The Washington herald., 1913-01-07
Workings Of Salt Lake Clear
ing-House Association Un-
der Investigation.
AS lawful EXAMPLE"
President of Bank Tells of Methods
Used to Force Concern to Work
Under Disadvantages.

JujO subcommittee was resumed Nester-
day afternoon with the Salt Lake City
Clearing House Association under ex-
animation by the counsel for the com
mittee. Samuel Untermyer
In the workings of thesSalt Lake City
Association, Mr.. Utermyer believes that
he has the opportunity 10 present an
example of the most fragrant misuse
of the powers OF seniority and majority
in financial associations existing any
where in the United States. For
new institution to enter the field OF
competition for its share of the banking
business of the Norman metropolis. was
shown to be the signal for concerted
movement on the part of the existing
banks to compel the Junior concern 10
operate under the most hurdensome dis
ADVANTAGES 1t was shown that vir-
tual combination in restraint OF trade
exists among the banks of the city.
The methods Of the senior institutions
were first discussed in the testimony
of Will W. Armstrong. president of the
National Copper Bank. An attempt
was made by representatives of the
other banks, within the Salt Lake Asso-
citation, to explain their reasons Tor
concerted adverse action against the
newcomer. but the impression left by
the general testimony was that in his
awful example" Mr.. ttermyer had
chosen wisely.
President Armstrong related how when
his institution had entered the banking
field at Salt Lake he had at once
joined the existing Clearing House Asso-
citation As soon as his bank COM
menCed an active campaign for the big
business Of the CITY ne was confronted
by the adoption OF a new rule by the
Clearing House Association. whereby his
bank and all other banks OF Salt Lake
were forbidden TO solicit the accounts OF
commercial houses and industrial cor
porations by means Of offering us an
extra inducement any special advantages.
This was true with regard to tie rates
of interest paid on accounts. For check
ing accounts there was an utter inhin
ton of any interest allowances. The
older banks Of the city. where interest
had been continually allowed on certain
OF their major checking accounts. insist
ed and maintained their right TO continue
such allowances. but on the new bust
ness there was an absolute embargo
The National Copper Bank refused TO
abide BY the rule. and in November. 1910.
the Clearing House Association withdrew
the rule from its list of requirements.
This, however. did not suffice for the
senior banks. In January, 1912. the cam
paicn for the forcing of the hand Of
the National Copper Bank was renaugu-
rated. The abruGated rule was again
voted into the associations rule book.
The Copper Banks directorate. on tn"
advice Of counsel refused to vote on
the rule. but in April. in respons" to-
the absolute demand OF the association.
they voted no.
This was the signal for draSti" action
| nable to force the Copper Bank I"
its knees. III" other members Of the as
s"Ciatiou withdrew from the Salt Lake
clearing house and formed new clear
ing association. with tn" Copper Bank
outside. th, brea stworks. They were in
yit..I to ioin and subscribe to the exist
ing rules but have declined on the
ground that -he efforts uf the Clearing
House Association constitutes a comhi-
natiOu-in effect. a trust-fnr the purpose
Of restraining Interstate trade. that tn"
rules DELEGATE TO the clearing house
DartiaI rnaragrmcnt Of the bank to the
clearing house commlttc" granting judi
cial and legislative power over the banks
own PROPERTY. and that th's" rules are
against the best Interests "t sharehuld-
crs and depositUrs of II" COPPER Bank.
w. :. Mccormick. head ii the State
Banking Corporation "f Mccormick K
Co, and member "f the clearing
house. followed Nr Armstrong on the
stand. Mr Mccormick w"S inclined to
minimize the importan"r "f the placing
Of the restrictions upon IN" banks OF
salt Lake with view to forcing tn"
National copper Bank {" tn" adoption
of the rules Of tho other hanks Of the
city.
Prank Knox. president "f the Ma
tionaI Bank Of tho Rcpuhlc. testified
a aIoug similar lines
Charles : Burton. president Of tho
Utah National Bank and secretary OF
the Clearing Hous" As" 'iatiOn. and l..
H. FarnSwCrth it's president. also ap-
p,ared and testified that the association
considered its rules fair and Just and
that they We're at any tim" Wiling to aC-
ccpt the National Copper Bank to mem
h"rship if it would ONLY ahiJ'. 10y their
rules
q &. Henry, a member Of tho firm Of
William Salomon & 60. :, Broad Street.
was the last witness Of the day. NJ.
Henry had been sUbpunacd to produce
the documentary explanation Of the deal
whereby Salomnn Il Co. in conjunction
with Lewisohn Bros. and others, had
made tn" fiOtation of the stu"k issues Of
the California Petroleum Company.
Mr.. Henry produced the papers. tho
agreement between the bankers and Do
heny and Garfield and the contract for
the fotation of the whole Of the issue
These were the failure to present which
at Il previous hearing had nearly result
ed in the arrest of Frederick Lewisohu
on charges of contempt
Alleged manipulation OF beet sugar
stock on the New York Exchange is
made the subject of resolution Of in
quiry introduced in the House yestcr- !
day by Representative Boland of Mis- /
souri,. 1t proposes an inquiry by the
Money Trust Committee into the sccuri- {
ties OF the American Beet Sugar Com +.
pany. 4 $20OOG. OC0 corporation organized
under the laws of New Jcysey
At lengthy executive session OF tho .
Pujo money trust investigating commit
tee yesterday afternoon. Samuel Inter /
myer told of his arrangement with VIII |!
liam Rockefeller's attorney whereby the
Oil macnatc agreed to accept !
service of the committees Subponean TO I
appear as a witness.
Mr. U-ntermyer repeated to the COM /
mittee, it is understood. the assurance (
gwen him that Mr. Rockefeller would |
appear to testify should his health per- |
nit II forced to send a physician's g /
certificate Of inability, Mr.. Rockefeller /
IS said to be willing to submit to ex- !
animation by physicians selected by the !
.Ommittec.
From members of the committee il |
Mas Icarcnd last night that Mr.. Rookie |
'clIer is expected to come to Washing |
onG January - 10 testify. IL his health |
permits. Assuming this to be n fact, the |
considered no plans yesterday |
or the apprehension OF Mr.. Rockefeller |
md the use of force to compel his at
endancc.