New-York tribune., 1913-07-27
INDIRECT CHECK ROUTING
System Causes Losses at Times
and Is Out of Date.

That banks viii continue untlI lne GU"
Of time 10 tempt fate by indirect rouuhs
Of checks, so long as the process en-
ables them to escape some eAchahe'
charge, is fully proved by some oi tne
things that happen every time oann
fails, saws THE United states investor
Some Of the checks which fail of colleC-
ton because this bank has suspended are
aIwa ys found 10 have suffered from IN
direct routing. If they had been sent
20 the bank which owed them ny Vne
most direct method possible the! "ou'u
have been paid prior TO the talIu'V :.
Under these circumstances the oHeI'ui,'-
bank which could have sent the cheo"s
direct and failed to do so is usually cal''u
unon 70 make good the loss, ana IL h"'
great difficulty in proving that IT was
not delinquent ,,e.
A, interesting case in point has Just
been called TO our attention 1t d
/ IN connection with the recent iaiIu'e ~
| q bank at Norwich. Conn, whose oo"
fall followed hard upon the hha'lCia'
r,iefortunes of the United states III
,ebirc Conpauv. Like all OF that cha'"
of several banks with which tins Con
necticut bank was more or less arIllia'eu'
=, u,as ambitious to shine as collecuhs
agent 1t arranged with banks III o'ho'
,orts IN collect checks for theHi
u,botbsr drawn upon banks IN Nor"lch
o,I,. or unon banks throughout that en-
tire portion of the state. We nave d"
idea that some of the banks VINO en-
nloved il 10 collect this very oo"-
siderable territory for them are eolnS
NOW 70 rue the day that they began the
practice.
Among the checks that failed Of col
lection because Of the failure or tn''
bank was one drawn on a town IN Con
necticut not far from Norwich which
we will call p A resident OF = was 50. %,
iourning in the South and gave checN
upon the bank AT to a Southern oanh'
The Southern bank sent the check 10 i'e
ST. Louis correspondent. a natural course
| eporrb since at that ST. Louis bank TINS
Southern bank keeps its reserve. Inc
81. Louis bank forwarded the check 10
q hank at Albany and the Albany BANK
sent II not TO the bank ut F, but 70 tne
hank AZ Norwich. The bank at Nor"ich
sent Il 10 P and the bank at P RENTED
nromptlv 10 Norwich. Before remit
tsnce from the Norwich bank reacheu
Albany the Norwich bank had failed.
Naturally there was some Chagrin down
I'm the Southern town when payment ior
this check did not come. The southern
hank called upon the resident OF Tor
another check 20 make good the one "hioh
~ had originally cashod for him. he re-
ce,ved the letter from the Southern bank
at p where he now was. and az once
visited his home bank TO make an invesu-
cation. lie found that his original cnecN
had already been charged against MS
balance. He was I'm distress unul inc
cashier of the bank at + explained 10
him that ne had recourse at law against
the bank which mlsrouted the check ana
therefore failed 10 get the money not
| through any fault OF MS, but through It's
own fault Some of the banks who par
ticipated In this devious piece OF routing
have tried 10 persuade the man at + 10
file his claim for the amount of the check
with the receiver Of the Norwich bank
He might have done so had he not been
put on his guard by his home bank. which
warned him that the other banks, not he
should be compelled to push the claim
against the Norwich one.
There is nothing novel about this case.
The interesting fact is that all Of the
banks who contributed to this piece OF
devious routing were big banks. 10 whom
the law requiring due diligence must he
very familiar. One would be inclined 10
ask why big and intelligent banks VIII
take these risks. The answer is probably
| that, in the long run, the saving OF ex-
change through unlawful routing more
than compensates for the occasional loss
| which Is eXperienced.