Bank Chains

The steady spread of Group Banking systems has given local-minded politicians a new and well-sharpened issue with which to prod their constituencies.

Wisconsin. Last week, preparatory to the 1930 campaign, the prodding process began in Wisconsin when Progressive (La Follette) Republican leaders, meeting at Marshfield, consolidated their political op- position against consolidation of banking.

In the State had lately been organized Wisconsin Bankshares Corp. to acquire local banks to "protect" them from "foreign control." Locally patriotic as the purpose of Wisconsin Bankshares might be. it was not sufficiently so to prevent the Progressive politicians from adopting this resolution:

"That this conference vigorously condemns and resents the insidious inroads of chain banking and urges the people of this State to go back to Wisconsin's time-honored system of independent and self contained banking, fostered for the protection of its own depositors and customers and not the tools of alien and absentee interests."

Kentucky. What the Wisconsin resolution seemed to call for was a state of banking affairs like that described by Max Brunswick Nahm of the Citizens National Bank of Bowling Green, Ky., at the American Bankers Association October convention. Said Mr. Nahm:

"In the smaller towns the scheme of life is not complete without the local unit banker--men like Gallic Harris of Franklin, Ky. Benign-faced, with a smile for everyone, an optimist in all emergencies, family and business, adviser to every patron and friend, trustee of every church or hospital loan, executor when men died --dedicating their souls to God and their estates to the banker! He befriended a poor foreign peddler with a pack on his back. . . . This peddler became a great and successful merchant and when he died, his will gratefully gave his large estate to this banker. When Mr. Harris was buried, nearly every man, woman and child in his county came to drop a flower on his red clay grave. Replace such a man by a city clerk awaiting every morning a circular letter or his master's voice out of a loud speaker's horn? God forbid!"

Nebraska. In Nebraska last month was born a proposal which, had it occurred in their State, would have set the Wisconsin politicians baying with wildest apprehension. The proposal was to form one gigantic State bank for Nebraska, of which every state bank, now independent, would become a branch linking up the chain. Attorney Thomas Stinson Allen, brother-in-law of the late William Jennings Bryan, representing unidentified Manhattan banking interests, advanced the proposal to the State Government to lift it out of its troubles over the State's Bank Guaranty Fund. To this fund State banks in Nebraska must contribute one tenth of one per cent of their average deposits per year, to be used to pay depositors a share of their losses in State banks that fail. So many Nebraska banks have failed that the fund is now $20,000,000 in the red. A special assessment against State banks to replenish the Guaranty Fund has been declared confiscatory by lower courts, is now on appeal to the Supreme Court.

Mr. Allen proposed that the legislature grant a charter to the Central Bank of Nebraska, compel all other State banks to surrender their charters and become Central Bank branches. The Central Bank would pay off the Guaranty Fund's deficit, capitalize at $20,000,000, become the sole depository for State funds.

Nebraska politicians cocked their ears to catch the popular response to this startling plan.

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