, 1873-11-13

Tho Committee Of tho Now York Associated
Banks Inns mado areport Of Hcyoral very important
reforms, which llnvo greatly excited the speo,,-
lators IN Wall street. Tho report recommends
that:
/. No bank shall pay interest on deposits.
2. No check shall bo corhot Until tho full amount
thereof has been deposited III tho bank.
3. Checks upon asaociated banks only to DO received
on deposit.
1. The Clearfng-nouHo Committee shnl tx tho ratio
Of discount on chooks upon banks out Of Now York
s. All checks shall bo taken at 'opoaitors' riak, anl
collected through the Clearing House, those not pad
to bo returned to tho dcrotltora next day.
Tho roal reforms aro contained In tho two
frst-named resolutions. That rotating to intor-
cat on deposits is ono that is likely to bo adopted
by Congress-. It's operation is open to some
uncertainty. Tho New York banls, by Offering
to pay interest On balancos hayo always attract
cd large eums of money from tho country be-
longing to othor banks and bankers. This
money, drawing per cont, has been loaned out
at much higher ratea to tho stook-gamb1ors.
The prohibition Of the payment Of interest on
thoso balances mny have tho offeot Of driving
all these deposits to the private banking houaes,
who will not be subject to tho prohibition, and
these 1httor establishments may thus gain buai-
ness. AgainBt this possibility there arc tho many
and various Ways by which the prohibition may
be oyaded. When man has money to lend, md
there arc persons wanting to borrow it, and pay
for its use, experience has shown that tho con-
tract can bo made and executed in spite Of any
Y1rn1,ftffnry
laws illustrates tho imposaibility of restricting
tho hiring Of money on any torms agreed upon
between thepartles. 30 tho ointerest-on-dopoBi
question is not likely to bo solved in a hurry.
The certifcatton Of chockB without any corro-
spending deposit by the drawer ia proceeding
local and peculiar to New York. It has been un-
lawfully and extensively carried On. It has been
the means BY which all the spoculatora in gold
and stocks in New York hayo dono business. A.
broker purchasing Certificate Of stock for
e5o,ooo would draw check on the bnnk whero
he kept his accounts for $4,000. and another
for 5000 and, pinning the stocl1-cortifcate to
thcm, send them to the bank by,a 14-year-old
boy, and the bank would return both ,ohooks GER
tiaea,-ono for $1,000 on account of his actual
deposit, md tho other for s45, 900 on account Of
the certificate Of stock, retaining tho Iattor aa
collateral security for the loan. This Ia the
general process by which stocks aro bought and
sold, tho banks holding the ssocks, and issuing
certified Checks for their amount less m agreed
margin. Tho transactions Of this kind often
roach $6o,o00,0o0 day. For this amount Of
checks the banks held nothing but tho Btocl-cer-
tiacatos. It is now proposed to abolish this
practice, and to limit tue certifying Of checks to
the amount actually on deposit. This, of course,
breaks up Wall street spoculators who do busi-
nose on margins morely. II the banks lend
them money OH such collateral8 as stocks and
bonds, they must do 30 In tho mannor prescribed
by low, and not in the haphazard style Of iBsu-
ing certified checks to be used aH currency. How
far these reforms nre practical can 10 ascor-
tanned in time; but that any reforms arc pro-
posed ia evidence that tho Now York banks aro
sensible Of tho dangers Of their 'intimato alll-
ance with tho jobbors Of Wall street.