New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-07-16
THE BANK CHARTER LAW.
CONGRATULATIONS OF CHECKS.

charters of the National banks makes it penal
offence for any officer, clerk or agent OF any Ma
tional bank wilfully to certify any checks
drawn upon the institution beyond the
amount of money actually on deposit
with the bank to the credit of the drawer OF the
check. The penalty provided is fine OF not more
than $500 or Imprisonment for not more taan hVe
years, OF BOTH in the discretion Of the court Inc
practice of over-certicaton of checks by the banks
is one of long standing in Wall Street 1t IS car
ried TO its greatest extent by few banks which
have large dealings with stockbrokers Ihese are
popularity known as brokers' banks" The princi-
pal brokers banks" are the Union.
the Fourth National. the Continental and
the Bank of New-York. The amount of their over
Qualifications rms far mp in the milionsdaily Many
other banks in the neIghbOrhood of the Stock Ex-
change accommodate stockholders In the same way
and to a considerable extent law against over
certi6cation of checks has been on the statute
books for some time but it has never been enforced
When the Bank Charter Extension bull. provldlnga
severe penalty for the violation OF the law, seemed
certain of massage few days ago, bank
officers were seriously troubled as to the
adoption of some means by which they might es-
cape the danger of violating the law and yet con-
tinue 10 accommodate customers who would be
compelled temporarily to overiraw their accounts.
II was generally believed by bank officers that an
absolute stoppage of over-certifcaton would result
in precipitating Wall Street panic. the final re-
suits of which it would be impossible 10 foresee.
AS already stated in The TRIBUNE yesterday, the
law went into effect on Friday without the
ordinary course of Wall Street business being DIS
turbed. The various methods adopted to avoid an
open violation of the law were described in The
TRIBUNE One of these. that of marking checks
Accepted" or Approved, payable through the
Clearing House" was devised by o. d. Baldwin,
president of the Fourth National Bank, several
days ago. when the adoption of the new law was
assured. II was submitted by him to several bank
presidents who approved Its practcabllity and
subsequently adopted it. Talks were had
Yesterday by a TRIBUNE reporter with
prominent bank officers and stockholders as to
the sltua ION. The opinion was general that If the
law could be earned out az intended 10y rs trainers
il would seriously damage not only wall Street
business but also that OF the Cotton and Produce
Exchanges The law was denounced as an unwlse
attempt OF Congress to interfere with the business
de ais OF the National banks and the belief was ex-
pressed by some persons tnat It's consltutlOnaIlly
would not stand the test OF the courts
A TALK WITH PRESIDENT BALDWIN.
O. D. Baldwin, of the Fourth National Bank, said
in substance The advocates of the new law I'M
doubtedly intended it as a measure hostile to the
National banks. 1t arose from the demagogic hatred
of the banks and the supporters OF it expected that
it would seriously Injure them. 1t is perncious
measure and, / am convinced, an mpOtent
one When thg law sga SpPedFeu sfudy mesns
to conduct our business in some other way than
through certIfcation. Ii was certain that If the
law should be enforced according TO the intention OF
its founders, business in Wall street would be
blocked. Credits to the extent OF millions would at
once be wiped out. You would have seen panic IN
the street which would have ruined the country
through lis effect. few days ago however hit
upon a method by which business inter
ests here would be protected With Nth
was submitted 10 eminent counsel, who were OF the
opinion that 1t did not violate tine law and that III
was 10 device TO evade the statute, either Ny
plan was Tor the banks not TO certify checks at all,
but 10 accept such they saw mt In this way the
bank renders itself liable for the amount accepted
which the Law does no. forbid"
"A certified check" continued Mr.. Baldwin, is
one which certitles or guarantees that the amount
of il is actually on deposit 70 the credit Ietids
il. Ii certainly Is a false ceruhcauIu
when funds not in the bank to the credit OF the
firm Whose check Il certified lhls false certlhca-
ton Is what Is forbidden By the law. Now, there
is no law fOTbiddlng bank to pay checks when the
money for them is not on deposit Nor IS there any
10 nreyent the acceptance of sight drafts or checks
These may be accepted by the bank, through lts
teller, at any time. suppose you bring me cheek
for 500 90. You decline TO take the money Of
fer ou preIerrlng 10 use the cneck instead, II you
can. In the place Of giving yOu the money,
/ simply write across tie check accepted You
can the cneck then as you wish, ana the bank is
responsible or H. while It does not certify or assert
thai money for the check Is on deposit 10 your
credit. This Is not 0cyIce 70 evade the law either,
because The law fOrOds only false or Over-certh ca
ton. On the contrary, the acceptance Is method
designed expressly 10 avoid all certlhcatlon,
ana particularly false certliicailon Inc
device referred to III the law relates
distinctly 10 fictitious credits; they are made when
a bank certIies 10 certain sum as being on
deposIt with it, This is avoided when the bank
re uses 10 certify for any person. and merely reDd-
ers Isef response Ole to the person who may present
a CHECK after IL las been accepted The check can
be- accepted and made payable through the Clearing
House or otherwise as Il desired, WITHOUT Ill the
least coming IN contilct With the law
This plan which have outlined ex-
planned to several other bank presidents, and they
approved It as solving the problem which was pre-
seIited by the new law. The consequence IS that
when the law took effect, the business of Wall
street went on without interruption"
VIEWS OF OTHER BANK OFFICERS.
b. p. Sherman, president of the Mechanics Ma
tonal Bank said that his bank did little
business with brokers which required tho
certlfcaton of checks. His officers were
not certifying checks beyond the actual
amount of money deposit. The law, If enforced
would have a serious effect on business but II was
of : ch character that Its PROVISIONS could be
nulIled Ii II were carried out the consequence
plobably would be to increase the number OF state
and diminish the number or National, banks. euch
of the National banks as depended largely on the
patronage of Stockholders might ind II prOhtaDlc
TO surrender their charters, the state banks of
course were not affected by the law
AS All instance Of the absurdlty OF the situation
in which Congress has placed u" said Arthur W.
Sherman a>hirr of the Gallatln National Bank,
look al our bank and the Bank of North America.
We are almost neighbors, and yet what can be done
next door to us, namely, the oyer-certlhcatlon of
checks If done by any OF our officers or employees,
would throw them into prison. lhe action OF Con-
oress rs most reprenenslble, for If the authors
of the Objectionable Law could liter
aIly enforce their own measure, they would
rIunge the whole country into a business
panic The evils of overcertiheatlon should he
sopped but congress cannot deal with that matter
as well as the banks can They are not ANXIOUS 10
allow customers to abuse their credit, and Will OF
their own accord protect themselves and the public
a. we'll" -. c,..-.
Honse Association said that the plan OF accept
49,. IL nIlII q Arar