Franklin National Bank of Franklin Square v. New York/Dissent Reed

Mr. Justice REED, dissenting.

I dissent. It should be noted that the New York statute, note 1 of the Court's opinion, limits the use of the words 'saving' or 'savings' in relation to their banking business to certain types of New York financial institutions. These are those that are mutual in character as distinguished from stockholder-owned. Such mutual institutions can and do pay larger returns on deposits in New York than the commercial stock-type banks, state or national, both of which are barred by the New York statute from using the word 'savings' 'in relation to banking or financial business.' The mutual banks have been successful in attracting a large proportion of savings deposits for over a century. They have a remarkable record for soundness in finance and profitable operation for the benefit of the depositors. The purpose of the New York law is to reserve the use of the word 'savings' to identify the mutual type of bank operation for the public, just as the federal banking laws reserve the name 'national' for a certain type of bank organized under federal law.

The Court's opinion permits the national banks to trade upon the good name of the savings banks to secure deposits of that type. Now they may advertise 'A Savings Bank' under their corporate name; their deposit slips may say 'Savings Account.' As no federal statute expressly authorizes the national banks to use the words 'saving' or 'savings' in their advertisements, I think they must conform to the New York law for the protection of the public from misunderstanding. I would not imply a federal privilege to use 'savings' in advertising from the fact that national banks may accept savings deposits. The cases cited by the Court in note 7 sustain that view. I know of no precedents that approve such a limitation on state power as the Court now announces.