Evening star., 1914-12-09
STATE BANKS HESITATE
TO ENTER NEW SYSTEM
Desire Longer Time to Observe It's
Worhngst1ncreased Capitalize
ton Would Be Required.
Features Of Law Regarding Their
Admission-Local Stock Market.
Southern Railway Earnings.
BY I. A. FLEMING.

|. BY I. A. FLEMING.
The claim was made by the state
bankers and trust company delegates
in conference with the federal reserve
board that it was easy to get into the
reserve system and hard to get out
without liquidation. and the suggestion
is made that the ruling is unfair to
banks that may desire to retire from
the system after giving 1t a trial.
One of the clauses that will cause
savings banks. especially, to hesitate
before accepting membership in the
reserve system is that which says;
mo applying bank shall be admitted
to membership in a federal reserve
bank unless it possesses paid-up cap
ital. unimpaired, to entitle It to become
a national banking association in the
place where It is located"
There are many savings banks with
capital from $4,000 to 100000 which
would have to double and quadrupIe
their capitalization, and might have
some difficulty in obtaining the addi-
tional resources. The national banking
act provides for $2o0.00o as a minimum
capital in cities Of $4,000 population or
over: $4,000 in towns or cities of over
1000 population, and $4,000 in smaller
towns.
The federal reserve act also provides
that state banks and trust companies
entering the system shall, in addition
to other requirements. 'be required to
conform to the provisions imposed on
national banks respecting the limita-
tion OF liability which may be incurred
by any person. firm or corporation to
such banks, the prohibition against
making purchases or loans on stock Of
such banks. the withdrawal or impair
ment of capital. or the payment of un-
earned dividends, etc.
Concerning the section of the law
which gave to the federal reserve
board the power to fix regulations and
bylaws, the state bankers said:
This regulation seems to contain
elements Of grave danger"
Probably Few Will Accept.
Probably but few banks will accept
the invitation to enter. at least until
such amendments have been enacted
that will broaden the entire scheme
and, in a way. change one of the chief
purposes of the act-not to assist in
vestments or aid operations in Sc
curtties in any way and to increase
earning power.
Created to provide against emer.
gencies, inactive in normal times, and
maker. the ability Of the system to pay
dividends on the capital stock of
regional banks, all of which is owned
by member banks. is something Of an
argument against investment Of capi-
talization. The restriction as to pa
per available for rediscount Is appar-
emily a positive objection to the trust
companies entrance. although few
ole fw~
tered.
B. F. Saul of the Home Savings Bank
was the Washington delegate at the
conference.
Conference.
The reserve board plans a conference
with the governors of the regional
banks, at which it is probable that the
objections Of the committee of visiting
bankers will be considered and also
other matters of vital importance will
be brought forward.
1t is within the probabilities that this
conference may recommend amend
ments to the reserve law, to increase
business and induce state banks to join
ST. Louis. Minneapolis, Dallas and
Atlanta regional banks have been au-
thorized to rediscount at 6h per oent
paper Of thirty days maturity.
On the Local Exchange.
There was a material increase in tho
volume of business on the local ex-
change. and yet there was nothing ap-
preaching activity.
Washington Railway and Electric Is
were wanted at s0A, while Potomac
Electric Consolidated 5s brought 99&.
The bid and asked prices continue to
show a steady disposition on the part
of holders Of bonds, and no pressure
whatever to sell.
more or less restricted, some without
restrictions.
1t looks as If the local exchange
might easily prepare restricted list
Of stocks in which trading might be
permitted, starting with bank stocks,
Washington Gas and others.
Bond opening has brought no uneasi-
ness, and this should give encourage
ment to the governors OF the exchange.
Southern Railway Company.
Operating income of the Southern
Railway Company for october de-
creased $947,390, and for the four
months of the year tho decrease was
s1,790,311. The chief loss. compare
lively, in the October returns was in
freight earnings, where there was a
decrease of $934,000; passenger earn
ings decreased s269,063.
For four months of the fiscal year
freight revenue decreased $1,135,551.
Clearing Checks.
The Chicago regional bank is clearing
checks in limited way for any of the
eight reserve cities of the seventh dis
trict. and soon expects to extend opera
tions so as to include checks on any
member bank in the District Business
men hope that the innovation will re-
duce their check collection fees.
TO PASS JANUARY DIVIDEND.