branch of commercial enterprise.

The system of branch banking, almost universally employed elsewhere,
is strong where our system is weak, but it has weaknesses of its own.
It promotes distribution of capital according to relative needs, and
consequently efficiency in the application of a nation's capital as a
whole, and it offers a wide field of training for the people engaged
in the business, and draws its recruits from every quarter. It can
readily supply banking facilities to communities too small or too poor
to provide for an independent bank, and more readily than our system
can adjust itself to rapidly growing communities.

Its chief weakness consists in the lack of independence of the
managers of the branches and the consequent danger that local needs
may not be fully satisfied. The manager of a branch is usually granted
freedom of action only in routine matters. Any business out of the
usual order must be referred to higher authorities connected or
associated with the main office; and, even with the advice of the
manager, who alone is familiar with local conditions, the decision
cannot be made with that intimacy of knowledge of and sympathy with
the business and aspirations of the individual or firm under
consideration that full justice to him and his town may require. In
the matter of adequacy and character of service, therefore, the city
in which the main office is located has an advantage over those in
which the branches are located.

In this connection it should also be noted that, while the branch
banking system is able to adjust itself to the capital requirements of
towns of all sizes more readily than the independent banking system,
and thus to secure a better distribution of the banking capital of the
community, it does not follow that it will do so. On account of
ignorance of conditions, insufficiency of capital or inability readily
to increase it, or inertia on the part of the head office, a town may
have to wait for the establishment of a branch longer than it would
for the establishment of an independent bank.

Whether or not this will be the case, however, depends to a
considerable extent upon the keenness of the competition between the
big banks with branches. The big central banks of Europe, which have
no competition within their field, have been slow to establish
branches. The coercive force of the government has been necessary in
many cases to secure their proper expansion. In the case of