New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-06-28
CLEARING HOUSE THE HUB
Van Tuyi Says Spokes Of FInan-
ciaI System Point to New York.
TRUST COMPANIES MEMBERS
State Superintendent OF BANKS
Finds That Their Admission
Strengthens the Wheel

o;eorqe r Van T,,vl state Superintendent
ot Banks. sent 10 the Senate -,
report "On the circumstances ana cohu'-
items under which state pahhS anu
companies Of New York city nave Jo.''eu
the Clearing House Association anu Nv"
the Clearing House rules anect the s'"'
laws and the institutions under the super
,,.ion of the state Superintendent OF
Banks"
The summary Of his report foilo"s
All clearing houses by their constitution
reserve the right 10 penallZs. suS ,,ppSich saii
expel from membership memoirs VA - re-
to comply with their regulations anu
fuse admission arbitrary: 49, .,rh, ~
Y, mus, he conceded that the rlght "
membership in a clearing house Is on -
great value for many reasons, anu ~ n'"es
also he conceded that me suspension VI
withdrawal Of that right thus attained IS d
serious reflection in the popular n!nu IN
upon the credit Of a hnancial li,trs
Since the state imposes laWrui res'i 1911
IN many WAYS upon the banking lnslltu
tons and nv means Of the powers OF tne
Banking Department enforces lneIu' Lio o
state In qualified sense gives cel IN ~
OF character 20 every INSTITUTION uhuei 10
jurisdiction by permitting II 70 continue
business
The people Of the state. while exerci sing
the perfect freedom Of choice as 10 liielr
demonstrates.
ali state institutions permitted 10 continue
business are solvent and able 20 pay thelr
la Utilities upon demand. ana YET " Is coh-
coded that a state institution cor1ple.ely
solvent bv every test OF the Banking De-
rartment. complying fully with every statu-
tory requirement. might be expelled OF sus,
rended from a clearing house or refused
admission 10 n for failure 70 conform 10
some extra restriction imposed upon " oy
tne constitution OF clearing house. which,
from the nature Of It's business. might ne
detrimental or unfair % II. WIN the reSuIt
that II might not only ne inJuIed ~ IL
business but run might he started ny
tlrrid depoSitors because Of such refusal.
su7pcnsi0n or expulsion. and + might be
come embarrassed through lnaoiliy 70
quickly realize on perfectly good asses
!, would seem clear that We owe some pro-
tection u the institutions Of our own crea-
tic1 which comply with all the state laws
and requirements. even the unlntended III
/ tIrv of uncontrolled power.
With the recent admission 70 membership
in the New York Clearing House or trust
COMPANIES which now contain as great oe-
posts in the aggregate as banks. " may
conservariveIv be said that the New York
city Clearing House il the hub OF the imam
Cial system Of the United states. and that
q notable percentage not only or bank de-
posits Of the state. bur OF the nanon. are
under the control Of that association. The
perscn mel ~ IFS officers ana committees
Changes from year 10 year. but these men
all represent the institutions constituting us
membership
After setting forth the basis on which he
POUNDS his report. Mr. Van Tuyi reports in
part as follows N the Senate.
cannot find that there has been any
onposition or the part II applicants for
membership in the Clearing House Assocla-
ton 10 the regulations enacted In the Clear
ing House Associations constitution 70
cover the situation The action OF the trust
companies who Joined the association was
purely voluntary on their part ana they
were az no time IN doubt as n the require
rnants 20 be demanded of them by the
Clearing House Association. In Other
words they knew that for years the CIear-
Ing House had exacted larger cash reserves
Of a state banking institution than were
required by law. but they were Wiling 70
meet the Clearing House requirements for
the sake Of the supposed privileges gained
hy being d member Of the association
In reference 70 whether the rules ann
any Of the laws 81 the state OF New FORK
in their application 70 any institution under
the supervision OF the State Banking De
psrtment." | can ind three cases where
clearing House requirements relating 10
Z reserves differ from the state law
Firsr-The requirement OF IeserVs 10.
state banks under the clearing rouse
rUling changes the privilege OF keeping ~
rer cent OF its reserve with the reserve de
pOsitory. requiring cash for the entire -
per cent which has always been the clear
ing House rule = ...... ..~
trust companies under Clearing House
ruling require an additional 10 per cent re-
serve n be deposited with a member or me
Clearing House having > per cent cash
reserve IN It's vault
Third-The Law Of l911. known as chapter
206 Of the banking law. whereby New YORK
state and New York city nonds owned
80, no deducted from the net balances re-
otii~ad as computed heretofore. upon "hi'n
10 compute reserve. has never been actrd
rIpon by the Clearing House committee,
and in consequence - not az me pIt.gI,t
,,-,a consiIered in any way IN computing
the Clearing House reserve which all mem
bers must report.