State law permits a State bank to do so. Moreover, there is also a Federal requirement that in order to establish even one branch outside the city of the head office, a National or State member bank must have capital stock of at least $500,000 (except in States that have a population below one million). There has been an almost continuous increase since 1900 in the number of branches of commercial banks, and their relative importance in the banking structure has grown very substantially. From 119 branches, about 1 percent of all banking offices, in 1900, the number increased to 4,721 at the end of 1950, representing 25 percent of all banking offices. Since the end of World War II the rate of growth in the number of branches of commercial banks has been more rapid, with the result that the total number of branches has increased about 30 percent in the past 10 years. Despite this growth in number of branches, relatively few of the country's 14,121 commercial banks operate branches. This is shown. by the following figures of number of commercial banks operating branches and number of branches operated at the end of selected years: Provisions of law, which in most cases specify the confines within which branch banking may be conducted, have resulted in a commonly accepted measurement of branch banking in terms of geographic relationship of branches to the location of the head office. Following some liberalization around 1933 of Federal and State laws with respect to the locations in which banks could establish branches (from 1927 member banks had been specifically limited to the establishment of head-office city branches), both the number and propor-tion of branches outside the head office city have increased from 1,508 or 48 percent of all branches in 1935, to 2,686 or 57 percent in 1950. Although the proportion of branches located in head-office city has declined since 1935, the number increased from 1,648 in that year to 2,035 in 1950. The following figures show, as of the end of selected years, the number of branch offices by location with respect to head office: Most of the banks which operate branch offices confine their activities to a relatively small number of offices. As is shown in the tabu 1 lation below, 955 of the 1,162 banks which operated branches in 1949 operated 3 or less branches; at the other end of the scale, only 8 banks operated more than 50 branches. Of the 2 banks operating more than 100 branches in 1949, 1 had 127 and the other 519 branches. 2. 3. 4. 5. 6-10. 1 This distribution is not available for a later date. The dominant factor in the widely different geographic development of branch banking has been the laws of the various States. These laws vary from the extreme of prohibition of branch banking to permitting branches on a State-wide basis. Between these extremes some States permit establishment of branches only in the city of the head office, some only in the county of the head office, and others only in counties contiguous to that of the head office or other limited areas. A few States make a distinction between full-power branches (empowered to perform all banking services including making of loans) and limited-power offices (limited generally to the receipt of deposits and cashing of checks). Only this type of limitedpower office exists in Arkansas, Iowa, North Dakota, and Wisconsin; 93 these offices or agencies are included in branch statistics since they are comprehended under the definition of "branch" contained in Section 5155, U. S. R. S. The effect of State laws with respect to requirements for the establishment of branches is illustrated in Table XXIII, which shows, by States, the number of branches in selected years and the status of State laws with respect to the establishment of branches. Group banking.—Besides branch banking, there are two other types of multiple office banking, commonly known as group banking and chain banking. In group banking three or more independently incorporated banks (and, of course, their branches) are controlled directly or indirectly by a corporation, business trust, association, or similar organization. Group banking is not so widespread as branch banking, and its relative importance has decreased over the years, due in part to the conversion of group banks into branches. The following summarizes available information on changes in the status of group banking between the end of 1931 and 1945: 93 In 1947, Wisconsin law was amended to prohibit the future establishment of even this type of limited office. In New Mexico also, only this type of limited-power office was permitted until 1951 when the State law was changed to permit full-power branches. As the table shows, all classes of commercial banks are found in group systems, as is the case in branch banking, although the majority are national banks. A complete survey of group banking has not been made since 1945, but reports are collected regularly covering so-called holding company affiliate groups. These are the groups that are under regulation of the Board of Governors of the Federal Reserve System pursuant to the Banking Act of 1933.94 They include all of the leading bank groups. There are, however, other groups not subject to such regulation that include member banks and some that embrace only nonmember banks; on December 31, 1948, the largest group comprising nonmember banks had 21 banks and 32 branches. As shown in the following table, the 20 holding company affiliate groups at the end of 1950 comprised 312 banks and 967 branches. These groups varied widely in size and geographic distribution of their banking offices. Nine of them comprised five banks or less; at the other extreme one group comprehended 75 banks in four States, and another 70 banks in seven States. Measured by number of banking offices, i. e., banks plus branches, one group operating in a single State had 102 offices (19 banks and 83 branches), while another had 671 banking offices in five States (48 banks and 623 branches). The existence of group banking in several States where branch banking is prohibited or severely restricted indicates that it is in some degree a substitute for branch banking; in fact, upon the enactment of enabling State legislation in the early thirties, a number of group systems converted into branch systems. However, group banking coexists with branch banking in some States, due in general to the fact that the groups operate in two or more States or because there are statutory restrictions on the areas in which branches may be established. For a brief history of the background and development of holding company legislation, see Banking Studies, Board of Governors of the Federal Reserve System, 1941, pp. 131-133. Chain banking.-Chain banking, the third type of multiple-office banking, is similar to group banking except that chain banks are controlled in one manner or another by one or more individuals, rather than by a corporation or similar organization. It is in some cases very difficult to determine whether or not a given bank is part of a chain system, and the following are the best available data on changes in this type of multiple office between the end of 1931 and 1945.95 The great majority of the chains comprised five or less banks. At the end of 1945, however, there was 1 chain with 40 banks and 6 branches, operating in 5 States; another with 19 banks and 8 branches, all in 1 State (most of the banks in this chain have since been converted into branches of the "key" bank); and a third with 17 banks, all in 1 State. As noted in the cases of branch and group banking, all classes of banks are found in chain systems. Chain banking is concentrated to a large extent in a few States in which branch banking is prohibited. Over one-half of the chain banks in 1945 were in seven States—Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, and Texas; six of these States prohibit branch banking and the other strictly limits its growth. Mutual savings banks The foregoing analysis has been confined to so-called commercial banks, a category which by common usage comprehends all banks other than mutual savings banks. Mutual savings banks for all practical purposes carry only savings and other time deposits, whereas commercial banks as a group carry primarily checking accounts and other deposits subject to withdrawal on demand and secondarily some savings and time deposits. Because of this broad functional distinction, and their concentration in a few States, mutual savings banks are usually treated separately in analyses of changes in the banking structure. At the end of 1950 there were 529 mutual savings banks with total deposits of 20.0 billion dollars, as compared with 14,121 commercial banks with total deposits of 155.3 billion dollars, of which 37.0 billion was saving and other time deposits. The number of mutual savings banks, located for the most part in the Northeastern States, has shown no wide variation since 1915; a long-term downward trend of modest proportions, reflecting mergers and liquidations, is discernible. In 1915, there were 636 mutual savings banks, in 1933 the number was 579, and by 1950 the number had 95 No survey has been made since 1945. declined to 529. The number of branches of mutual savings banks, however, increased from about 125 in 1933 to 213 in 1950, more than offsetting the decrease in the number of banks. Of the 529 mutual savings banks in existence at the end of 1950, 3 were members of the Federal Reserve System and 191 others were insured by the Federal Deposit Insurance Corporation. The 194 insured mutual savings banks had deposits of $14 billion and operated 152 branches, and the 335 noninsured mutual savings banks had deposits of $6 billion and operated 61 branches. Additional statistics for mutual savings banks are included in Tables XVI-XVIII. TABLE XVI. Total number of banking offices (banks and branches) in the United States, by class of bank, 1900-511 » Preliminary. 1 This table is a combination of Tables XVII (banks) and XVIII (branches). See footnote 1 to those tables. 2 See footnote 2 to Tables XVII and XVIII. 3 See footnote 3 to Tables XVII and XVIII. See footnote 4 to Tables XVII and XVIII. 5 See footnote 5 to Tables XVII and XVIII. 6 Not available. 7 See footnote 7 to Table XVII. 8 See footnote 8 to Table XVII. See footnote 9 to Table XVII and footnote 7 to Table XVIII. |