Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1912-06-07
First Hearing on money Trust
Power of New York Clearing
House Should Be Regulated.

New York, June 6.-The immense
| power WELDED by the New York Clear
ing House Association over the banks
of the country's financial center and
arbitrarily lodged in the hands of five
men should e-'placed under judicial
| regulation, it was conceded by Will
liam Sherer. manager of the assoeia-
| tion on the witness stand, today.
| Mr.. Sherer was the chief witness at
\ the first hearing held by the House
committee on banking and currency
which is investigating the so-called
| Money Trust" The committee came
to New York today, to take such tes-
| tinony as its powers viii permit.
pending the passage of the amend
| ment to the banking law, now in the
Senate under which the committee
| hopes to be able to enforce from the
| banks its demands for the Informal
ton which it expects to make the bas-
| is of remedial legislation.
While today's inquiry was charac-
| terized by Chairman Pujo as "Collat-
eral'' to the main scope of the inquiry,
| Samuel Untermyer. special counsel for
| the committee. developed through Mr..
| Sherer, testimony to the effect that the
destiny of practically every financial
| institution in New York was poten-
TALLY at the mercy of the mere within,
determination or order" of the live
men who composed the New York
Clearing House Committee" Mr.. I'm
termyer referred to the regulations of
the association comforting this power
as "Monsterous" and also raised the
question as to whether the association
did not violate the Interstate COM
merce laws in the banking operations
of it's members with out-oftown
banks
The Clearing House committee
which is composed of Frank A. Van
derlip president of the City Bank. the
largest in the country; James G. Cam
non. president of the Fourth National
Bank: Walter L. Prev, president of
the Exchange Bank, Richard Della
fide. president of the National Park
Bank and Otto T. Barnard, president
of the New York Trust Co., had full
power over the admission of member 4
ship according to the testimony of the
witness and power of suspension.
.Then it rests with the five men as
to whether they can keep a competitor
out of the association inquired Mr..
untermyer. Don't you think that is a
monsterous regulation for an institu-
ton doing an interstate business"
"The average banker has moral
status to maintain" replied Mr.. Sherer.
He realizes that he can make more
money by walking straight than
crooked. | have never known honor
able men who are able to fulfill the
q.
be refused. If the committee took the
narrow view of keeping out a COM
petitor it would react against them.
Merchants and business men who are
the banks largest customers would
never stand for unjust discrimination"
Il am not speaking of motives" pur-
sued the attorney, but of the I'M
bridled and unlicensed power of these
men. Don't you think this power
should be subject to judicial review
and control?"
Mr.. Sherer then explained that the
Clearing House Association was vol
untary institution similar to a private
club, and that no court would hold
that a voluntary institution could be
compelled to accept as member any
one who could not comply with its
regulations.
But you know that this great power
exists: should it not be judicially con-
trolled?"
Il agree with YOU" finally conced-
ed Mr.. Sherer Where, where there
is a wrong it should be corrected"
"And this mere within, determination
or order. whatever you are to call il
to stop clearing for non member
banks. Don't you think that that is
to great power without judicial re-
view"
The witness again gave an affirma-
tive answer, but asserted that in the
exercise of the power, lit is not so bad
as it looks" citing a recent instance
where the committees power was ex-
ercised to prevent an institution whose
officers were "Not of good character"
from obtaining membership by buying
out and merging with clearing house
bank.
Good character often depends upon
which group of banks you belong to,
doesn't it?" queried Mr.. Untermyer.
"Oh | don't admit that" said the
witness.
Mr. untermyer raised the question
Oh tlc VOCATION Ille
merce laws when he brought out
from the witness that by taxing the
collection of the checks on out-of-
town banks, the New York Clearing
House Institution levied ON the coun-
try a tribute of over $4S,000000 annu-
ally. This tax which was first inn
posed by the Clearing House in 1899
amounts to one-quarter of one per
cent. or one-tenth of one per cent,
according to the territory from which
the check originates, Mr.. Sherer said
And any bank charging less
amount is subject, according to the
rules of the association, to expulsion
after a second offence.
Don't you realize that the collec-
tion of out-of-town checks in this
manner is in restraint of trade
asked Mr. Untermyer, after pointing
out that it was impossible for the
clearing house banks to compete with
each other for a customers accounts
by offering, for example,. to collect
their checks for nothing.