old and respected institutions of that city, consolidated with its affiliated institution, the Pacific Southwest Trust and Savings Bank, which operated a large number of branches. When the Pasadena branch of the Pacific Southwest Bank was about to have its name changed to "First National Bank in Los Angeles", the First National Bank of Pasadena disapproved. A compromise was reached on the name Los Angeles First National Trust and Savings Bank.

IV

The Bancitaly Corporation, organized by Mr. Giannini in 1918, is a New York corporation with its home office in New York City. One of the early investment trusts in the United States, it has no special business other than that of owning securities. Its own stock is offered to the general public, and is widely distributed. Especially is it held by those who hold stock in the Bank of Italy.

The first move of the Bancitaly Corporation was to take over the East River National Bank. From ownership in this single institution Bancitaly has grown until at the present time it owns stock in approximately one hundred different banks in the United States and foreign countries. In addition to bank stocks, it owns securities of all types, both domestic and foreign. About sixty securities are held in blocks of one million dollars or more. Furthermore, Bancitaly owns about twenty-five per cent of the stock of the Bank of Italy.

Bancitaly's most recent move to cause special comment was the purchase of 33,250 shares of the Bank of America, bought at $510 a share. The stock of the Bank of America thereupon rose rapidly in market price to between fourteen and fifteen hundred dollars a share, giving a paper profit to Bancitaly of over thirty million dollars. Similarly when 20,000 shares of the Bowery and East River National Bank were purchased at $250 a share, and rose to about $2,300 a share, Mr. Giannini saw a profit accumulate for Bancitaly to the extent of over forty million dollars. The value of these stocks has at present declined somewhat from the maximum.

The Bank of America, the Bowery and East River National

Bank, and the Commercial Exchange Bank have now been consolidated into one institution with a capital of over sixty million dollars. The new institution brings to the Giannini organization some of New York's outstanding bankers. The reorganized Bank of America has been brought into the National Banking System, the Bank of Italy having already come into it upon the passage of the McFadden Act which, among other things, liberalized the National banking law.

Mr. Giannini has at various times taken over other banks which bore the name Bank of America, and it is expected that eventually the whole Bank of Italy group will be merged into one bank under the name Bank of America.

The stock of Bancitaly has experienced a spectacular rise in price, especially during the Corporation's most recent activities. It is now quoted at a price well over $200 a share. The par value of the stock is $25 and the dividends are $2.25 a share.

Bancitaly has made large profits during the long continued rise in the stock market, and especially during recent months. While the earnings have been large they have come to a great extent from increases in the value of the securities held rather than from interest and dividends on these securities. Some feel that this type of profit is not of a substantial enough nature to warrant the present high selling price of the stock.

It is furthermore pointed out that the market value of the securities held by Bancitaly is only about one-fourth the selling price of the stock of Bancitaly itself. The stock thus seems high to many investors. Mr. Giannini himself has pointed out that the stock was selling at a price greatly in excess of its book value. Yet the stock goes higher. Some of his opponents say that he is deliberately pushing it up and capitalizing on the way it has caught the public imagination. Others say that it is out of his control and that the public continues to buy it unreasoningly, believing that it will move to still higher levels.

In addition to the Bank of Italy and to the Bancitaly Corporation there are several other associated institutions. The National Bankitaly Company, formerly the Stockholders Auxiliary Corporation, was organized in June, 1917. It was formed for the purpose of transacting certain types of business which

were prohibited to a bank. It deals in mortgages, insurance and other lines of business which tend to gravitate around a bank. The stock of the National Bankitaly Company is owned share for share by the stockholders of the Bank of Italy. As there are two million shares of Bank of Italy outstanding, so there are two million shares of the National Bankitaly Company outstanding. The shares of Bank of Italy have a par of $25 while those of the Bankitaly Company have a par of $10. The capital surplus and undivided profits of the Bankitaly Company amount to one hundred million dollars, which is one million less than that of the Bank of Italy.

Another Giannini organization is the California Joint Stock Land Bank, organized in 1919, which operates under the Federal Farm Loan Act. The particular business of this bank, which has a capital of about one million dollars, is the extension of long term agricultural credits, which are amortized gradually over a period of years.

Somewhat similar in purpose to the Joint Stock Land Bank is the Bankitaly Agricultural Credit Corporation, also with a capital of one million dollars. The purpose of this Corporation is to grant loans for a shorter period than those of the California Joint Stock Land Bank. Loans of the Agricultural Credit Corporation ordinarily do not exceed three years' duration, while loans of the Land Bank may run for thirty-three years.

Still another Giannini organization is the Bankitaly Mortgage Company. This Company which has been in operation only a few months, and which has a capital of $1,500,000, makes loans on improved real estate. It operates only in the larger towns.

V

The continued expansion of the Bank of Italy, as well as that of other banks in different parts of the country, makes it clear that the development of State-wide or nation-wide branch banking has not been stopped by the McFadden Act. In California there are at present eleven strong branch bank systems. The McFadden Act has, however, caused a shift from branch banking in its simplest form to what is sometimes called chain

own.

banking. In a chain system each bank has its separate capital, a separate board of directors and an organization distinctly its A branch bank, on the other hand, is an integral part of the parent bank, but conducting business under another roof. Chain banking operates through the holding company. Chain banking is not new, but already existed on an extensive scale prior to the McFadden Act. The declared policy of the Bank of Italy is not only State-wide but nation-wide branch banking. In fact, Mr. Giannini has gone still further and has opened offices in foreign countries. Through Bancitaly he has gone into the principal cities of Europe, especially in Italy, where over thirty banks are controlled. In this connection it is to be noted that the central bank of Italy, which also carries the name Banca d'Italia or Bank of Italy, has no connection with the Bank of Italy known in the United States.

Mr. Giannini's Italian institution, recently acquired, is known as Banca d'America e d'Italia. This bank was organized in 1912 under the name Banca dell'Italia Meridionale. The name was changed in 1918 to the present form. With its head office in Milan and with over thirty branches it is the third largest bank in Italy. In 1927 it had a capital of 200,000,000 lire (about $10,000,000). The Bancitaly Corporation owns, it is understood, about seventy-five per cent. of the stock of this bank.

Branch banking, while fairly new to the United States, has had a long and successful history in Great Britain, Canada and other parts of the world. It offers advantages over the unit system, which seem more than to offset the disadvantages. A bank which is a branch of a large system can withstand local distress which frequently would cause an independent bank to fail. The notoriously large number of bank failures each year in the United States and the subsequent loss to depositors has practically no equal anywhere else in the world. A branch bank is likely to have the benefit of expert banking knowledge to guide it, and the facilities of a strong and highly developed organization to call upon.

Banking in the United States is in a period of evolution, the results of which may eventually call for a substantial revision of the American banking system.

WHY SIR WILFRED GRENFELL?

BY THEODORE L. BADGER

SOME thirty-six years ago, St. Anthony, on the eastern tip of Newfoundland, was a tiny fishing village with a few squalid shacks along the shore of its spacious landlocked harbor. Low hills rose behind it, and a massive headland sheltered the seaward end of its harbor. Few strangers found their way in from the ocean through the narrow winding "tickle", but for the northern fishing fleet it offered a snug security from every storm. Into this Sir Wilfred Grenfell first sailed in the summer of 1892, aboard his small ketch, the Albert, in which he had crossed the Atlantic earlier that spring.

In the two succeeding years hospitals were built, at the request and with the aid of authorities in St. John's, Newfoundland, at Battle Harbor in Labrador at the eastern entrance of the Straits of Belle Isle, and at Indian Harbor, two hundred miles north of this. They were the beginnings of the work that has continued. Some years later, St. Anthony with its fine harbor and more convenient location was chosen as the headquarters of the medical mission which in so short a time had made an imposing place for itself. Here a small wooden hospital was built, and in later years, as time and money could be found, more structures roseworkships, warehouses, the undenominational school, an orphanage, industrial shop, coöperative store, and power plants. The Mission drew new families, offered a new security for the sick, and brought work for many.

Since then it has grown and expanded, to meet the needs of the extended work. Now, in addition to its old cluster of buildings, stand the new orphanage and new hospital, fireproof buildings built largely by St. Anthony men. The new hospital is a perfect unit, with large sunny wards, spacious operating rooms, dental room, etherizing room, plaster room, good laboratories and comfortable quarters for the staff. Its steam fitting, electrical