Evening star., 1915-02-14
FINANCIAL-LOCAL AND OTHERWISE
By I. A. FLEMING,

tne discussion regarding a unificafion
0t street railroad and gas properties.
N even II the difficulties arising from ie-
ga oo9ectlons were removed, 1t would
seem to be hard matter to hrine
about unifcation.
overdrafts.
A Few Of the Washington banks have
gone on record in reply to the request
OF the controller of the currency with
regard to "overdrafts" No recent rul-
ing OF the department has caused 40
much comment. and yet there is almost
unanimity on the part Of the banking
fraternity in condemning overdrafts'
ana especially loans in the form OF
overdrafts. while at the same time the
bankers contend that an absolute rul-
ing against the payment of overdrafts
IN all cases would, perhaps, work in
jury to the business of a bank and
might even bring on law suits. They
claim the right to dictate their own
business policy.
Many are using the controllers order
as club against depositors who are
persistent overdrawers of their ac-
counts.
Commenting on the recent order. the
United states Investor has this to say:
Inc controller would do far better
to move slowly along this new line
One cannot help wondering a little
whether he talked over his most re-
cent letter with a number of practical
bankers before sending it out broad
cast. Although there have been times
when his predecessors In the con-
troller's office have seemed to be al
| most too eager to obtain and to heed
advice from the big New York CITY
institutions, there is some danger that
Mr.. Williams will lean too far in the
opposite direction. He will make NO
ha
ally with possessing quite as wide an
experience in banking and quite as
high regard for the public interest as
he has himself. The fault of his pred
vice than in being too ready to ac-
cept it."
A Bankers Letter.
A Washington banker has this to
say on overdrafts:
The evil of permitting overdrafts by
financial institutions is by no means q
| small one. and I believe we should as
| far as possible comply with the request
| of the controller of the currency. II
| is not possible, of course, to absolutely
prevent overdrafts which arise from
many causes not controlled by the bank
| itself For example, when check
drawn on another institution is de-
| posted and returned for want of funds
| 1T is Immediately charged back to the
depositor's account and thus may cre-
ate an Overdraft, or the depositor may
wish check on his account. believing
the one deposited is good, and in that
\ way overdraw the account.
The same applies to coupons payable
| out of town. where default is made by
| the corporation. or 1t may occur
| through a mistake of the depositor in
| keeping his personal accounts, espe-
cially in the case of woman depositors
Trust companies have a further diff
Guilty to contend with. For example. an
estate may have $1,000 to invest either
In bond or real estate mortgage and
| In both cases there may be accrued in
terest to pay when the security Is pur-
chased. The charging up of this item
OF accrued interest may create an over
draft until the semiannual interest is
paid on the bond or mortgage. Another
| source Of overdrafts comes from the
depositors being a beneficiary in some
estate controlled by trust company
| where to throw out a check might In
volve the company in litigation, in case
| as beneficiary, he had in the trust de-
| partment sufficient amount to his
| credit to meet the check. These are
| not, however, I believe. the overdraftf
which the controller Is really after.
| Il can give you little experience OF
my own which think will throw light
| on the subject.
Some years ago 1 was interested in
me as peculiar that their reports for
\ two years showed no overdrafts. foi
| as practical banker l knew the en-
tire elimination Of overdrafts was an
! impossfbilfty unless in practice, which
In my opinion viii be far Worees they