In certain states, state banks and trust companies are empowered to establish branches in their home cities, elsewhere in the state or abroad, but even in those states the system has not spread as far as might be expected, because of the dogged hold and possession of the field by independent banks. The idea of branch establishment is, however, not strange to our banking thought as shown by the number of branches of state banks in the following representative states in 1920.

This argument against concentration is not altogether conclusive. In Canada, where conditions are similar to those in the United States, an efficient system of branch banking has arisen, and centralized ownership and direction do not seem to promote loose extensions of credit. The managements of local interior banks rely increasingly for credit data and advice upon the large metropolitan banks, and it is probable that a parent bank could function in this capacity even more effectually than a metropolitan correspondent. Besides, any locality large enough to support two banks might find the competition of two branches of different parent banks quite as beneficent as the competition of two independent banks.

Branches Of State Banks In Representative States, 1920

Alabama.................. 21

Arizona................... 21

California................. 118

Delaware................. 10

Georgia................... 32

Indiana................... 4

Louisiana................. 50

Maine.................... 25

Maryland................. 36

Massachusetts............. 22

Michigan.................. 72

Mississippi................ 23

New Jersey................ 19

New York................. 148

North Carolina............ 23

Ohio...................... 61

Pennsylvania.............. 12

Rhode Island.............. 13

South Carolina............ 14

Tennessee................. 16

Virginia................... 20

Washington............... 11

Wisconsin................. 9

Although a national bank may not directly establish a string of branches, this may be accomplished indirectly. A state bank having branches may become a national bank and retain its branches; the branches are then treated as if they had no separate corporate existence. A national bank, by purchasing a bank with branches and then liquidating the purchased bank, does not acquire the right to establish branches. A state bank joining the federal reserve system may retain its branches. National banks having branches within their domiciling states are (1921):

Location

Name of Bank

Numrber of Branches

New York, N. Y.

National City

3

New York, N. Y.

Chatham and Phoenix National

12

New York, N. Y.

Public National

5

San Francisco, Cal.

Bank of California

3 (diff. states)

Milton, Ore.

First National

1

Moss Point, Miss.

Pascagoula National

1

Greensboro, N. C.

American Exchange National

1

Lake Charles, La.

Calscieu National Bank of Southwest Louisiana

8

Seattle, Wash.

Union National

2

Congress has recently considered the advisability of permitting national banks to establish branches in their home cities. Such legislation would put those national banks having no branches at present on a competitive equality with national and state banks that have branches. One state bank in New York City has forty branches in the city, and one national bank has twelve branches in New York City. The Federal Reserve Board favors permitting national banks of capital and surplus of $1,000,000 or more, located in cities of 100,000 population or more, to establish not more than ten branches, each within their home cities.