Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1873-11-13
New Regula ions Proposed for the New
York Clearing House Association.

This association held meeting on the 1lth,
at which important changes in the regulations
were proposed in a report from the Commit
tee on Reform in Blinking.
The evils of paying interest on deposits are
thoroughly sifted by the committee. 1t is
commended that banks cannot purchase depos-
its and secure to themselves a just compen-
sation without violating the conditions indis-
pensabie to public safety. The practice of
paying INTEREST on deposits was one of the
causes of the panic of 1857, and was con-
demned by the bank officers then. The es-
| Establishment of new banks during and since
the civil war actively revived the old and per-
nicious system of paying interests upon de-
posts, and some of the older banks were
forced to adopt this method of obtaining pat
| ronage. This active competition has extend
ed throughout the country, and the panic and
| depression from which we are slowly emery
| ing can be cited as q clear illustration of its
evil effects. The surplus capital of the coun-
try, by the system Of paying INTEREST on de-
posits, has been concentrated at intervals in
q few money centres, to the detriment of many
sections. Without this rivalry the resurces
of the nation would be so diffused among the
banks as to give increased financial strength
and stabilityIto every part, and not only re-
move great couse of irritation but add to
the comfort, efficiency and profit of all. By
this system money is piled up in Wall street
during the spring and summer, and withdrawn
suddenly in the fall, thus precpitating infia-
ton at one time and depreciation at another,
frequently to the great detriment of regular
business. The following committees report
is interesting in connection with this subject:
The average deposits Of the sixty clearing
house banks for the ten weeks from the 9Th
July to the 9th September were s232. 223 900.
The lowest amount since the war, $l43'l7O,-
900; showing total reduction of $S9, O5S,-
900 OF the above amount during the ten
weeks twelve interest-paying banks held
$lll,5S5, 900; the lowest total reached by
them since the panic. $50 ,66S, 900; showing
loss in the twelve banks of $5S, 9l6, 900, and
in the other As banks CT $50, l42, 900; and
we ;e it not for the fact that several of the As
banks are more or less involved in the same
practice this disparity would be still apparent.
The committee discuss the question of re-
| serve, and On this point recommend that as
ISOLATED banks, while they strictly follow the
requirements of the national currency act by
keeping on hand either in coin or legal tender
notes an amount not less than % per cent. of
their total liabilities tothe public, be required
always to hold at least Is per cent. in legal
tender notes, subject only to such modifica-
tons as the clearing houses may from time to
time unanimously determine. The commit
tee also think that no institution should be
| allowed to loan more than . l-2 times its cap
i;al and surplus. The certfcation of checks
is also dwelt on with great force, and the
committee recommend in no case shall a
check or other obligation be certified by
| bank unless the amount is first found regu-
larly entered to the credit of the dealer upon
the books of the institution. The question of
| indirect changes is ably handled, and the evil
of outside institutions and individuals having
their checks pass through the clearing house
| Il ali nd int III Ia
mended that no bank shall receive upon de-
post from its city dealers checks or drafts
| other than upon banks, members of this asso-
| citation. In regard to receiving out oi-town
| checks as cash deposits, the committee rec
ommend the total abolition thereof, and also
| that the clearing ho1sc committee be required
to es,sblish monthly a schedule of minimum
| rates at which the associated hanks shall re-
| ceive on deposit checks and drafts upon
places out of this city, and to which every
| bank shall be boand strictly to adhere. Hav-
ing thus considered the prominent evils and
the proposed remidies, the committee sum.
Marie TEEN with the following remarks:
First, that the payment of interests upon
deposits, either directly or indirectly, be en-
tirely prohibited. Second, that each bank,
while it observes the requirements of the law
OF Congress respecting reserve fund, be re-
qured to carry at all times an amount of le-
sat tehoer notes equal TO at least fifteen per
i cent of its Liabilities to the public. Third,
| that no bank shall certify a check as good
until the full amount of it shall appear on its
book, from deposit regularly entered to the
credit of the drawer. Fourth, that no check
or draft shall be received by a bank upon de-
post at par as cash drawn otherwise than
upon one of the banks composing the Clear
| ing House Association. Fifth, that all
checks and drafts upon places out of the city
of New York shall only be taken at rates OF
discount established monthly by the clearing