The New York herald., 1879-10-29
BANKERS AND BROKERS.

BANKERS AND BROkERS.
A COMMITTEE OF TIE FORMER TO coNsIDEh
THE oyER-cERTIFIcATIoN OF BROKERS CHECKS
URGENCY OF NEW SYSTEM FOE THE
SAFETY OF BANKS
Wall street bankers ere just now skirmishing with
the brokers upon an issue that has been urged at
least twice before during periods excessive specu
latlon The trouble is regarding the certicaton OF
checks to accommodate brokers, which is car.
ried to such an extent ss to seriously interiers
with the other business of the banks. besides y
involving them i'll great responsibilities. A
bank president put the case to a reporter,
of the HERALD in this way:--'.A bank derives
direct profit by certifying these checks,
but is enabled to retain for business purposes the
money for which the checks CALI AS for over
drawing accounts the law does not permit national
DanAa to accommodate its customers IN that way.
know you will say that it is done by some nstitu
tons"
''Is it not the prevailing custom among what ara
known as 'brokers' banks?'"
"Weli, the national banks have no right to do it
under the law. you have $50 in national bank
they cannot certify your check for 500 lawfully.
'Do the banks apprehend any danger from tho
large amount of speculation now going onY'
'.Of course there is danger. Wherever there Is
speculation there is danger II a broker overdraws
his account by OF certified check and un.
able to make that good by three o'clock, the banI
next day has to pay over to the Clearing House
which 1t has never received. A strong bank
could stand it; but suppose Black Friday ensuess
where does it leave themg II would then amount to
saving the brokers at the cost OF the banks"
SAFETY AND ExPEDIEScY.
'There are two motives" continued the banker.
"to actuate in the present One is expediency.
The labor of certifying many checks and clearing
them daily is more than you understand The
other is safety Perhaps should have named that
first"
..How do you propose to alleviate the strsin?,
II can't tell you that. suppose it must be done
pioy among themselves or such as was employ cd in
the days OF heavy gold transactions. Why. look
yesterday and all settled ut the Clearing House with
about s5OoO,oOo! Why can't such arrange
meut be made tor stock transactions? II. for
instance, you and were brokers, aud gave you y
certified check for 500, ,000 and you gave me one
for $1l00O0; how the transaction could be SIM
pliiied by the exchange only of the difference. Not
only would it lessen the banks labor but it would
make them responsible for $4,000 instead OF
S2l0,000"
''Why has there never been such system put into
practice?"
'In London they have system by which balances
settled every fortnight. l don't know enough
about it to say how it would work here Don't i'm
agine that wish to nvegh against the brokers' nos
ut all. Considering the immense amount of their
business with the banks. it wonderful the latter
lose little by them as they do. We might lose
through a merchant well through a broker.
There dishonest men in both ranks. But
business is business and banking is banking.
There are so many different stocks dealt i'll the
Exchange that 1t is hard to lind method Tor the
direct relief"
..Are you looking for crash in the stock marketj
Do you think that values have been overrun?'
ii can't say that expect a crash. am not sufi-
cieny familiar with the stocks dealt in to say
But do believe that many stocks are now selling
for sos a share where they are not worth S. In
fact, know OF some instances where values have
been far overrun 1t has resulted from the surplus
capital in the city. We have been receiving vast
| fiasa at rnlt frAm f.rn no
"But will not the receipts OF gold continue for
some time yet i'll exchange for wheat?'
ITO be sure; but the gold is going down South to
pay for cotton, and soon will be going West to pay
for pork and other staples There is no avoiding
the conclusion that speculation is excessive and the
safety of the banks demands that they should put
u brake somewhere.
INITIATIVE.
At a meeting OF bankers, held at the Merchants
Bank Monday, 1t was resolved to have commir~
tee on conference. and as such were appointed -
Frederick d. Iappan. Presdent OF the 1ai-
latin National Bank; d. G.. Hayes. President
OF the Union National Bank and secrssAry
of the Stock Exchange, and Charles Fry. Prest-
| dent OF the Bank OF New York. There WAS An in,
formal conference with Brayton Ives. President OK
the Stock Exchange. on the same day. and this after.
noon the Committee OF Three will meet again. As
| formal request is made to the stock Ex-
change President Ives will call meeting OF the Gov
erning Committee and subcommittee on confer
| ence will doubtless be appointed.
Said Mr.. Tappan to the reporter:-"There 10 im-
mediate need or relief tor the banks, aud hope
shall succeed III reaching agreement. Why it
has failed previously tell. have not been
| on such a committee before Neither tell what
plan will be considered. Self-protection and bust-
ness economy demand some kind Of a reform. Self
protection is the pr consideration. Do think
| stock values overestimated? Well. don't know
very much about them Stocks are worth whatever
men willing to pay for them, suppose. Ono
man sells stock for $40 to another. who thinks It
worth sl2. and he finds third man who thinks it il
worth Sl5.
Mr.. Hayes, another member of the committee,
said it was Intended as lie understood. to test the
feelings of the brokers conference before Tor
mally proposing any change OF plan. When asked
if he had any plan Of his he replied Every one
for himself and be careful who you deal with; that's
my motto"
Mr.. Fry said that no formal invitation for con-
ference with the Stock Exchange had yet been ex.
tended. He ntiiaated that such would soon be
issued.
The president of the Merchants National Bank
said quite number of suggestions had been made
as to how the banks could be better protected and
spared extra labor i'll certifying brokers' Checks
but none had taken any definite shape as yet.
BROKERS' VIEW t.
Mr. Ives. the President Of the Stock Exchange rec
marked that some bankers had called upon him to
informally discuss the subject that lay between
them. Whenever asked to do SO he would call .
meeting OF the Governing Committee to lay the mat
ter before them.
''The same thing has been proposed to the Ex-
charge before, has it not?" asked the reporter.
yes believe that committees were appointed
occasions to consider the matter, and think
one of them reported. | can't remember just what
their report was, but know that plan has
been devised which the members of the Stock Ex-
change considered practicable. Speculation is rife
Just and the banks naturally expect to be pro-
tected. The great question is how to do without
curtailing the facilities of the brokers'"
"Do you understand the London system. OF fort
nightly clearancesY'
..well enough to know that they simply settle
balances once in two weeks. What New York banks
demand is some system of daily settlement. They
could do that well enough with god but the list OF
stocks sold III the exchanges is large that in
Vulnerable difficulties beset any proposed plan Of
clearing. The safety OF banks is the safety OF
brokers. and the latter would willingly join in thu
adoption OF any system which they could regard ~
practicable"
BRENTANO'S MONTHLY.