The Washington times., 1911-07-09

/, association insists upon a prompt ad-
| Justment Of the affairs of the institu-
tlon. under penalty of being denied the
privilege of the clearing house equiv
alent to putting the delinquent out Of
| business. Protest against wildcat bank
Ing, the taking of undue risks and dan
| gerous practices is usually heartily ac-
| quiesced in by directors, and prompt
! steps are taken to correct the matters
| OBJECTED to by the examiner, particular
iy when backed up by the clearing
| house committee. :
The deliberations of the clearing house
| committee are always conducted in ex-
ecuttve session, and every member of
the committee, as well as the examiner,
| Is pledged not to divulge any informa-
ton disclosed by an examination, or
fairs
The position Of examiner can hardly
be called a pleasant one, and the duty
or the committee Is certainly not with
out its embarrassments. But wherever
the practice of supervision over assoct-
ated banks has been exercised by a
clearing house committee, the cordial
cooperation on the part of affiliated
banks has contributed, to make the sys-
tenn of clearing house examinations easy
and effective.
Opposition at first encountered has
been eliminated by the success follow
ing the results obtained in a close ad-
herence to its recommendations.
Objectionable features have been re-
moved, and the bank under criticism
placed on a more solid foundation, pre-
pared to Withstand the rigors of a
panic or a period of disaster which 1t
otherwise could not have done.
Every obJector has become a convert
and an ardent champion of the system
of clearing house examinations.
IN addition to the plan of supervision
and examinations performed by clear
ing house associations, many cities
nave naugurated a credit rating bu-
reau for the exchange. of information
many bank has been saved from loss
by reason of being advised OF an over
extended credit already granted to
prospective borrower extended beyond
conservative limits.
Other clearing house associations have
installed collection department for the
collection OF out-of-town checks on
excessive. The cost of collecting items
on remote points has been a source of
constant complaint among bankers, and
too often banks in reserve cities refuse
to carry country bank accounts because
OF the loss entailed in handling their
items
The clearing house association has un-
dertaken In some cities to collect these
items In bulk or by express, prorating
the cost among its members according
10 the volume Of items collected. The
plan has been found expeditions and
economical. and is steadily spreading in
Its operation and effectiveness
In some cities, where banks buy COM
merc1al paper, clearing house associa-
tons have insisted upon the me-can-
tie house or corporation seeking to sell
It's paper to its members, that 1t shall
fle full detailed statement of its con-
dluon prepared by certified public ac-
countants. At present the general prac-
llce pursued ny every bank buying COM
Inercial paper is to rely upon the in
tegrlty of the note-broker as to gen.
u1ness of the paper, and as to the cor-
rectness of the statements of the max
ers of the notes aided by rating of
creditable agencies.
FIRMS or corporations issuing notes
for discount through brokers, have been
found not averse to the above require
'nents.
1t is not claimed that clearing house
supervision will prevent failures, but
t has been demonstrated where clear
ing house examinations are in vogue.
that failures are less frequent and
that lOng-continued, irregular banking
methods likely TO endangcr the rights
of depositors and stockholders, have
been eliminated
The. usefulness of the clearing house
association has proven of paramount
Importance in every community where
active supervision over its members is .
n force. and the results have demon
;trated its operation to be o. inestimabIe
benefit to the banking fraternity enjoy
ng its privileges.