The Portland daily press., 1884-05-01
FINANCIAL AND COMMERCIAL
The Financial Situation.

In the financial world there has been nothing new
during the past week to record General business
is extremely dull and at tie Stock Exchange prices
rising and falling few points but the tide still
appears to be on the ebb. The leceding of the i'm
mense tidal wave of prices is still apparent with no
present prospect of extreme low water. Action and
reaction are always equal, but the majority have
found it hard to believe at first that prices must
fall that they will realize it and begin 10 act &C
eordingly only long after the bottom has been
reached and the advance well under way.
The national banks of the large cities have been
considerably exercised for some time past over the
question of County Collections" To state their
position in word, they want work done for moth
ing and to them, at least, this position does not
seem absurd when they offer as their reason, that
they themselves in this department of their bust
ness, also work for nothing. Such being their de-
mand and its reason what is the for this ex-
traordinary state of things and what the remedy?
To be BRIEF the cause of this abuse, as we'll as of
many, purely mercantile abuses is due entirely to
competitor. One of the legitimate sources of
banks profit is the charge for collection of checks
notes. drafts, etc., there being an actual expense
and risk connected with every piece of paper hand
led. 1t was formerly the custom for Boston bank
to charge certain percentage for such work, part
Of which went to pay the country bank, which did
OF the actual labor and the balance it reserv-
ed for itself. How completely all this has changed
see from the fact that nothing is charged lex
cept in rare instanees for it's profit or to make
itself whole with its country correspondent The
bulk OF country paper is collected for nothing, and
in great measure, is even credited at par as cash
before pay is received. All this change is due to
nothing but competition between the city banks
few began to "cut rates. for new business, and this
hoor 1dad
The old-fashioned banking idea that profits on COL
lection and exchange should pay large part OF
banks running expenses, leaving discount received
net gain, is anything but true at present. On
par with this form of bank competition is the more
dangerous method of some enterprising New York
and Boston banks paying excessive interest on daily
balances. This practice of paying interest if sound
in itself, is sufficient to impair their standing from
the high rates allowed. Such being the facts, for
which they have only themselves to blame, what is
the remedy? Clearly, if they can retrace their
steps, further complaint will arise. But this is
considered as impossible as to abolish the
pernicous system of commercial travellers. Taking
this vew they have largely seized the plan of
forcing the country banks forego their profit and
remit at par in Boston funds. BY this scheme the
country banks would be compelled to bear loss be-
longing to others, and for which they are not re-
HpOuSlDl6. WILL DC ODJ6cb6u GnaG LQ6 charges
of country banks are exorbitant. The fact is, on
the contrary, that competition between the country
banks themselves, for this collection business has
reduced the charges to very small fraction of one
per cent. A bank charging lilo of per cent on
sums up to $4,000, and 1-2o from that amount to
$4,000, with no higher charge for $4,000 than
for the latter begs leave to differ when exces-
sive charges claimed. If competition or any le-
Ultimate inducements still further reduce these
charges it is square business operation but what
object to is the claim that theoretically country
banks should work for nothing because those in
large cities do (without the correspoL ding advanta
ge and therefore practically they should be brought
near that point as possible.
Hitherto we have referred to city and county
banks only but to be accurate there should be
an intermediate division, say quasi country banks.
These are city banks with reference to those in
country towns and country bank compared with
others in reserve cities.
In their first capacity they have the same cause
for complaint as the Boston banks; but where they
doing business for nothing for the indirect prof
its of that business we have yet to learn of case
where the "Boston theory has been urged. They
make their collections on the best terms often
much harder than those they impose on their city
friends, and see whether the business pays. fit
does not, they give it up without talk In their
ond position, as country banks, they do not care
whether dealer in Boston deposits his country
customers check on the latter's bank or whether
this customer buys Boston funds at his own bank,
except that in the former case the countryman gets
so much extra capital or credit for nothing while
his checks going the rounds. In either the
country bank gets its pay; in the former for remit
ting by selling exchange to its depositors But they
do claim that payment should be made for proper
services and if the Boston banks cannot go back to
the old system, they should copy their rural fell
lows, by pocketing the immediate loss, and making
it the accounts to get which this loss is SUI
fered. Banks have long been considered eleemos-
ynary institutions by the Masses but never hitherto
by the other members OF the fraternity