Small Banks' Victory

The small town banker won a complete victory in the recent fight against branch banking, and evidently he intends to press his success to the limit.

The first step in the effort to prohibit banks from establishing branches was taken in connection with only national banks; by a ruling of the Attorney General new branches were forbidden, although most existing branches, especially in New York City, were left undisturbed. The national banks, however, protested that competing banks organized under the state laws could maintain branches, and that the national banks were thereby put at a disadvantage.

The anti-branch banking group, despairing of attempting to change the state banking regulations of each of the 48 states, have endeavored to get at the problem by one blow through the Federal Reserve System. Owing to their insistence, the Federal Reserve Board adopted resolutions sharply restricting branch banking activities of state banks now in the Reserve System, or those which may apply for membership in it. In general, branches are forbidden outside the cities or towns in which the main banking offices are established.

A single member of the Reserve Board, Mr. Edmund Platt, dissented from the resolution on the ground that it amounted to forcing state banks to conform to national banking laws.