MIDCONTINENT PERSPECTIVES

Midwest Research Institute

Kansas City, Missouri

April 14, 1980

James M. Kemper, Jr.

Chairman and President, Commerce Bancshares, Inc.
Kansas City, Missouri

The Role Of Banking In A Credit-Oriented Society

The American economy, despite some imperfections, continues to arouse the amazement
and the envy of the world. It has been based on the belief that all members of the society,
through intelligent planning and the proper allocation of resources, could experience a constantly
increasing standard of living, and that our political system would fairly protect the rights of all
classes of society in that process.
Our merchant classes maintain that differences in opinion as to various shares of interest
in that affluent society could be arbitrated by a process of market evolution which would fairly
allocate the benefits of our mutual effort. We have lived in a time of constantly escalating
expectations for all of our people, without discrimination as to race, sex, or age. There has been a
general feeling of late, however, that the nation as a whole has been living beyond its means, and
our critics abroad share these concerns.
In recent years the only practical control that our government has been able to place on
such dislocations has been its control of monetary policy. The expenditure of money by the
government has been based on political expediency, which has made it impossible to deny any
segment of the public the economic gratification which it expects.
Costly social programs advocated by militant minorities have been added to the burden,
and many of them have gotten out of line. Wages and social security benefits, for instance, tied
to the so-called “price index” because of the faulty way in which it is conceived, actually
increase on the average at 130% of the cost of living. But although this is well known, Congress
will not adjust. It has instead accepted a course of action that in other societies has eliminated the
stable middle class and, eventually, free society as well. That course is the use of inflation and
credit allocation to maintain political stability, a pragmatic solution in an increasingly complex
world economy where free men are very much in the minority.
Bankers as a class in such a society are subject to contrary forces which are apt to destroy
their credibility as they deal with other classes of society.
The character of banking in years to come must first depend on whether our nation will
recognize what the trade-offs are. It is obvious that the incentives for non-productive investment
forced upon us by inflation, government loans, grants, and credit allocations accelerate the
problem. The control of the vote by the confiscation of capital through inflation – at the same
time making economic grants to everyone, rich and poor alike – shatters confidence. With the
introduction of more intricate payment, credit, and information systems, those controls can

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become even more finely tuned, to the point where the right to participate in the rewards of our
society may be mysteriously entombed in an unintelligible thought process maintained in a
computer system controlled by regulations we cannot comprehend. If that process continues, the
private banking system may be looked upon as the disease rather than the symptom of the
disease as we at one moment are forced to shut off housing and auto loans, for instance, and
then, as policy changes, are sued for not making them. Or we issue credit cards to the Four
Winds and then take them back as the monetary system attempts to dry itself out because various
elected officials and staff economists decide that the time has come to act.
Such priesthoods are not new in the world. Central planning groups have existed since
man first assembled in communities to produce goods and commodities. The community in
general has always looked to a smaller group of their leaders and advisors to direct them. And as
their methods of governing developed, the economics flourished for a time and died.
Many such examples exist in the history of the world. Some of you may have read the
recent Smithsonian magazine on Mexico. Five hundred years before the birth of Christ, when
Greeks were busy fighting Persians, Zapotec Indians in lower Mexico across the Atlantic Ocean
began building a great city on a 1,500-foot high hill overlooking the valley of Oaxaca in central
Mexico. It is called Mount Alban. Twenty-five centuries ago workers constructed hundreds of
terraces on this mountain for plain and fancy residences. For the seats of the mighty, the palaces,
temples, and major administrative centers, they leveled the entire hilltop, creating a central city
on a 55-acre plot eight times bigger than St. Peter’s Square at the Vatican. This city lived for a
thousand years and died 800 years before the arrival of Cortez.
What has been learned of its demise raises questions which apply to the emergence of
cities and states everywhere, in our time as well as in the past. After about 200 B. C. the
surrounding agricultural areas that had supported the city collapsed. The agricultural workers
clustered in the central city. Despite the emergence of new cities, like Teotihuacan outside
Mexico City, Mount Alban was never conquered. It reached its zenith in 500 B.C. , but unless
you were one of the elite, borne about on a litter, you would have spent most of your life
climbing, moving with your fellows like a column of ants carrying everything needed for life in
the city. The lower on the social level you were, the more you climbed, carrying food in and
carrying garbage out. At the very top there was a zone apart, remote, secret, silent, strictly off
limits.
Finally, some 200 to 300 people occupied this central area on a daily basis, making
forecasts by solar observations in an elaborate central temple. It was here that decay set in.
Things began coming apart in little ways. More than neglect was involved as the population
began to abandon the city. The ancient edifices and tombs at the top became storage places for
the evidence of past glories. The distance between the populace and its leaders increased. A
complex system had broken down. But the world, of course, went on.
As Lewis Thomas said in Lives of a Cell,
We are told that the trouble with modern man is that he has been trying to
detach himself from nature. Man comes on as a stupendous, lethal force and the
Earth is something delicate like flights of fragile birds. It is an illusion to think
that there is anything fragile about the life of the Earth. Surely this is the toughest
membrane imaginable in the Universe, opaque to probability and permeable to
death. We are the delicate part, nor is it a new thing for man to invent an
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existence that he imagines about the rest of life. As illusion, it has never worked
out to his satisfaction in the past any more than it does today.
We must realize that our society exists in an environment that is continually judging
which system of life will survive, and that this is a process of evolution, whether in the survival
of species or social or economic systems. In our frustration with our human condition, we have
increasingly amassed data and employed social scientists to manipulate the course of this change.
We have arrived at the point where we can store millions of facts on a chip almost too small to
see. The resulting thought processes necessary to make use of these facts can then be
programmed into systems of thought, which are then integrated into solutions to problems.
This scientific program is then further interpreted into a simple coherent system. As the
journal Business and Technology points out, “Additional rationalization will guarantee maximum
usefulness only if man as the user will no longer have to transfer already existing information
from one level to another. The computer is much better equipped to perform this function. Just as
man has supplemented and replaced human power by tools and machinery, he can enhance his
ability to transfer and transmit information with a computer.”
As we all get on to this game, this game of programming by writing solutions and
systems and complete attitudes of thought – whether as free enterprise elitists or social activists –
we find to our delight or despair that once a body of fact or a system of thought becomes a part
of the system, resulting conclusions can come quickly and are very hard to question, somewhat
like ancient Zapotec priests rendering judgments on the basis of solar rays at the top of Mount
Alban.
Consider the recent statement by Nancy H. Teeters, member of the Board of Governors
of the Federal Reserve System, before the Committee on Banking, Housing and Urban Affairs,
U.S. Senate, December 21, 1979. Mrs. Teeters opened her statement by saying there was some
doubt as to whether the level of a person’s income had anything to do with his ability to pay a
loan; but, no matter, under the Federal Reserve’s powers to enforce the Equal Credit Opportunity
Act, they were obligated to follow the law. Mrs. Teeters stated,
One example of the difficulty of determining whether a business need is
supportable is the question of whether consideration of income as a standard of
creditworthiness is justifiable – thus, consideration of income, which is a basic
part of judging creditworthiness for many creditors, probably disqualifies
members of most of the equal credit opportunity protected classes at a
substantially higher rate than middle-aged white Anglo-Saxon males who are
married. According to this line of reasoning, consideration of income, when
subjected to an effects test analysis, would be suspect under the Equal Credit
Opportunity Act.
Mrs. Teeters goes on to say that her staff does not have the budget to examine all the
banks potentially involved in the crime of considering income as the most important part of the
ability to pay debt, but she does have the staff pick out special cases, run them through the
effects tests, and take the banks to court to extract large punitive judgments from them for such
indiscretions. Conclusions like this explain why the happiest looking bankers seen at a recent
banking conference were those who were about to take early retirement.
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The role of bankers in our present credit-oriented society has turned full circle as changes
in technology have undertaken the conventional wisdom which was a part of the earliest history
of this country. Even at the present time, the concept of a banking system based on a body of
public savings, guarded by many independent financial institutions which were deliberately
franchised, continues to have strong political support, based on a basic concern about possible
over-concentration of banking resources in just a few large banks. Commercial banking is the
last major industry in this country to modernize from a legislative point of view and make
possible technological changes which have concentrated other endeavors in fewer and more
complex enterprises.
The reasons for this, as we all know, go back in our country to Alexander Hamilton and
Thomas Jefferson and their fight over the original bank, to Andrew Jackson and his great dislike
for banks as a class, and to the populace of the Middle West coming up with people like our own
Harry Truman. I don’t think I ever went to a luncheon or a dinner where President Truman spoke
when he didn’t start by saying a little something derogatory about bankers. It was always a good
way to warm up the crowd.
Our country was founded on credit which was often highly leveraged. Recurring
shortages of money and credit were common, and although our Judeo-Christian culture
advocated prudence and savings, as opposed to usury and credit, the fact always was that the
right to venture and to borrow the necessary wherewithal was really kind of a part of the
unwritten American Bill of Rights. So our leaders and their constituents insisted on lots of local
lenders.
Even now – after all of the banking disasters through our country’s history which have
resulted in the most fragmented banking system the world has ever seen – even now there are
nearly 15,000 separate banks in this country representing many points of view, not all necessarily
attuned to an increasingly complex credit system. Many of the assumptions that made up this
system of credit no longer conform to the attitudes of thought in this country as we begin to enter
the 21st century. Simple questions such as who the savers will be when everyone wants to
borrow against increasing inflation, or why interest on a credit card is deductible from other
income, or who should have the right to borrow on a preferred basis under a government
guarantee, or who should have the right to buy a house on a long-term loan with limited
resources to repay the loan – the questions go unanswered.
The right to participate in the advantages of borrowing on a preferred basis have already
become a major political issue in this country. Borrowing is a popular pastime and everyone
wants to do more of it, including the government.
It is becoming obvious, however, that not everyone can participate all at once. The social
and economic disruption caused by an improvident extension of credit by our government in
response to countless militant minority groups – and I’m not talking about minority groups in the
popular sense; I’m talking about all the various interest groups in this country – causes relentless
pressure on our American banking system, a system composed of many different kinds of banks
which lack a coherent attitude toward the problems that they face.
This banking system has had outstanding success in providing credit to all segments of
business and society in this century, operating under archaic banking laws regularly modified by
antagonistic Congressional committees and their academic staff assistants. They usually name
them the Banking Reform Act, or the Modernization Act, or We Get in Under a Lot of Other
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Acts, but they are always something that sounds as though we are getting a wonderful something
and turn out to be a further confusion of where we already are, at least from the bank’s
standpoint.
But the banks have succeeded many times in spite of this. In the meantime, worldwide
technology and innovation have completely changed our customers’ way of life and their
attitudes and expectations.
The development of the electronic computer and rapidly progressing telephonic
communication has changed the dimensions of what we think of as money or as a store of
wealth. Toll free numbers have eliminated the last protected enclaves of financial resources as
the American public has been educated by television to manage their economic future in a
different and more complex way.
This is continuing to create confusion as technology collides with the time-honored
banking tradition. These basic circumstances go back to the dark days of 1933. At that time
banking problems had become the focal point of our country’s woes. I am old enough to
remember listening to Franklin D. Roosevelt declare the bank holiday on radio. It gave me a
great deal of satisfaction, and I knew nothing about it. I just felt that it was a good thing that
somebody like that was taking such a courageous move. It reminds me of the time I took my two
daughters to see “Butch Cassidy and the Sundance Kid.” On the way out I said, “Gosh, wasn’t
that a tragic ending.” And they replied, “Well, Dad, you realize they were bank robbers, don’t
you?” And I responded, “Yes, but they were so appealing.”
Anyway, the resulting banking legislation severely restricted areas of bank business that
banks could do business in, and put bank regulators in a much more powerful position. It
excluded banks from the investment banking business. It prohibited the payment of interest on
demand deposits and severely limited the payment of interest on time deposits. It focused on
equity requirements, and it created the Federal Deposit Insurance Corporation, which insured all
banks at the same rate regardless of risk, on a reciprocal basis. The fundamental concept was one
of protecting the banking system from its perceived inherent weaknesses. Banks, by being
limited as to the amount they could pay for money, could offer cheaper long-term housing loans,
car loans, and long-term business loans. They were encouraged to do so before the days of
double-digit inflation.
The Federal Reserve System in 1933 was thought by many to be one of the principal
causes of the Depression because of its inflexible monetary policy at that time. It was assumed
that the country could buy less employment for a little more inflation when needed and that we
could anticipate correctly the timing of the business cycle a high proportion of the time.
What had started out to be a program to enhance the solvency of the private banking
system in fact became a built-in system for an increasingly socialized banking system. The
reciprocal underwriting of risk by the Federal Deposit Insurance Corporation and the controlled
but pervasive inflation of the monetary system aided this trend.
The Federal Deposit Insurance Corporation looked just like Smokey Bear. You know
Smokey Bear was considered to be the friend of man and protected the little and big trees and
made it possible for everyone to live like we always had. But in recent years some have said that
Smokey the Bear was not a good thing because forest fires, by burning the big trees, allowed the
little trees to grow. There is a similarity here to the Federal Deposit Insurance Corporation. I
© MRI, 2000 James M. Kemper, Jr., April 14, 1980 Page 6

think their argument that banks should never be able to fail is not the way it was set up. It was set
up to protect depositors, not to insure the perpetuation of any bank that was ever chartered. I
think they might rethink that process. But this process is intensified even though the more
intelligent members of the financial regulatory bureaucracy have begun to realize that some of
the facts, thought processes, and solutions that are still part of our conventional economic
wisdom no longer hold water. For instance, we have seen unemployment and inflation rise
together. The old trade-off relationships no longer fit the evidence. We have found that neither
the Federal Reserve nor the Treasury Department can anticipate correctly the timing of the
business cycle, so how can they intelligently inflate the currency?
As Paul Volcker, the present Chairman of the Federal Reserve System, recently said,
“One clear signal of our fallibility was when the assembled economic wisdom of the nation in
the fall of 1974 gave little warning of the imminence or severity of the worst of our post-war
recessions.” Well, that’s the worst up until the present time.
We have found that we really do have to pay our bills abroad or see our dollars scorned
by the nations who receive them. We have found we are a “have not” nation, that we take our
Sunday drives at the sufferance of the Saudis, and that we are not necessarily the smartest, most
productive country in the world. Inflation in the 1970s became a commonly accepted condition
of life. As the voting electorate, particularly at its younger level, came to understand the rules of
the game in a debtor’s society, the question of bank solvency became secondary to the question
of banking performance as an active lender for preferred social-oriented risks, a further
socialization of the banking system.
In time, the question of active lending was extended to who got the money. As all the
data were stored under new banking laws and the regulators now can ask you to do some of the
most impossible things – the oracle spoke in a vague but prophetic manner indicating that poor
people should be able to borrow as much of the nation’s savings as could rich people. It was
thought that there was justice in this thinking because anybody who could borrow now could pay
back the debt with cheaper dollars and anybody who did not pay off might be guaranteed by the
government on an off-balance-sheet basis and become one of the richer classes. So far as the
government was concerned, this made good sense. It kept everybody happy, prevented social
unrest, and kept some of them in office. Bank examiners who complained about sketchy loans
were counterposed by younger, specially trained examiners who pressed for more socially
conscious loans. The Small Business Administration pressed the banks to come up with more
90% guaranteed small business loans to provide jobs, and more importantly, to put minority
people in management. Bankers were told that they were not to be pampered anymore, that they
had to get out in a hard world, and that competition was the name of the game. If they couldn’t
cut it, somebody else could. Foreign banks, for example.
Foreign banks and their domestic branches now make 11% of industrial and commercial
loans in this country. We do our share of lending abroad. Last year 75% of the earnings of one of
our largest New York City banks came from overseas. As inflation became a condition of life
rather than an illness, it brought with it an early end to interest regulation, both in what people
paid for money under the usury laws and in what they received for money under Regulation Q,
the government regulation dealing with the maximum rates to be paid on savings. This, of
course, caused problems because many banks could not continue to ante in the pot, to put in the
necessary capital to expand as their deposits and loans expanded. As the stakes grew higher, they
began to run out of capital.
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There were two solutions to the problem suggested by the best and brightest in the
banking fraternity. First, what we had to do was establish the fact that capital was not important
if a bank had a high return on equity. In other words, the person who never lost did not need
much money to enter the game. After all, were not most of the failing banks more securely
capitalized than the solvent ones in 1933? That was a fact. The banks that went into liquidation
had a larger capital ratio. Of course, what the statistician did not point out was that by the time
those banks went into liquidation, they had lost most of their deposits, so naturally they were
more heavily capitalized. But most of their capital was in uncollectible loans.
Secondly, the other fact the brightest and best had to establish was that you should
borrow more money to put up in your capital account and then you should sell the regulators
because borrowed money in an inflationary environment is the same as capital. As a banker said
recently, “Why should the brightest bankers have to carry as much capital as the dumbest?”
Lastly, if you made the first two propositions stick and you could operate with an average
capital of 3.5%, as one could in New York City last year, then change the banking laws on a pro-
competitive basis (and competition is the key word in this with the regulations people), borrow
more money in the larger banks, and buy the smaller banks out at a market price of around 50 to
60% of their true dollar value. One would say that that is how most knowledgeable bankers see
the present game plan, a plan underwritten by the Federal Deposit Insurance Corporation,
expounded by the Controller of the Currency, and analyzed by the Board of Governors of the
Federal Reserve. The only problem with this scenario is that it is too slow for the most
sophisticated economic system that the world has seen, for this scenario feeds on inflation. As
persistent high rate inflation continues, something profound is happening to what the public
anticipates from government and the economic system, how the public values its money and
savings, our attitude toward the work ethic, and our attitude toward capital investment.
Bankers may no longer serve as the connection for the dope most greatly in demand. A
new unregulated banking system has grown up, one in which money market funds operate in the
smallest denominations of savings without the restraints of reserves, capital, or insurance as they
invest their money where they can achieve the highest possible rate after expenses. For instance,
if a money market fund takes money from this community, people say that’s wonderful. They
yield a high rate of savings and pay me back when I want my money returned. In contrast, if a
bank takes money out of this community, in order to keep its charter and to expand in the
community, it has to prove that it is loaning this money back in community-related activities.
This is a completely disproportionate set of regulations. Corporations can buy and sell their
commercial paper back and forth without any reserves or any requirements, subject sometimes to
acceptances from banks already severely undercapitalized, and where payment transactions flow
through banking non-banks, currency exchanges, and corporations issuing their own notes.
Why are there two banking systems, the regulated and the non-regulated? The answer is
that we cannot artificially control just one part of the economy. The American system is too
smart and innovative for that. So as the unregulated banking system gains market share, the
regulations system still performs the basic functions for a decreasing percentage of the market
for financial services, becoming like the old neighborhood drugstore. It provides jobs for
longtime employees and for all those agencies examining them all the time. It is a convenient
place for the exchange of information and a relatively cheap place. Despite 20% interest rates,
compared to the rates at which very large corporations borrow, it is a relatively cheap place to
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borrow for borrowers who are not well known. When they get better known, they can go into the
unregulated system.
The regulated banking system is severely limited by law in how well it can adjust to
rapidly changing circumstances. It cannot solicit or advertise for small savings at market rates. It
cannot merge across state lines. It cannot underwrite corporate debt. It must allocate local
savings to local debt. It must be careful not to discriminate among classes of debtors. The list
goes on and on. In the meantime, other large American companies like Merrill Lynch, Ford
Motor, American Express, and countless others freely compete through the non-banking system,
providing services more efficiently and, in many cases, marketed under a better pricing system
than is possible in the banking system. It would be strange if this were not so. Without the
encumbrances of Federal Deposit Insurance, community obligations, reserves, or proportionate
equity, they have taken the most desirable share of the market and they will continue to do so
until the American banking industry convinces itself and the public that it should be paroled
from the dead hand of the past and the over-regulation of the present.
Some changes in banking seem fairly predictable. In the short run, geographical restraints
on banking mergers will come to an end as rates are de-controlled and uncontrolled inflation
continues. There will be fewer banking companies and increasing specialization by the
remaining banking companies. A large part of banking relates to communications and very
simple accounting. It seems inevitable that fewer delivery systems for this kind of banking
service will exist. Pricing and marketing will become more important with less emphasis on
grandeur in bank facilities and more emphasis on the training of personnel. Mistakes in judgment
as to the share of market they should be in will have more profound and immediate effects than
before. As more horror stories emerge as a result of high money costs and radically oriented
banking legislation, less emphasis will be given to social causes and more emphasis to liquidity
and solvency. Probably once that is over, we will get back on the social causes once again.
Events in recent weeks have shown the power of that time-honored doctrine of bank
solvency and security. At the end of last year the VISA credit card system had over 80 million
card holders. The average outstanding balance was $453, a very small amount for a public loan
company. That was up 13% over the past year, just about the same as the inflation rate, so it has
not increased very much. The recent regulation of credit card receivables by the Federal Reserve
Board does not reflect a puritanical concern about easy credit to the wrong people on the part of
the banks. It reflects rather the admission that a large part of the public, including the most
affluent and intelligent segment of the society, has a new perception of money and what it is. I
quote from Gertrude Stein on this, relevant or irrelevant:
The money is always there, but the pockets change but sometimes the
change is not in the pockets and that is all there is to say about money.
Credit cards are the most important development in banking services, as perceived by our
customers, of any product offered in recent years. But this new form of money, and the resultant
financial service, has become a highly endangered species so far as conventional banking goes.
Here is a product brought out by the banks, highly thought of by the public, one which provides a
great service in that one does not have to carry large amounts of cash. Suddenly this product is
looked upon as one of the principal ills of the economy. This is not altogether rational, and of
course it puts the banks in a very unusual position, as they tie that in with their whole method of
operation.
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Unfortunately, due to the present regulation, it looks as though just as we are about to
consummate an important new banking service, we are being forced out of that service. Probably
the unregulated system will come in and take a significant part of that service because they do
not operate under the same constraints as we do.
The credit card is only a primitive first try at an information system made possible by a
fantastic improvement in our computer communications. The management of that
communications system requires more and more complex manipulation and management of data.
The Federal Reserve Board recognized that in March, as far as credit cards were concerned. For
the first time they publicly admitted that they were not the only people printing money.
An interesting comparison was evident when shortly after these regulations were
imposed, the head of one of our largest banks pointed out that our inflationary problems had
been caused by the Federal Reserve’s policy of printing too much money. His bank over the
previous years had undertaken the greatest mass issuance of credit cards of any financial
institution to date, and had equally profited from them. Perhaps this is a case of the pot calling
the kettle black, as far as the banker reflecting on the Federal Reserve goes, but not one of poor
planning on the part of the banker. In my opinion, market share in the banking industry will be
based on control of the entry system and the resultant control of the credit information system
that is involved in the plastic card. It will become increasingly necessary to update immediately
not only the basic financial data on all adult Americans, but also the continually changing laws
and regulations applying to their participation in the payment system. Well-run banks must
already make these priorities: correcting the delays in adjusting spreads, providing timely
information under continual regulation, interfacing retail and commercial accounts, increasing
worker productivity in a notoriously overstaffed industry, and many other factors.
Banks not participating in this payment system will be relegated to a severely limited
role. The segment of the banking system that has felt most secure in handling personal retail
banking services and has enjoyed continued growth in so-called “core deposits” has become the
segment most vulnerable to competition. This segment of the banking industry is no longer based
as much on bricks and mortar or long-time friendships as it is on competitive services, in which
some bright souls even attempt to convert free credit card float balances to money market
instruments or savings accounts.
This necessary consolidation of our banking system will still leave unanswered the
question of how credit will be allocated. When there is an unlimited demand and limited supply,
how can the banking system determine who has first priority? How can we discriminate among
borrowers when it is unlawful to discriminate? How can we raise prices to limit borrowing when
we are perceived by our friends and countrymen to be usurious? How can we maintain our
private store of capital to underwrite risk and, when necessary, limit the expansion of credit
when the government, trying to be all things to all people, guarantees all financial intermediaries
without regard to solvency and arbitrarily determines who can borrow under a government-
guaranteed basis?
The extension of credit has become a serious business in modern society and involves far
more in social expectation than it used to. It forces bankers into a conspicuous position which is
more and more vulnerable as they become exponents for an increasingly socialized capitalistic
society. As a profession, we are at the very center of not only technological change but also
social attitudinal change. It is to be hoped that our fellow countrymen will continue to feel that
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we are worthy of their trust and that we are intelligent enough to properly allocate the nation’s
resources without bureaucratic overkill. It’s a matter of credibility on the part of the public.
Banking in the last part of the 20th century should not be asked to do the impossible: to
provide cheap credit to all classes of society in an inflationary environment. No amount of
innovation through improved technology can accomplish that. If bankers are forced to raise false
expectations in a credit-oriented society, we too will be perceived to be oppressors and our
system of freedom will break down. We should not delude ourselves by thinking that the world
cannot go on without us. It most certainly will, for better or for worse.
© MRI, 2000 James M. Kemper, Jr., April 14, 1980 Page 11

JAMES M. KEMPER, JR. is Chairman and President of Commerce Bancshares, Inc. ,

the largest banking organization headquartered in western Missouri. A third generation banker in
Kansas City, he is a 1943 graduate of Yale, where he majored in economics. Besides his leading
role in the Commerce organization, both the holding company and in several of its affiliates, he
also is a director of Missouri Pacific Corp. in St. Louis, Owen-Corning Fiberglas in Toledo, Paul
Mueller Corp. in Springfield, Missouri, and Gas Service Company in
Kansas City.
Active in the Reserve City Bankers Association and the
Association of Bank Holding Companies, Jim is regarded
nationally as an astute observer of the banking scene. In Kansas
City, where his family has long played a key role in the
development of this community and state, he is regarded by his
peers as one of the region’s most intellectually challenging
businessmen.
He is active locally and nationally in numerous civic and
professional associations, including the chairmanship of the
national board of Smithsonian Associates in Washington.
Mr. Kemper has also had a long and effective relationship
with MRI, as a trustee since 1959 and a member of its Executive
Committee since 1966.

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MIDCONTINENT PERSPECTIVES was a lecture series sponsored by the

Midwest Research Institute as a public service to the midcontinent region. Its purpose was to
present new viewpoints on economic, political, social, and scientific issues that affect the
Midwest and the nation.
Midcontinent Perspectives was financed by the Kimball Fund, named for Charles N.
Kimball, President of MRI from 1950 to 1975, Chairman of its Board of Trustees from 1975 to
1979, and President Emeritus until his death in 1994. Initiated in 1970, the Fund has been
supported by annual contributions from individuals, corporations, and foundations. Today it is
the primary source of endowment income for MRI. It provides “front-end” money to start high-
quality projects that might generate future research contracts of importance. It also funds public-
interest projects focusing on civic or regional matters of interest.
Initiated in 1974 and continuing until 1994, the sessions of the Midcontinent Perspectives
were arranged and convened by Dr. Kimball at four- to six-week intervals. Attendance was by
invitation, and the audience consisted of leaders in the Kansas City metropolitan area. The
lectures, in monograph form, were later distributed to several thousand individuals and
institutions throughout the country who were interested in MRI and in the topics addressed.
The Western Historical Manuscript Collection-Kansas City, in cooperation with MRI, has
reissued the Midcontinent Perspectives Lectures in electronic format in order to make the
valuable information which they contain newly accessible and to honor the creator of the series,
Dr. Charles N. Kimball.