CONCENTRATION OF BANKING INTERESTS 417 



of the latter. Apparently we are now witnessing a movement 

 which resembles, at least superficially, that which has proceed- 

 ed so rapidly in the field of transportation and manufactures. 



But actual consolidation is not the only method by which 

 our banking capital is being aggregated in larger masses; for 

 in many cases a common ownership has been established in in- 

 stitutions which retain a formal independence. The national 

 banking laws prohibit one association from holding stock in 

 another, but there is nothing to prevent a group of men from 

 buying a controlling interest in an}^ number of banks. This 

 method is exemplified by the groups of institutions which 

 Mr. Charles W. Morse has brought together in several cities. 

 It has been followed also, by the capitalists who control the 

 great National City bank, and by others. Sometimes a great 

 deal of diplomacy is required to effect such an arrangement, 

 since prosperous banks of long standing are jealous of their 

 independence and their stock is held at very high prices. An 

 illustration of this is seen in the relations of the First National 

 bank of New York with the Chase National. In this case 

 some degree of union was secured through an exchange of 

 holdings and directors, so that the resources of the two banks 

 are now under a joint control. In many cases it is supposed 

 that the stockholders of one bank have purchased an interest 

 in other institutions with money that has been borrowed by 

 pledging as collateral security the shares thus acquired. Such 

 a practice makes it possible to secure an extensive control with 

 a small amount of capital, and may yet prove to be a source 

 of danger. Obviously, if a number of banks that are involved 

 in the same set of enterprises make numerous loans upon each 

 other's shares, an impairment of capital might result from 

 the failure of the undertakings in which such loans were used. 



Finally, in addition to all the centralizing tendencies which 

 have been described, every effort has been made to secure co- 

 operation on the widest possible scale, through arrangements 

 designed to unify the world of finance. The larger life insur- 

 ance companies have become interested in various banks or 

 trust companies ; and their officers in a purely private capaci- 

 ty, are influential in many other institutions. Private bank- 

 ing houses are represented among the owners and managers 



Vol. 3-27 



