The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1912-11-17

banks that are found debit In the
morning-l0 to 1880 o'clock-pay
into the clearing house their debit
balances at p. NJ. the clearing
house redisttbutes the amount to meet
to the creditor banks At l:3o p. NJ
OF course. the credit and debit balances
equal and prove each other. Each bank
settles with the clearing house pre-
cisely as two banks would settle with
each other, II there were only two
banks in the town The exchanges OF
the New York Clearing House for last
year averaged more than $325, 100000
daily; this was all accomplished by less
than a half hours work In the morn
ing, and again In the afternoon. ano
instead Of the banks collecting this
1926, 100000 daily from each other, and
paying IL to each other, with attendant
labor and risk involved In sending so
much money about the streets. the
cash requirements averaged about $lS,-
100000 daily-or not much In excess
Of 5 per cent of tho totals involved
By charging our vision to include
the whole country, 1t Is easy to realize
what q great service the clearinS
houses render to commerce.. trade and
business generally. by accomplishing
this maximum of business with a
minimum of time and expense.
and a minimum demand upon the ac-
tual cash Of the country. This SER
vice is little known TO the average
citizens. and Is. therefore, not ap-
preciated.
have described tho only normal
function OF q clearing house. and the
only function II would be called upon
to perform but for the grossly de-
fective laws which govern our none
tary system "A feilow-feeling makes
tho whole world kin" and q common
danger cements kindred interests In
united effort for mutual protection.
Brought into close and harmonious re-
lations in the clearing house. II natur-
ally follows that in times Of financial
stress and business peril the banks
should combine effort and act through
the clearing houses Of the country Tor
tho Genefit Of commerce and in aid OF /;
individual members Of the community.
Defects In Our Monetary Systen.
There are three cardinal defects In
our monetary system. not to mention
others, from which other great COM
mercial nations are reasonably I'm
mune:
First-Ths reserve power Of the
banks; the cash they holland which
is a margin of safety In dealing with
the public, and which supplements
the use Of checks and drafts. which
may be Characterised a auxiliary
currency-should b under centralized
control, an sltruistic control DON'T
mated By the govssnment In order
that the same may - used Whsu and
whore needed for the common good.
In whatever section Of the country
conditions may call tor it, ose. Under
present law each Of our $1,000 banks
holds Its own cash reserve. and whom
ever troublesome tirnes come or three
ton. all banks naturally seek tol
strengthen themselves BY increasing
their cash holdings-they enter into
active competition for this purpose,
and in SO doing refuse loans and with !
hold currency. Past experience has
taught them that IL they part with
which they can with certainty obtain
more The situation 10 thereby aggra-
waited, and threatened trouble may be
made actual trouble. all because Of the
natural working Of the Law.
An Elassle CUrreDey.
Second-The volume Of metallic
money comes through the mint and
partially disappears By abrasion, loss
and through the melting pots OF the
jewelers.. A to any particular coun-
try. the volume may be increased Oh
diminished BY export or import While
the volume Of coin money varies. IL -
in no sense responsive to the varying
needs Of sus:nessL A properly reSv-
lated bank currency IL the only cur
rency. which the experience Of the
world has devised, that Will come into
being when wanted and retire when
there u no longer need for its use
Under our Law banks must buy bonds
w hich command prsmsum. a. security
for circulation. and must pay more
for the same than the amopns Of cur
rency they are permitted 70 Issue
thereupOn. By taxing cut circulatton
a bank locks ~ money In . bond In
vestmenI end u thereby lesssas It's
ability to supply the needs Of its
customers.
Commercial hanks are Aessgnea -
serve and supply credit % commercs
and trade. both lasge sn1 snail The
notes and loans whach they hei1 repre-
sens che hoDs0 of Dge0psrtSy q Tie
millions q De6pis throughout TIE ian1,
she have sought credit WITH Tie eaaks
In order to supplsmsat their evs re-
sources and realsse The Srsoses Gs1a.
such credits reprcoeas bosh bsass and
bsawn-shs ssSOss. shs tabosss. TIE
merehaaI tie 0ssufaesuser-a01 ere
the best ere1st. he beSs assss that
any nation eaa Dreducs; their char
Ac,er corrssDos1s - tss 0tssAorA Of
eommsrcssJ hs0es which eesaino 10 the
eommpsisy. Mutsas % peopSe are
striving TO meet as1 ~ sAsos Seu-
cations as nstuS1sy, In order - prO-
tecs their cre61s 80 ssve shess eoaa-