New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-11-12
tuition be allowed to loan moro than two and half times
its capital aud surplus.


CERTRIoArtoS OF CHECKS.
The practice OF certifying checks upon banks "a
good has proved great public convenience and mas
for that grown into extensive use Your Com
mtee approach Its consideration with some embarrass-
ment. The custom originated in the natural inquiry
OF bank telers respecting the standing and credit Of
their dealers and for many years 1t had little stgnii-
canoe, otherwise than rs Giving clerical information
Checks marked were not regarded as binding upon
institutions in the nature OF official acceptance, and
were therefore, not entered upon their books IL was
only since about the year 1850 that and influential
institution deemed it expedent TO define the character
OF act then vague and uncertain by charging such
when they have been legally regarded as formal
obligations Ond have become the medium OF the
certified to real fact that the bank actually had In
possession aud due from 1t 10 the drawer OF the checK
the stated sum- which IL thus agreed TO transfer 10
another party no possible injury, but great good would
ensue But when bank binds itself to transfer what ~
has not but only expects 70 have assumes l9r ie
dealers without reason oil the contingencies lnciuent
10 human transactions. and places ,ls snsrenodeiS
under perils which they never intended 10 assume.
The power OF certifying checks 10 necessarily lntrused
to clerks or subordinate officers, who are ompoyea
bank aud who supposed to be strictly Limited III
giving to every dealer, only what mas peloro red il
ceiyed from bn. And the power OF Desowlns eiet H.
reserved for ADLER and more eXpefenceu ot M a.
selves personally identified with the Interests pey ac
munster who gravey deliberate upon every ua
ton and decide with the light of their uh1ou nun
But the practice OF certifying this esab
Iisbed order aud while the responsible conneli
! is carefully celebrating ovor smaller circuits,
- Observation-Disclosures officer is freely bestowns
them in larger volumes, VIZ g. nv tenstveiv
mon connaratiyey Irresponsible men. 90 eAtensney
non Ppnco been pursued by several institutions
that the amount OF such checks, whch naVe iaseu R
throngh the Clearing has reacneu III some III
90 twice and three times and In one or two 10
four and five times hoir capital stock, aud TINS through
ioI Every bank in the Association is directly involved in
the risk attending this practice. ~ muitipes e1Oe5
siyely the which such institutions pass through
tho Clearing house. and the consequent balances tne
exchanges with their associates which the capital OF
such banks never adequately guarantee
The most striking commentary upon the dangers OF
this practice was afforded during te Iae PANE oy tne
dealer of bank who had largely received sch isvOrs,
and who seeing by its application 10 others lhat MS
own checks were In peril, declined, under advice OF
counsel TO them by deposit untll otnerWlsc as
snred that the could respond TO these very obga
tions. No sufficient reason ia the opinion Of your com
mitee can DO given why corporation shouu pIace IL
self without compensation and special security, between
two parties dealing with each other ana become le
garantor OF either In transactions entirely personal 10
themselves, simply because one or inc Otcr is uc
tor in the institution. We nave already sa'ea .nst
the safe custody OF money payaDe oh aSiI ,
full compensation for its legitimate USE ana Ihe lshs
attending such business are an tnat properly az
pertain 70 tho profession OF panher. Au s, ~
the rule be invariably observed OF certifying cheeks
only when the drawer has the full amount at MS crea
the bank no one can be injured or onende9 %he ne Is
treated in all respects like every other OF his fellow
dealers The RESTRICTION susseS.eu VII, WoIh U nd
to every interest-o the banks their anu
their associates, by diminishing inc Iss now 50 wldey
Incurred and il also conforms 10 and confirms thc law
which Congress has established upon TINS SUBJECT III To-
spect to National Banks $1,000 49,. 800
Your Committee. therefore, recommend that In no case
shall check or other obligation be eertlhed py pane,
unless the amount OF IT - first found regularly entered
VI the dealer upon Tue OoOho VI
INDIRECT EXCHANGES.
A custom has grown UP among the Associated Banks
and has greatly increased within the last few years, Of
epgraftng upon themselves and thus admitting to the
benefits Of the Clearinghouse, other institutions and H.
ylduals who while not eligible to regular membership
nartIcipae in all its advantages without sharing its
penses mourning its responsibilities or submitting TO us
s6e control They OF banks ana corporations OF
various character and objects, in this city and vicinity
| xuIar ID
active capital from the commercial community Dy
extraordinary rewards, and use II ior lurpose5 anu
ing The Associated Banks thus ma themselves sur
rounded by duGent competitors IN ther proper business
for support. BY Keeping satisfactory balance IN DanK,
for which INTEREST," frequently paid these institutions
avoid the necessity OF any money reserve Whatever ana
only invest all the resources az thelr GOnhahu III
profitable or unprohaDe oGn nage o. pl eaa
The thus deprived Of large portion OF com
mercia deposits that would naturally come 10 theI ana
incur Increased aud indefinite risks, and the public are
uuconscOusy placing their ready means wherc they are
subject to unusual hazards. 49,,
Any in the city. worthy Of public confidence
may become regular member OF the Oicallus nousc
Association, and the banks when compose II are pouu
In duty themselves aud 20 the pubhc 10 Withhold inc
special support of this b06y from any VINO cannoI sun
INIT TO. or safely pass through tle necessary eAaia
tiou which entities them TO credit And your Committee
can n sdo r no ESG be bSne of he New Clearing
house. when they share none of IT'S burdens ana submit
20 none ITS regulations. Ihey, therefore, recommend
that bank shall receive upon q, posll' rom It's Cly
dealers checks drafts other than upon banks Meu-
bcrs of this Association
RECEIVING oUT-OF.TOwN CHECKS As CASH DEPOSITS
Among the various devices introduced 10 attract mer-
camille accounts and deposits OF country banks
Is that of receiving and crediDg immediately cash,
checks and drafts upon places out OF this citya prac
tice which was commenced special inducement by
one institution but which, the natural consequence OF
nfaIr competition has been followed and extended by
other until IL embraces points far and near throughout
the whole country. II has been carried on with such
nter disregard ohe laws Of exchange and of the time
IN afF4
me tBods OF making payments IN. aud remlttances 70
TINS eit IS sLea.y 1 yy W., arc 49,
cepted as cash in NewYork, prefer that mode OF pay
ment and they are naturally encouraged to do by
their banks at home, receive The benefit that
our institutions are not only deprived OF deposits,
which by the laws OF trade naturally belong 10 them,
but they daily incumbered by miscellaneous
mass checks, which occasion serious embarrassment
loss OF time great rsk clerical labor ana expense IN
collecting entirely caused by this unnecessary diversion
OF business from us natural courses some OF the IN
erest paying institutions which have by TINS expedieDt
enlarged their correspondence with interior banks have
with them adopted peculiar methods OF facilitating such
collections which they regard as advanageous TO them
selves but by which they are continually extending this
evil City merchants, whose business Is cneIy WITH the
country, now accept such cheeks reey rom thei Gus
TONER'S because their banks will accept them from hem
and many of the accounts which, from their amount,
dealers regard as very valuable their banks the latter
find experience TO result in actual loss instead OF
the business OF Legitimate commercial exchanges In
the city such banks are thus made ours The subject
IA the cause of continual irritation and dscord be
tween banks and their customers, and between the
banks themselves Your Committee, In considering this
evil can perceYe remedy but by its total abolition
and they therefore recommend that the Clearing
COMMITTEES lie required establish monthly schedule
of minimum rates at which the Associated Banks shall
receive deposit checks and drafts upon places out OF
TINS city. and to which every bank shall be bound
strictly TO adhere. -,
Having now considered the prominent evils which
exist the removal OF which your Committee consider
indispensable the harmonious intercourse between
banks bound together by common interests ana having
recommended for their removal
OF deposits, either directly
directly, be entirely prohibited -,
Second while observes the requirements OF the
law of Congress respecting fund be required all
legal tender notes equal 10 al least 10 cent OF
liabilities 10 the public go , 80
Ihrd: That DO shall certify check good until the fall
shall sppear its books from deposit regularly Gu
tereGfO the credit or the drawer.
rlrafi he