform nation-wide system which, with broader powers, would lead State banks to national charters.

George W. Davison, President of Manhattan's central Hanover Bank & Trust Co., took sharp issue, upheld "correspondent" banking, now used by many a great bank.