The evening star and Newark advertiser. [volume] (Newark, N.J.) 1907-1908, 1907-07-22
CLEARING HOUSE
FOR EASTERN NJ AD-
vOCATED.
Newark Bankers Do Not Favor PROPOSE
ton of Writer in New York
Financial Paper.

In an article written for and printed In
n New York financial paper, the writer
proposes that a clearing house for banks
be formed for the acc ,nnmodation of banks
|. the cities of ten Of the Eastern States.
He stated that In 1889 the New York
Clearinghouse adopted rules that banks make
charges fol, all collections on checks from
outside of New York City and BROOKLYN
which. he claims, is not feir to country
banks. He SAYS the rules were amended
in 1899 and 1901 so that collecting banks
could use discretion IS 10 making charges.
and that In New Jersey to its discretion
airy places are Newark. Jersey City, Hobo
ken and Bayonne, while in Paterson, Eliz-
abeth and Trenton the charges for collect
ing 10 onc-tenth Of l per cent. Here is
tho authors prop sition for a new clearing
house:
LIEF all banking Institutions Of Greater
New York. not members OF a clearing
house. form an association for protecting
business interests. Each institution to
have a vote. and. stand upon its own fourl-
dation. Not to act as the redemption
ageat for any other institution; to be In
dividrally responsible for its trans
actions. Any proviso recommended to be
adopted affecting other institutions as a
class. not TO become operative unless
adopted bv a vote Of th~ree-fourths of all
the Institutions represented. effect the
daily exchange and pay all balances in
coin, legal tender notes, or clearing mouse
gold certificates. Make a free zone of the
ten States included on the mar referred
10. for the collection of out-of-town checks.
: Extend an invitation to banking institu-
tons to become members making daily
exchange of checks. including Yonkers,
staten Island, Jersey City. Hoboken, New
ark Orange, Elizabeth, Paterson. Passaie
and Hackensack. First. city clearing, sec
ond. cities nearby; third. country checks'
Including ten States. Exchanges could De
mutually arranged between the TWO clear
ing houses by each sending a representa-
rive TO the other conveying all packages
and settle balances In treasury gold GER
tIacatos. coin or legal tender notes daily.
Provide n constitution stable and eHec-
tive. with reasonable admission charges
and YEARLY dues. Result would be tremeh-
dons saving of labor, time anu expense,
also provide the greatest security " ~
business interests.
.orhere are very many firms and corpora
t,ons in New York who receive a large
proportion of out-of-town checks ana the
charges for collection amount TO a very
large sum of money yearly. They keep
large balances in banking institutions.
Nevertheless. under clearing house regu7
lations they are heavily taxed. Take FOR
instance. II. b. Claf1n & Co, Tiffany q
Co. Macy. Altman. in fact all the large
stores In both New York and Brooklyn.
an are made to suffer alike simply because
there are comparatively few business
firms keeping small bank balances which
NAV run very close to the limit, especially
IL they have to depend mostly on out-ot-
town business The bank can protect
ifsclf and do so without calling upon me
largest nroportion of its depositors to
make good for the deficiency of a few.
same hanks are so determined to make
a nront out of n situation In their daily
routine of exchanging checks as to De
unwilling to give up ill-gotten gains II IL
can be prevented. They are not satisfied
to make their profits out of their deposits
alane. but insist in doing so out OF the
volume of daily trar sfer of funds by
check. that Is really not the function OF a
bank to attempt to do
officers in three local banks and trust
companies said today such a clearing house
as proposed might be a benefit 70 Newark
banks and trust companies. ana that IT
would be better II Newark had one ~ It's
own for its banks and those In Essex
County. Other bank men said they dlu
not favor the proposition. and that they
believed II would be a long time before
Tho system in vogue at present would be
changed.
They said that for years the New York
hanks had accommodated Newark banks
and got nothing for II. and that they hau
10 charge for making collections from out
side banks on checks sent to merchants
and manufacturers and financial men In all
parts Of the United States. for individuals
and firms wanted TO draw against the
checks 1i,ght after depositing them. so
that the Banks could not make anything
on the depssit, for the balances arc small,
Vice President Frank B. Adams, OF the
Essex County National Bank. said a New
ark bank once consented to clear for H. s.
Clafin e. Company, but soon gave 1t up. be-
cause the company. after depositing checks
on banks In the West and other distant
places, wanted to draw against their ac-
count at once, before the bank could col
lect on the checks. The result was that
tho company did not have large daily and
weekly cash balances in the bank and the
business did not pay.
Vice President Albert II. Baldwin, Of tbs
National Newark Banking Company, said
The New York banks had TO make a'smal
charge for making collections on outside
checks. for the work necessItated the EN-
ployment Of more clerks, and there were
other expensts He said the present sys'
tenn OF collecting by New York bank.
would continue. for It worked well.