Evening star., 1914-10-13
H. Parker Willis Discusses
Financial System Before
Bankers Convention.
OBSTACLES TO STATE
INSTITUTIONS EXPLAINED
Early Entry Into Fold Depends on
Way Clearance Feature Is Handled,
Reserve Board Official Declares.

| for their fOrtieth convention were CEN
! tered today in sectional meetings OF
| their subsidiary organizations. H. Par
ker Willis, secretary of the federal re-
serve board, opened the way to dis
| cussion of the nations new financial
system at joint meeting Of the trust
company and savings bank sections.
He spoke however, a financial edi-
tor and not as a reserve board official.
There was no rigid requirement in
the federal reserve act that would pre-
vent state banks from entering the
system, Mr.. Willis said. They would
merely have to conduct themselves in
general way on the basis of bank
ing management required of national
institutions.
He said that in a general way it had
been found that the two principal OBJ
tions into the federal reserve system
were:
THE existence of large element of
real estate loans in the portfolios OF
the institutions.
"The existence of what are called
excessive loans by which is meant
loans to single persons or individuals
greater than the amount permitted
under the national banking law"
1T has been rightly assumed by the
eliminate these two grounds of criti-
oism il they expect to enter the sys-
tem.' said Mr.. Willis. "A good many
have suggested that they be given a
with the requirements of the system. it
being recommended that such time
should include period ranging from
six months to three years.
Points Out Advantages.
He pointed out that it would be of
greater benefit to state banks and trust
companies doing a commercial business
to enter the system than to others en-
gagged more largely in investments and
trusteeships.
Mr.. Willis said the main motive that
probably would impel state banks to
the clearing mentioned. "If the clear
ance provision in the federal reserve
act proves successful said Mr.. Willis,
1T may be expected that business Will
be transferred to the member banks by
those who will appreciate the immense
advantage open to them as a result of
the provisions freeing them from the
oppressive conditions to which they
have been subjected in regard to do
nestle exchange.
I'VE may say. therefore. that the
early entry of state banks into the sys-
tenn depends in a very large measure
on the way in which the clearance
feature is handled and the extent to
over by the federal reserve banks un-
der instructions from the federal re-
serve board. Provided that this work
is undertaken courageously and sue
very greatly the membership of the
federal reserve system. This opinion
advance simply as a personal opin-
ion."
Amendments Suggested.
Members of the savings bank and
trust company sections indicated their
attitude toward the entry of state banks
into the new federal system by recon-
mending to the general convention, that
a committee be appointed to take up
with the reserve board and congressional
committees amendments to the reserve
law. The amendments to be proposed. it
was said, would make acceptance of mem
bership by state banks, trust companies
and savings banks more attractive. APP
pointment of the committee was proposed
by Sol Wexler of New Orleans. One
need for the entry of state banks. he
said consisted of regulations to permit
them to continue business as now con-
Quoted.
The proposal for the appointment Of
the committee will be taken up in the
general convention Thursday.
George NJ. Reynolds. president of the
Continental and Commercial National
Bank of Chicago, and A. Barton Hep
burn of the Chase National Bank of
New York. sent letters to the joint ses
sion stating in a general way that it
would be wise for state banks to await
the result of the experiment with the
new banking system before deciding
to enter it.
A. J. Hemphill. president of the Guar
anty Trust Company of New York, and
E. u. Hubert, vice president of the
Merchants Loan and Trust Company of
Chicago. expressed similar views. They
agreed that the federal reserve act
would require amendment before state
institutions could enter.
Arthur Reynolds, president of the
Bankers Association, also counselled
waiting.