The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1912-07-17
New YOrk's Charges for Check
Collections Unjust.
Boston, Philadelphia and Other
Towns Set Benefit.
USE OF THE CHECK GROWS
Many Small Transactions Now
Made Through Banks.
Charges Act as Restraint of
Trade and Commerce.

New York, July 17.-There is not
business man whose credit is good, who
has any reason to be apprehensive that
the order just issued by the comptrol-
leT of the currency at Washington for
bidding banks to loan in excess of the
amount permitted by law will affect
their own paper offered to banks for
discount provided that behind that pa
per there are real values.
The order recently issued by Comp
troller Murray has caused some appre-
hension lest it result in the curta1l-
ment Of loans to the embarrassment OF
business. The comptroller purposes the
limiting of loans but the curtailment
is to apply to a certain class of loans.
Under the law no national bank can
lend to any one person or corporation
an amount in excess of ten per cent of
the capital and ten per cent of the sur
plus and total loans must not be in ex-
cess of thirty per cent of the capital.
This, however, does not apply to
commercial paper. There is no bank in
the United States which cannot lend
any amount which, in the discretion Of
its officers, it may be justified in lend
ing, through the discount of CONNER
cial paper behind which stand actual
values.
In the time of the money panic of
1907 the National City bank discounted
commercial paper behind which stood
raw cotton. In one day-the first day
counted eight millions in round num-
bers of cotton bills. Some of these pur-
chases were for amounts which would
have been in violation of the national
banking law If it had not been that the
bills were based upon actual values,
upon cotton itself
What Is the Motive?
None of the bankers of New York
city knows why Comptroller Murray
issued this order at this time. They
suspect, however. that the comptroller
has discovered that banks, here and
there throughout the country, have
been disposed to overlook the law and
t. make loans behind which actual VAL
ues do not stand-loans other than
those upon bills of lading or CONNER
cial paper-in excess of the limit :m-
posed by law. The comptroller, who
has undertaken many important re-
forms and who in some respects, has
established as drastic a discipline for
the banks as any of his predecessors in
that Office has ever done, simply serves
notice upon the banks that it will be at
their peril If hereafter they make loans
in violation of the national banking
law.
The comptroller has always expressed
approval of the encouragement given
by the banks to merchants, to manu-
the farmers of the country, by lending
money upon their paper behind which
stand actual, visible and marketable
values For Mr.. Murray reasons that
TINS, after all, is the first and the true
function of banking. 1t has been known
Ia this city that the Pujo investigating
committee, or some members of it
We're informed that if they carried their
scrutiny deep enough into the manage
ment of some of the national hanks
they would be likely to discover that
there had been excessive loans. The
committee, however, has decided that
1t is powerless to make such scrutiny
unless congress amends the national
banking law and the president approves
the amendment so that congress NAV
have power equal to that of the comm
troller of the currency so far as the in
vestigation of national banks is con-
cerned. 1t can be reported with GER
tainty that the comptrolIer's command
will not in any way affect loans Tnada
to business men upon paper behind
which stand commodities or active
values.
A Very Serious Question.
Apparently the committee of the
Clearing House association of this city
which is now engaged in investigating
the whole subject Of collection CHARGE
made by the banks upon the checks de-
posted with them and drawn against
the so-called country banks has dis
covered that there is a widespread and
very strong feeling throughout the
OAnteo states winch IS in antagonism
to the rule adopted by the Clearing
House association about Is years ago
by which standard charges for tbe
collection of out of town checks were
fixed. Members of the committee have
informally had their attention called to
the very broad and liberal method
adopted by the Boston banks in regard
to this matter. Apparently the bank
ers OF Boston are strongly of the opin
ion that whatever the actual cost of
the collection of out of town checks
deposited with them may be, neverthe-
less it is in the long run to the ad-
vantage of the business and commerce