New-York tribune., 1899-03-26
THE CHECK TAX FIGHT.
EFFECT OF THE NEW RULE on NAIL
ORDER BUSINESS.
POsTOFFICE MONEY ORDERS MAY TAKE
THE PLACE OF SMALL CHECKS
TRUST COMPANIES LIKELY TO
GET INCREASED DEPOSITS.

GET INCREASED DEPOSITS.
No move I'm many years has excited so much
discussion among business men and given rise
n go much apprehension as to its effect upon
the trade Of this city as the recent action of
the New York Clearing House Association In de-
Gliding TO make charges for the collection OF out
of-town checks: and It is widely believed that
the associated banks will find II necessary in
their own interest to modify in important par
ticulars their scheduled rates of collection. II
not TO rescnd altogether the resolution under
which the Clearing House Committee formulated
the new regulations. The most onerous eXaetion
contemplated by these regulations is generally
conceded to be the charge Of 10 cents on the
small checks a check for even 81 being obliged
10 pay this fee. To take a concrete example
typical Of thousands: a woman living In Orange
sends an order to a department store here ior
an article which will cost ST. and forwards with
the order check for ST. drawn on her bank IN
Orange The department store delivers the arti-
Gle free Of charge. but receives in payment only
90 cents for it is debited at its bank 10 cents as
the collection charge on the country check
An extensive mail-order business. in which
checks for small amounts figure largely. is done
bv all the uptown department stores and Dry
goods stores, not to speak Of the vast number
Of small checks received i'm the course of business
bv book and magazine and newspaper publish
ers TO cite only one other line. By lar 'he
largest proportion of the department-store trade
OF this class comes from patrons on Long lsIahd'
in Westchester County and in the New-Jersey
suburban towns all Of these points being wi'hih
a few hours Of New-York City by mail. so that
the loss Of interest to the banks because OF the
time necessary for making collections cannot
,fv-f. NOT 1l.l
enough TO warrant a charge Of 10 cents on
check for only 81 or $2-a charge the payment of
which by the New-York merchant or publisher
would mean the filling of the order at positive
and serious loss on each small Item.
The cost Of transmission Of cash by means Of
postofiice money orders is three cents on 81 30,
and IT is suggested that money orders may In
time he generally substituted for checks in for
warding small remittances The check. for no
matter how small an amount. must bear two
cent revenue stamp. affixed by the maker oi
the check The cost OF buying money order
for sum less than 50 - would be only one
cent additional for which the merchant would
undoubtedly be glad To make deduction; and
a. the banks impose no charge on evidences ot
Indebtedness Of the United States Government,
the merchant could. n is declared turn over ms
money orders TO his bank. which would collect
them for him without demur As 70 the out-of-
town checks OF larger size. II Is urged ny fner-
chants that the proposed tNdIEt lpI tilfl ''l-
lection is so great as in many cases 10 wipe out
the margin Of profit on transactions as business
in many lines is now conducted under conditions
Of strenuous competition
II anybody should meet these charges, it is
asserted IL should be the out-Of-toWn Tur-
chaser. who should pay for his purchase in
New-York money. and not the local merchant
who II this burden must fa'l on him. viii nave
to charge higher prices on out-of-town business
in order to realize a profit. and In charging
these increased prices is in danger Of seeing his
trade diverted to other cities. II is not intend
ed 10 assert in this that the banks should neces-
sarily incur the expense Of all collections. Many
business houses, however, carry constantly large
balances in their respective banks. not receiN-
ing interest on these balances. although country
banks having funds on deposit in the same in
stitutions get . per cent interest on their money
and are likely to withdraw their deposits pre-
cipitately when the money market becomes
tight-but asking a compensation only the
courtesy or the service. OF gratuitous collection
Of their out-of-tOwn checks. Such business
firms or many Of them, II IL unders TODD, are in
clined 10 feel that their own interests can he
furthered in case the Clearing Houses new
regulations are put into effect by transferring
their balances TO trust companies, which viii
pay . per cent interest on deposits; and using
the Clearing House banks media for the col
lection Of their out-of-tOwn checks, the charge
for which service would he Offset by the inter-
est received from the trust companies on the
standing balances.