Evening star., 1914-09-26
CHARGE Of BOARDING
MADE AGAINST BANKS
Instances Cited Of Large Accumula-
tion of Reserve Funds by
Institutions.
Excessive Interest Also Alleged.
Correspondence Between N. Y.
Clearing House and McAdoo.

e~AASA AAe~sS~~SOs
A national bank in Texas which has
piled up its reserve to "A per cent, ap-
parently Is the worst offender in hoard
ing money. a financial practice of
banks denounced by the Secretary of
the Treasury as detrimental to the in
dustrial interests of the nation. In
nearly every state of the Union Is
there to be found one or more banks
which have acquired excessive reserves,
according to the list published by Sec
retary McAdoo.
Maryland shows almost a clean slate
in this respect, having only one bank
Bank of Annapolis, with % per cent
reserves. The legal minimum require
ment is Is per cent.
Five Listed in Virginia.
Five banks in Virginia are on the
= list. The Planters National Bank Of
Fredericksburg has 80 per cent re-
serves; the First National of Graham,
II per cent; Marshall National, As pc,
cent; Tazewell National 20 per cent,
and First National. Wytheville, 81 per
cent.
The majority of the banks in the
Secretary's list were small institutions
as to both capital and surplus, many
OF them influenced probably in their
reserve strength by local conditions
not generally understood-special de-
posits. demands coming of which they
had been notified-or acting upon the
presumption that they would be oblig-
ed, as they had been in the past. to
care for themselves in an emergency.
Duty of Reserve Cities.
The national banking act requires
central reserve cities1New York, Chica-
go and st. Louis-to carry 25 per cent
reserves in cash in their own vaults;
reserve cities-the larger cities of the
country-to carry Is per cent, 12h in
cash and 121s in central reserves, while
smaller banks have to carry but 10
per cent, and but small percentage in
their own vaults.
In the Secretary's list of $50 banks
not a single reserve bank was mention
ed, nor one of the banks in the CEN
trail reserve system.
Continuing his campaign against high
interest and boarding of money by
banks. Secretary McAdoo last night
tional banks outside reserve and CEN
,tral reserve cities. which are carrying
reserves In excess of legal require
mehts. The list IS based on reports to
sponse to the call September IL.
SukkSSIS meGuOQ OF helleI.
III" said Mr.. McAdoo. in a state
ment given out with the list, 1.-The
larger amount of loanable funds that
are kept from active employment, as
indicated by these figures, was invested
loaned on proper security the present
situation would be greatly relieved"
Tne Secretarys statement referred to
me list as showing some" of the ma
oaN
serves and it was understood that
further lists would follow in accord
ance with his recent announcement.
Exculpate State Banks.
The rebuke administered by the Sec
retary of the Treasury to national
banks offending by boarding money,
piling up reserves. Withholding loans
on proper collateral or charging ex-I
cessive interest rates. is not deserved
by state banks and trust companies,
every state banking commissioner who
has replied to the request for cooper
alton made by Secretary McAdoo.
Nearly twenty state banking super
visors have been heard from. They
promise cooperation and sympathy
with the purposes of the Secretary Of
the Treasury. All give assurance that
information regarding the reserves,
loans and interest charges made by
the banks that report to them will be
provided for the national inquiry.
N. z. Clearing House Replies.
At a special meeting of the clearing
house committee of the New York
Clearing House Association. held late
yesterday, Secretary McAdoo's tele-
gram complaining that excessive inter-
est was being charged for accommo-
= hap ka in
Chicago. Boston and ST. Louis was con-
sidered. and the following reply sent
to Mr. McAdoo:
Your telegram received. Except on
some Wall street loans and on paper
placed by brokers. the rate charged to
customers and to correspondents by the
New York banks does not exceed per
cent. Please give us the specific in
stance to which you refer. and. while
we have no authority to control the
rates of interest charged, If there is
any action that is unjustifed or un-
reasonable, we will use our influence
TO correct it. II is the desire of New
York TO set an example that cannot be
criticised"
Cites Specific Instances.
Names of two New York banks are
given by Secretary McAdoo as specific
instances in which excessive interest has
been charged on loans. in response to in
Quiry from the New York Clearing House
Association. The correspondence between
the Secretary of the Treasury and A H.
Wiggin, chairman of the New York
clearing house committee, was made
public this morning.
In giving the correspondence publicity.
Secretary McAdoo withholds the names
OF the banks. They are, however, ex-
plicitly given in his reply TO Nj. Wiggin.
The declaration is made, on authority of
a large bank in the south, that per
cent was charged by these New York
Institutions for accommodation, aggre-
eating in each case about quarter
million of dollars
President Wiggin. in his communica-
ton by wire. asserted that no loans made
by New York banks to correspondents
at Interest higher than PEI cent had
come under his observation. He prom
ised to use his influence to make New
York finances an example above criti-