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Group Banking. Anxiously scanning the casualty list were all U. S. bankers. One reason for their interest was that the question of group banking still looms for dispute, that the troubles of last week furnished two cases which will figure importantly in future arguments on the subject:
BancoKentucky. Organized last year to control banks in Kentucky, Indiana and Ohio was BancoKentucky. Two of its biggest units, practically 100%-owned, were National Bank of Kentucky and Louisville Trust Co., both of which went down early in the storm, did much to spread it.
Owners of bank stocks are liable for a 100% assessment on the par value of their shares. It has never been decided whether a holding company's shareholders are also liable, although the consensus is that they are not. Last week BancoKentucky Co. was faced with being held for double the par value of its holdings in its two biggest banks. Probably to obtain cash for this contingency it sold its stock in two Cincinnati banks. An indictment of this situation is found on the Chicago Stock Exchange where BancoKentucky which sold at $34¼ last year has dropped from above $16 on Sept. 1 to 13¢ last week.
President of BancoKentucky was James B. Brown, publisher of the Louisville Herald-Post. Last June he announced that BancoKentucky had bought a half interest in Caldwell & Co. and Rogers Caldwell had bought a big interest in BancoKentucky. No indication that this deal had failed to go through was made until last week, when Colonel Brown resigned from BancoKentucky.
A. B. Banks Banks. Another case of a chain breaking was in Arkansas. In that state a potent banking group is A. B. Banks & Co., which controls American Exchange Trust, biggest in the state, and some 50 other banks. Last week virtually all of these had closed.
The strength of the chain had been the strength of its strongest link, American Exchange, which had held deposits from all the other banks, swept them down when it fell.
A. B. Banks & Co., important Southern banking group, is headed by Aloysius Burton Banks, 62, Arkansas booster reputed to be worth $5,000,000. He is also a big factor in the insurance field. He lives in Little Rock in modest luxury, takes long walks at dusk, alone. Last week genial Mr. Banks took few walks, showed the strain of long conferences. He hoped that eventually his chain could be rewelded.
Farmer Caldwell. Last week Rogers Clark Caldwell commented on the situation his difficulty had started. Undismayed, he said to the St. Louis Star: "Everything happens for the best." He said he plans to auction his famed stables, retire. He explained, "The trouble is that modern business has been bottomed on paper values and they are being swept away." His remedy: "We must get back to fundamentals." He plans to become a farmer.
Negroes. In Louisville, two Negro banks were drawn into the maelstrom. The National Negro Bankers Association adopted a slogan: NO BANK SHALL FAIL.