Bunch & Branch

Thomas William Lament, No. 2 Morgan partner, speaking before the Academy of Political Science in Manhattan last week, caused bankers throughout the land to prick up their ears when he recommended Federal Reserve membership for every last commercial bank in the country. Declared Banker Lament:

"Today 60% of the country's banks, with resources of over $12,000,000,000, are outside the strong Federal Reserve System. The fact is that, despite the melancholy number of eliminations, the country today has far too many banks. Our banking units should be far larger than they are. ... In eleven years (1921-31) there have been bank failures aggregating 9,285, with deposits of $4,278,000.000. Of this total only 1.698 banks were members of the Federal Reserve. . . .

"No thoroughgoing banking reforms can be brought about until two vital changes have been accomplished. The first is to bring all the commercial banks of the country, small as well as large, under the single aegis of the Federal Reserve System. The second is to establish sensible provisions for regional branch-banking. . . . Then we should have something worth talking about. . . .

"Almost all the failures early this year of small suburban banks around Chicago could have been avoided if it had not been for the fact that the Illinois statutes permit no branch banking. It was quite impossible under the law for the large Chicago banks to attempt to serve the important suburbs. The lesson must be glaringly obvious to the whole country."

Mr. Lament is a good Republican but that did not deter him from flatly contradicting President Hoover's panicky campaign utterance that the U. S. had been "within two weeks of going off the gold standard." Said he: "Among all the alarums and excursions of the last twelve months we have never been near the point of abandoning the gold standard. Nothing can or will drive us from that standard. . . . American dollars are the safest things in all the world to tie to."

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