The Sentinel=record., 1912-06-07
GOVERNMENT
 REGULATION
OF NEW YORK CLEARING HOUSE ASSOCIATION WOULD BE
 WELL, SAYS MANAGER.
immense Power Is Yielded by Com mittee of Five and Existence of Banks is Within Their Juris
 dction, He Says.

New York, June 6-The immense power yielded by the New York Clearing House Association over the banks of the country's financial cen ter and arbitrarily lodged in the hands of five men, should be placed under judicial regulation. it was son- ceded by William Sherer. manager of the association, on the witness stand today
 Mr. Sherer was the chief witness at the first hearing held by the house committee on banking and currency. Investigating the so-called money trust" The committee came to New York today to take such testimony as it's powers will permit, pending the passage Of the amendment to the banking law now in the senate, un- der which the committee hopes to be able to enforce from the banks it's demands for the information which it expects to make the basis of reme- dial legislation.
 While todays inquiry was chrac- terized by Ghirman Pujo as 'coliater- al to the main scope of the inquiry, Samuel Untermyer, special counsel for the committee, developed through Mir Sherer, testimony to the effect that the destiny of practically every financial institution in New York was potentially at the mercy of the i "mere whim, determination or or der, of tine five men who composed the New York Clearing House Com mittee'
 The clearing house committee, com posed of Frank A. Vanderlip, prea- iaent of the National City Bank, the largest in the country. James G
 Cannon, president Of the Fourth Ma ad tional Bank WaItek ' K1kwy ps'es~ \ ident of the Corn Exchange Bank:
 Richard Delafield. president of the National Park Bank. and Otto T. Barnard, president of the New York , Trust Company, had full power over the admissions to membership, ac- cording to the witness, and the pow- CT of suspension.
 Then 1t rests with these five men as to whether they can keep com 2 petitor out of the association?n induir- , ed Mir. Uhterneyer. Don't you think that is q monstrous regulation for : an institution doing an interstate business?"
 'The average banker has a moral status to maintain,D replied MT. Sherer. He realizes that he can make more money by walking straight than crooked. I have never known honorable men who are able to fulfill the financial requirements for admission to be refused If the committee took the narrow view of keeping out a competltor 1t would react against them. Merchants and business men, who are the banks largest customers, would never stand for unjust discrimination"
 "I am not speaking of motives,, pursued the attorney, but of the un- bridled and unlicensed power of these men. Don't you think this power :; s;;;ii 5v 5ubJcrt to Juu1ciai review and control
 Mir. Sherer then explained that the clearing house association was vol untary institution, similar to a pri- yate club and that no court would hold that a voluntary institution could be compelled to accept as a member anyone who could not com- ply with it's regulations
 But you know this great power exists; should it not be iudicially controlled?p
 T agree with you" finally conceded MT. Sherer Where there is d wrong. it should be corrected ''
 And this mere whim, determina- ton or order, whatever you are to call it, to stop-clearing for non- mem Der banks-don't you think that taat IS too great a power without judi cial review?"
 The witness again gave an affrma- q tive answer, but asserted that in the exercise of the power it is not so bad as it looks. citing recent in- stance where the committees power was exercised to prevent an insti- tuition, whose officers were not of good character from obtaining mem bership by buying out and merging with clearing house bank" Good character often depends upon which group of banks you belong to, doesn't it?" inquired Mir Untermeyer.
 Oh ! don't admit that" said the witness.
 MT Untermeyer raised question of the violation of the interstate com merce laws when he brought out from the witness that by taxing the col ) lection of checks on out of town banks, the New York Clearing House levied on the country a tribute sof over S4S.000,400 annually This tax. { first imposed 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, MT. { Sherer said, and any bank charging less amount is subject. according to the rules. to expulsion after a sec ond offense.