Evening star., 1914-04-20

On these bonds owned by the national
banks there is being carried in their as
sets S6.6OS,24S in premium account. just
what to DO with this premium is ques-
ton that has been raised by many of
them.
In going into the federal reserve sys-
tenn it will be necessary for the officers
and directors of national banks to GER
thy to all unimpaired capital and surplus
of a certain amount and the disposition of
! this premium will have to be adjusted
to the satisfaction of the controller and
the member banks.
In the controllers last report he states
! that there has been notable deprecia-
tlon in the market value of standard and
other securities. necessitating a cut in
the undivided profit account of banks"
Should this account be insufficient the
banks will nevertheless be expected by
the controller to charge off the premium.
Many of them may adopt the method
pursued by other institutions and charge
this premium on United States bonds
direct to surplus account. which will
merely a reduction of these securities to
their par value.
1nasmuch as the banks purchased
large holdings of these bonds at con-
posits which We're being placed with
the banks at that time. the banks feel
that had not the federal reserve act
been passed they could have reduced
the premium annually or semi annual
ly out of their earnings rather than
show sudden depreciation in their
assets, as has occurred in the market
for government bonds. Should they
be compelled to mark the bonds to par
they would not even then show their
true value. as the 2 per cents are
quoted a point or more under par now.
but in view of the exchange privilege
which is offered by the government
under the federal act it seems fair
han n tC Shn
face value.
Institutions here and there have
taken the bull by the horns" as it
were, and charged the loss to their
surplus or profit account. which will
not anect their earning capacity.
II is understood that the controller Of
the currency is urging this. II this en-
tire sum is charged to surplus account
1t Will reduce the subscriptions of the
national banks to the Federal Reserve
Association by approximately s4O, 600,
though. of course. this sum is insignifi-
cant compared to the s1o5. .oM. 900 capitali-
zation OF the twelve federal reserve in
stitutions.
Members of the District Bankers AS
sociation will gather at the American In
stttute OF Banking rooms 1914 street
northwest. tonight to hold their spring
meeting Among the matters to be con-
s!dered will he the nomination of mem
Der OF the District association as vice
president of the. American Bankers AS
socia.ion. The local bankers also Will
select one of their number to represent
the association on the nominating COM
mlttee OF the American Bankers Asso-
citation. A member of the associat ton
also will be elected to represent the Dis
trict organization on the executive coun-
Gil of the American Bankers Association
for term of three years. A report on
the proposed bad check law probably
VIII be submitted by a committee Of
which Samuel ]. Henry is chairman.
A meeting Of the Washington Clearing
House Association has been called for
costing the name Of local banker to
represent the District Of Columbia on the
directorate of the federal reserve bank
at Richmond. The suggestion has been
made tha. all the clearing house assoc;a-
tons in the federal reserve district of
which Richmond will be the headouar-
ters name representatives who shall be
empowered to decide on the personnel of
the directorate. An effort will be made
to have representation from each of
the five states included in the reserve
district and the District OF Columbia on
the board of directors
The meeting of the stock exchange to-
day was featureiess. Quotations remained
practically unchanged.
101 and Railway and Electric preferred
brought Sc. Washington Gas sold at 81
In the bond list Railway and Electric 4s
sold $500 at 81. and Norfolk and Washing
ton steamboat as sold S1OO at 1O5la. {.
and P. Telephone 5s brought 105 for
$1,000.
Ten shares of Washington Loan and
Trust stock brought 233 and four shares
of Farmers and Mechanics National
Bank sold at DO