Evening star. [volume] (Washington, D.C.) 1854-1972, 1914-10-18

year and 1874 per cent less than two
S Sitv ca ago: MINNEAPOLIS and Kansas
prosperous conditions in the territory
tributary to those centers incident to
! the Dig crops Of grain that are selling
at profitable prices and the activity in
the Hour market. At every other city
| however, sharp decreases appear, with
| the railing of especially marked at
Boston. Louisville and New Orleans
average daily bank exchanges for the
! year to date are given below for two
/ years:
G October %, SAT- 1000 $3.50 1855 oot
Second quarter, 47s.4is.ooo $685. ooe
First quarter. sos, O39,OOO 51s16S OOG
Interesting Questions and Answers.
Just at this time the following ques-
lions and answers. asked and answered
at the Dallas convention of the insti-
tute of banking are interesting:
VIII the member banks be permitted
to clear checks of non-member banks
at par?
L presume you mean will member
from nom member banks to be put
through the federal reserve bank. Yes.
Ihls system is not intended to be a
burden upon the present banking bust
IL
fact. it is generally believed the re-
serve banks will even accept non-mem-
per banks checks at a certain DIS
count to help out the member banks In
that connection.
Do l understand you to say that the
checks of the member banks sent to
the federal reserve banks will be
credited as soon as they are received
serve for them If they are payable in
another district. The member bank
will keep one account on his books.
due by federal reserve bank"-but on
a memorandum account he will split it
into two-"in reserve" and in
transit"
The reserve will be operated just as
it is operated in the reserve cities to-
day. There are scarcely any reserve
city banks that do not keep an analy-
sis department. The purpose of that
would be a checking up of balances
Deposits by member banks will be
made on different tickets. one for items
payable in the home district, and an
other for items payable in other dis
tricts and so on, in any event not more
than twelve and possibly two. or there
may be aggregated items from districts
which are the same time away. For
instance, the bank in Dallas is equi-
distant, let us say. from San Francis
co and Chicago, and it therefore could
lump the amounts payable In those
two cities. The reserve bank will have
pose it will be to see that no member
shall draw below his actual collections
sent in for reserve. II he does that.
the excess will be subject to a penalty,
and that penalty has been fixed at a
higher rate than the discount rate.
You know it is not good banking to
overdraw, but it is good banking to
discount; hence any member bank
which continually overdraws must pay
higher rate than II he rediscounted.
In my opinion, that penalty will not
apply when an unexpectedly large
check makes an overdraft which was
accidental, so to speak, but the bank
that habitually overdraws and allows
its account to be depleted will have
to suffer that penalty.
Did I understand you to say that the
federal reserve bank will collect items
on non-member banks?
1t Is presumed they will to equaliZe
trade differences between different dis
tricts. For example: suppose the trade
balance Is in favor Of New Orleans
against New York in the cotton season.
Now, then. New York's reserve bank
would advertise to its members that
for certain period it would accept
non member checks. payable in New
Orleans, which it will send down there
to be collected in the clearing house.
I should have said Atlanta would do
that, for there is not federal reserve
bank in New Orleans.
Will member banks in each district
all be charged the same tate of dis
count?
Yes, sir.