Bank Convention

The American Bankers Association last week withdrew its old, vociferous objection to branchbanking and thereby partially relieved itself of a false front.

During the past decade there has been one trend in U. S. banking more pronounced than all others combined: the trend to merge, to branch, to group, all of which is essentially one trend, and all of which is exactly and naturally parallel to the developments in U. S. industry, commerce, society (FORTUNE, February). But Federal laws have opposed this trend and so, verbally, has the A. B. A.

Actually, nearly all the most potent members of the A. B. A. have been merging, branching, grouping as fast as they could. Actually the "small" bankers have been selling out to big-bank groups about as soon as they could get good offers. Then why the verbal opposition?

There is plenty of theoretical argument against branchbanking. There is also much sentiment against it, for oldtime U. S. banking tradition is one of local "unit" independence (the local small-town banker a fatherly financial shepherd to his local flock). Also, for practical purposes, potent bankers have found it prudent to disclaim any intention of becoming more potent lest such designs should offend small bankers who, meanwhile, must be their principal customers. Therefore, the merging-grouping trend had to move until it had half-swept the nation before the A. B. A. dared approve it. And even last week the trend was only partially approved. Branchbanking was endorsed for extremely limited areas only ("metropolitan" and "county"). Nothing was said about state-wide much less nation-spanning chains of banks.

The Convention--A. B. A.'s 56th--met in Cleveland for the first time since 1899. And for the first time in history it was addressed by a President of the U. S. (see p. 14).

First indication that the Convention was sure to take a favorable stand on branchbanking came with the report of Rudolf S. Hecht, a first citizen of New Orleans, famed as President of HiberniaBank & Trust Co. and nationally famed as chair-man of A. B. A.'s economic policy committee. In Banker Hecht's stand there was an element of irony. Long has he been a stout defender of unit banking. In making his report he said: "I want to make it clear that at heart I still hold the same views concerning our unit banking system. . . . I am as much as ever opposed to the creation of a banking monopoly in the hands of a limited few. ... I still also hold that public welfare demands the maintenance and strengthening of our independent unit banking system wherever its services are economically justifiable. However, the march of events in the last few years seems to draw us irresistibly toward some modification of our banking structure. . . . We cannot stem the tide of economic events by passing hostile resolutions or by mere appeals for still more legislation. . . ." And there was irony too in the fact that head of the resolutions committee was Max B. Nahm of Bowling Green, Ky., who last year was an eloquent orator against branchbanking.

Convention points were:

Savings Banks. "Commercial banks are creeping into the field formerly occupied by savings banks"--Howard Whipple, vice-president, Bank of America of California.

"Likely changes will come into the Federal Reserve System from time to time. . . . I refer to a possible amendment under which mutual savings banks could become members"--Rome Charles Stephenson, new A. B. A. president.

"If the word 'savings' is used in describing the type of deposit solicited, the responsibility of trusteeship cannot be escaped"--Austin McLanahan, president, Savings Bank of Baltimore.

"Economic history is relentless in teaching that the popular vice which needs correction is excessive spending, not excessive savings"--Alexander Dana Noyes, financial editor, New York Times.

Personal Loans. "Character--the best collateral on earth"--Robert B. Umberger, vice-president, Personal Loan & Savings Bank, Chicago.

Trusts. "It has been said that about $30,000,000,000 of estates are now being administered by banks and trust companies, and that 1,086 estates of over $1,000,000 were trusteed in 1929, nearly twice the number trusteed the year before. . . . The growth of group and branch-banking will inevitably bring to the smaller communities the benefits of corporate fiduciary services"--Robert Foster Maddox, chairman of executive committee, First National Bank of Atlanta.

Taxation. "This discussion [trend of taxation] is all in point here because long ago most of us learned that the question of bank taxation could not be settled for itself. It is bound up with the whole tax problem"--Thornton Cooke, president, Columbia National Bank, Kansas City.

Service Charges. Every progressive banker must give serious thought to the use of a measured charge on checking accounts, said W. D. Schultz, vice-president of Commercial Bank & Trust Co., Wenatchee, Wash., adding that commercial depositors use the bank as a clearing house, not a repository.

Business Conditions. "The depression in this country is merely part of a world-wide situation due largely to the sharp decline in the price level of raw commodities. . . . There are evidences that the present depression has just about run its course"--A. B. A. resolution (echoing President Hoover). By the end of 1931 business will have reached the statistician's norm, halfway between the nadir of depression and the zenith of prosperity, predicted Col. Leonard Porter Ayres, vice-president, Cleveland Trust Co.

Election. Rome C. Stephenson, A. B. A. vice-president last year, was automatically elected president to succeed John G. Lonsdale. New vice-president, to be president in 1932, is Francis Hinckley Sisson, vice-president of Guaranty Trust Co. Mr. Sisson has done much newspaper work and was a pioneer in bank advertising. He was also (1916-18) assistant chairman of the Association of Railroad Executives. He was born in Galesburg, Ill., graduated from Knox College in 1892, became a banker in 1917.

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