The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1912-06-07
Rv Associated Press.

= by ASSOCldLCo FTces
New York. June e.-That the i'm
mense power welded by the New
Y ork clearing house association over
the banks of the country's financial
center should be placed under judicial
regulation was conceded by William
Sherer, manager of the association,
testifying at the first hearing by the
house money trust committee to-
day.
Special Counsel Untermeyer. Tor the
committee. developed, through Sherer' s
testimony, that practically every
financial institution in New York is
potentially at the mere whim and de-
termination of the order" of FIVE men,
composing the clearing house commit
tee. Scherer admitted the National
City Bank is earning forty per cent
on a capital of twenty five millions.
The first witness was Prof. ]. Laur-
ence Loughlin, formerly of the Uni
versity of Chicago and new head Of
the National Citizens League for the
promotion of sound banking. He was
questioned by Samuel Untermyer.
special counsel for the committee, as
to what banks had contributed to the
campaign expenses of the organiza-
tion which is Supporting measures for
monetary reform.
MORGAN'S NAME ABSENT.
Mr.. Untermyer brought out that no
contributions had been made to the
organization's campaign fund by ]. P.
Morgan & Co. and Kuehn, Loeb & Co..
and wanted to know why. Pro.
Loughlin said merely that they had
not been solicited.
What l want to know is why the
names of these great private bankers
are SO significantly missing from your
subscription llst?" asked the attorney
of the next witness, Irving T. Bush,
chairman of the New York branch OF
the organization.
There was design not to ask the
private bankers" said the witness.
The theory is that the business men
and the banks of deposit of the coun-
try should carry on the reforms by
themselves. The burden of a panic al
ways falls on the merchant
Andrew Carnegie, he added, had
contributed $4,000.
What kind of a merchant Is her"
he asked the lawyer.
We'll, he was some merchant in his
day." laughed Mr.. Bush
VOLUNTARY ORGANIZATION.
William Scherer, manager of the
New York Clearing House Association.
testified that the clearing house was
an entirely voluntary organization
and was sole Judge of the ability of its
members. These In 1853 numbered 81
and in 1910 fifty, he said, although the
business of the clearing house had
grown in that time from millions to
billions.
Mr.. Untermyer asked why the
clearing house had established a rule
barring from admission all banks with
q capital less than $1,0oO,ooO.
80 that the depositors will have
something to fall back upon," said the
witness.
But" said Mr.. Untermyer, ~if it is
barred from admission by that rule, it
must clear through some member of
the association ?"
They can pay over the counter" /"
said the witness.
But you know that that is not
practicable" commented the lawyer.
He then brought out that no member
of the clearing house could clear for a
non member without consent of the
clearing house committee.
You know that banks are not al
ways able to get member to clear
for them, don't you"
yes, sir. A member assumes a
great responsibility"
IAN that could be avoided II the
clearing house would let down the
bars and let a reputable bank in
couldn't it?'
Mr.. Sherer said membership was a
question of judgment.
Mr.. Untermyer attempted to take
the witness through a list OF clearing
house banks to determine, If possible,
the interests in control Of them. Mr..
Sherer, however, was reluctant to give
testimony along this line.
Take the Hanover National-that
Is known as a Morgan bank. isn't II p
'I don't know 1t as a Morgan insti-
tuition" said Scherer.
well. the National City-that is
known as a Standard Oil bank, isn't
it?"
Il have heard II referred to as such
in the newspapers, but I am not COM
petent to testify as to these matters
under oath"