New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-06-07
FIRST DAY Of PROBE
HERE PLEASES PUJ0
Counsel Holds Clearing House
Revelations Justify Entire
"Money Trust" Inquiry.
SHERER LONG ON STAND
Manager of Association Admits
Bank Can Hardly Do Business
in New York Unless 1t
Is a Member.

The testimony adduced at the hrs'
hearing in the Custom House esterdaE
before the Banking and Currency 'oi"-
mittee of the House of representatives.
which is investigating the so-Caleu
money trust" was of such nature as
10 Justify the whole inquiry accoruirs
Ia Samuel Untermyer, counsel TOT the
committee. 1t was evident that the III
formation given the committee by VIII
lam Sherer. manager of the New lork
Clearing House Association, VINO was ."
the witness stand the greater part Oh 'he
day. in regard to the business rela'lons
between the association and the banks
was gratifying to the members OF the
committee also
MIR. Sherer admitted in the course OF
his examination that it would be almost
iponossihle for a bank to do business IN
Soy York unless it was a member OF
the Clearing House - sociauoh' ne
conceded that lie discretionary power
IN the hands of the five members OF the
Clearing House committee 10 grant VI
DENY a bank the privilege OF clearing
with the association should be amehaple
IN some sort of judicial revision. lie
said the present la did not compel any
voluntary organization, like the Clearing
House Association. to admit or retain
member unless tie member compheu
with the rules and regulations OF 'hdl
hodv TO the satisfaction of its members,
hut he agreed with Mr.. Untermyer ana
the committee that the law should ne
amended so as not to give this aroi'rary
mower to the Clearing House Ass 'cla-
ton
When Mr.. Sherer expressed the opin-
ion toward the close OF his testimony
that perhaps he had made a very poor
witness. Mr. Untermyer promptly re-
assured him, saying:
ooh. no, Mr.. Sherer; you have made
an extremely satisfactory witness.
Puio Adds His Approval.
Representative Arsene p. PuJo' oil
Louisiana, chairman of the committee
smiled and shook his head in approval
of co,,nsel's remark. At one time "heh
Mr. Tntermyer was rapidly pressing MS
questions, the witness assured nm 'h"'
he could have anything the Clearlils
House had except the combination Vi
the safes"
Al the close of The days session Mr..
Untermyer said:
"Tbe information brought out to-day
IN regard to the arbitrary powers or the
Clearing House Association, without
warrant of law and in restraint OF trdue'
IN nv mind justifies the whole lnVesu-
cation. We certainly should have some
hotter system, which is at least amen
ohio IN the law. The fact brought out
az the hearing that there were more
hanks sixty years ago, when one-tWen-
tieth Of the business was done, as COM
pared with to-day is in itself starting
revelation
The committee had issued statement
earlier in the day, after its organization
at the Hotel Plaza, setting forth the fact
that the main inquiry would not De helu
until after election. Just few minor
hearings, looking into the AFFAIRS OF the
Clearing House and the Stock Exchange
would be held before the summer Naca-
tions, 1t stated.
The principal reason for postponlhg
the main inquiry, the committee stated
was TO meet the insistence of certain
leading financial institutions that the
committee was without power to enforce
IT'S demands for information. Full juris-
diction in that respect would be given
the committee by the passage of the bill
q Y
amendment TO Section 5,24l OF the
Ranking Law, the statement read.
Furthermore. the committee considered
~ jnadvisable TO conduct the pqui.y
during the heat and excitement OF po-
litical campaign.
The substance Of Mr. Untermyer's
questions to Mr.. Sherer indicated that
ne intended to show that the money
trust" power lay in the hands OF the hVe
members of the Clearing House COM
; mittee. They are Frank A. Vanderlip'
president of the National City Bank;
James G. Canno.-, president o. the
Fourth National Bank; Walter E. FTew,
! president of the Corn Exchange Bank;
Richard Delafeld, president of the Ma
| tlOnal Park fdllh, anu Olto L.
president of the New York Trust Com
many. Mr.. Cannon was present at the
, hearing. but was not called as a wit
ness.
BY an exposition of the rules of the
Clearing House Association which pro-
vide for a tax of one-tenth Of i per cent
in certain near territory and one-fourth
of 1 per cent in the states further West
:or the collection Of out-of-town checks.
MIR. Untermyer showed that the sum of
approximately SJO00O00O was paid an
nualiy TO the New York banks by the
merchants throughout the country for
this business This was a 'monstrous
imposition" upon the people, according to
the comm tees counsel and stihed com
petition and was in restraint Of inter
state commerce. An association rule
made it obligatory on the part Of MEM
bcrs to exact this tax under penalty OF a
heavy fine for first violation and ex
pulsiOn from the association for a sec
ond offence, Mr.. Shcrer testified.
Checks for s1O0,0Oo,ooo Daily.
Mr.. Sherer added that about one
fourth of the business done by the Clear
ing House was In the collection Of these
out town checks. That amounted to
over $1O0,OO0,OOO daily, he said. The
average tax, one-seventh Of / per cent
10 dnx