The Washington herald., 1912-06-07

or trust company, whether it be a men,
, Der of the association or merely by
| clearing through members. by denying II
/ the privilege of clearing directly or in
directly Mr.. Sherer admitted that no
bank or trust company in New York
| not even the strongest-could assemble a
/ sufficient supply of money with which
to Withstand a sudden run, such as would
| follow expulsion from the Clearing
] House.
Can Refuse MemBerShIp.
Should even the strongest bank or trust
company in the city be taken over by
new owners it would not necessarily re-
tain its membership in the association
Tle Clearing House Committee could re-
fuse without cause to permit the old
member that had fallen into new hands
TO remain a member
Thirteen years ago the clearing house
committee arbitrarily fixed the fees to
be charged by all its members and non
members" for the collection Of out-of-
town checks. The first year OF the oper-
alton of this arbitrary rule yielded S25.-
100000 to the money trust. Last year Il
yielded around S5O,COO0OO, this for the
mere cashing Of checks sent into New
York by out-of-town banks.
When the Clearing House Association
was established in 1888 IL had a bank
membership Of fifty-two. Its present
bank membership is only fifty, although
in the fifty-nnth years Of the life Of
the association the city's business has
been multiplied by more than twenty.
Two years ago the bars were let down
little. and seventeen trust companies
were taken in as members. ''Non-mem-
bers" to the number Of twenty-seven are
now clearing through members.
Only One Outsider.
Every national bank in New York ex-
cept the Hartman National. is now a
member. Explanation was obtained from
Mr.. Sherer as to why the Hartman Ma
tionaI has not been taken in. since it
meets the requirement as to a million
dollars capitalization.
For five years no new bank has been
organized in New York. though during
that period there have ben many con-
solidations of banks and trust COM
panIes.
Mr.. Sherer admitted that with its firm
control of the money market the clear
ing house had the power to interest rates
for loans. but said this power had never
been used.
Before the taking Of testimony was
begun Chairman Pujo read a statement
prepared by the committe and counsel
in executive session at the Plaza Hotel.
asserting that after hearings as to the
operations of the New York Clearing
House and Stock Exchange have been
concluded in this city next week, the
committee will adjourn until next fall
The reason assigned for this determi-
nation was two-fold. The committee per-
ceives 1t to be not desirable to carry on
the investigation in the heat and ex-
also deems II unadvisable to test its in
quisitorial powers too far until the
amendatOry legislation passed by the |
House and now being held up in the |
Senate shall have been enacted into law |
and signed by the President.
Outline Central Bank Plans.
Mr.. Sherer was preceded on the witness
stand first by J. Lawrence LaughIin, |
professor Of political economy in Chi |
cago University, and chairman Of the |
executive committee of the National !
Civic League. of which John CIafin, Of |
New York, is president, and then by
Irving Bush, treasurer of that Organiza-
ton.
1t was developed by their testimony
that this league, for a year, has been de-
voting it's energies and resources to an
campaign favorable to the
adoption of the Aldrich bank and cur
rency reform plan, one of the chief |
features of which is a central bank. Pro-
lessor Laughlin has had active direction
of the work, and has spent S216OOO thus
lar.
Both of these witnesses insisted that
The big private banking houses IKE ]. P.
Morgan and Company had not contrib
lted to the educational fund of the
eague, because II was considered de-
5irable to have the money come from na-
ional and other banks that dealt largely
n commercial paper.
Andrew Carnegie had subscribed 5000
Mr.. Bush said.