7 THE CHICAGO BANKER July 25, 1008] bank deposits of the country out of the communities which own these deposits and give it to communities owning less than one-third. Who is going to guarantee that the control of such central banks would never get into the hands of unsafe and selfish men? There are many people in Canada who are not so enthusiastic about their banking system as its admirers in this country are. Before the trouble began here last fall there was serious stringency in Western Canada. The leading newspapers attacked the banks editorially. Many large borrowers found their lines withdrawn and sought help in this country. During the winter two important Canadian banks failed—about 5 per cent of the total number. Previous to that an important Canadian newspaper made the assertion that 25 per cent of all banks chartered in Canada had failed. At the last session of the Canadian parliament one of the members in a speech said: “It was due to the small banks of the United States that the Western states grew and prospered. What do we find in Western Canada to-day? These provinces have been taken by the throat by the large banks, which have got their capital from Eastern Canada. This could not have happened under the United States system.” And yet we are told that “We have heard no word of difficulty from across the national border.” Our banking system is hitched up to a government currency scheme which has few defenders, and probably deserves none. This currency scheme is responsible for most of the criticism of our banking system. Bad as it is, tion to demand anything for the small town.׳ The nature of the branch system is to draw funds away from the small place for the benefit of the large—to draw from the weak for the benefit of the strong. Not, as some would have you believe, to place the resources and the strength of the great and strong at the disposal of the small and the weak. I dislike to use the octopus as an illustration. He has been overworked in that line, but I don’t see how I can help it. The octopus is nature’s experiment in the branch system. Now, when an octopus gets his eye on an adjacent oyster bed, and feels like establishing a branch in that locality, we might imagine him saying to the oysters, “You fellows over there are pretty weak. You haven’t much strength or many brains. Now, I have a surplus of both. It’ll be a great thing for you to have me establish a branch in your community. I have branches all around, and when I get more than I want to eat, I can pass it along to you. Besides, when the storm comes you will have me to take care of you.” That sounds all right, but when the connection is made it is made for the benefit of the octopus and not for the oyster. You have probably noticed that bankers who advocate branch banking are as a rule men who expect to be at the head if the system is adopted. There is very little call for it from the smaller towns. A change to the branch system would not only eliminate eventually some eighty thousand bank directors from the business, but it would take the control of two-thirds of the Capital paid in $200,000 Surplus Fund $1 25.000 Deposits over $2 G00,000 Rusinc.ss Established in 1879 Depositary of the The Central National Bank United States Govern- of Peoria Under distinctively sound and conserva- tive management Especial attention given to accounts of banks and bankers "HAHLESj ^AYMAWAY & €©. Commercial Paper Ü)B ÏLsi Safe Sforasi CMea|© Correspondence Invited AT THE THE NATIONAL STOCK YARDS NATIONAL BANK AT THE ST. LOUIS Our especial equipment and close touch with every interest represented at the St. ST. LOUIS STOCK Louis National Stock Yards enables usto eliminate expense and to assure the maximum of security and profit on all live stock business at this market entrusted to us. STOCK YARDS NATIONAL STOCK YARDS - - ILLINOIS YARDS Peoples Savings Bank & Trust Co. Capital and Surplus, $200,000 Deposits, $1,854,831.59 Solicits Accounts and Collections from Banks, Firms and Individuals on Favorable Terms. WM. BUTTERWORTH, PRES. NELSON H. GREENE, VICE PRES. C. W. LUNDAHL,*CASH. AND SEC. First National Bank of Joliet Capital and Surplus, $250,000 Solicits Collections from Banks GEORGE WOODRUFF, President ANDREW H. WAGNER, Cashier the same area in the United States there are over twenty thousand incorporated banks, if these banks have on an average four directors, exclusive of officers, we have in the United States, over eighty thousand business men giving their counsel and advice to local bank officials, while in Canada there are probably less than five hundred, and they are bunched together in the business centers. There is a sort of parallel between banking and farming. There are two kinds of farming; intensive and extensive. The intensive farmer confines his operations to comparatively small areas and endeavors to make every foot of his land produce all it is capable of producing. He is the man who makes two blades of grass grow where only one grew before. The extensive farmer, on the other hand, tries to see how much territory he can cover. His farm runs into the thousands of acres. He sows and reaps on a vast scale, and sells his crops in foreign markets. He is a nabob in his way, but he is not improving his land; he is not getting out of it anything like what it is capable of producing, and he is of no great benefit to his own locality. Intensive farming tends to build up its own territory and increase both wealth and population. The difference between our system of banking and the branch system is much the same as the difference between intensive farming and extensive farming. Under our system the tendency is for each community to be brought up to its highest possibilities of development and not only to use its own funds for its own financial fertilization but to attract, when necessary, outside funds as well. All through ' the troubles of last fall the banks of New York and Chicago loaned money to their country correspondents at rates much lower than these banks could get from the great interests in the centers. The reason was obvious. They wanted to hold the business of the country bank. They are keenly alive to the fact that the country banker controls two-thirds of the deposits of the country, and his good will is a most important consideration. In many cases loans were called in New York drawing 30 or 40 per cent to loan the money to country banks at 6 per cent. The president of one big national bank said it made his stomach ache every time he saw a country banker coming into his office last fall. There are never any stomach aches of that kind under the branch system. There is no fear at the head office that, if they do not supply a local manager with what funds he thinks his community needs, he will transfer the deposits of that branch to some other bank. Suppose that, instead of our present system, the branch system had been in operation, and these interior banks, instead of being independent institutions, who could take their business where they pleased, had been branches of banks in the centers. How much money do you think they would have got to loan in the interior? It is more than probable that the reverse would have happened, and that funds would have been drawn from the interior to relieve the centers, where the pressure was greatest. No one would be in a posi- Joyce Si Company (Incorporated) General Agents The Rookery Bid¿. Chicago, Illinois ILLINOIS ADVISORY BOARD Charles G. Dawes, Resident Vice-President A. J. Earling David R. Forman John A. Spoor Walter H. Wilson M. J. Kirkman COUNSEL Calhoun, Lyford & Sheean Winston, Payne, Strawn & Shaw National Surety Co. Of New York Fidelity and Surety Bonds Burglary Insurance