After ten weeks of stormy trial, Chicago's John Bain, 64-year-old founder of a chain of twelve small banks that failed at one crack last year (TIME, June 22, 1931), was last week convicted of conspiracy to defraud depositors. Scottish immigrant, onetime plumber, Bankster Bain had prospered in real estate, then branched into banking. Before the Depression, his Midas reputation spread widely among the clerks and laborers of Chicago's Southside districts. Unsound real estate promotions, wholesale juggling of assets among his various banks, whisked over his house of cards. When the banks crashed with deposits of $13,000,000 owed to 150,000 depositors, only $390,000 was found in cash. The episode gave a black eye to chain banking and, through popular confusion of terms, even to branch and group banking.* In one of the Bain institutions directors had loaned themselves $1 out of every $2 deposited. Chief associates in the mismanagement were Banker Bain's two sons and his son-in-law. Bankster Bain was sentenced to the penitentiary for one to five years. Fining the sons and son-in-law $1,000 each, Judge O'Connor added: "These young men did just what I should expect. . . . They did just what their father and father-in-law told them to do." A swarm of gulled depositors and investors, expecting a stiffer sentence, muttered sullenly: "It's a shame, it's a shame.'' They had often booed and heckled Banker Bain while he was giving testimony. Once he burst into tears.
Not to be confused are: 1) Branch banking, in which a central institution maintains offices apart from its head office. Example: Bank of America N. T. & S. A., with 410 offices up & down California. 2) Group banking, in which a holding company controls one big bank and a group of smaller banks which draw upon the experience and facilities of the central institution. Example: Marine Midland Corp. with 22 banks built around Buffalo's Marine Trust Co. 3) Chain banking, in which a string of small banks are controlled by a holding company or individual but having no kingpin institution.