The Birmingham age-herald., 1915-05-13
Appeasing Country Banks

s.It seems to have been the idea in Con gress that country banks would be ap- peased by the provision that they might make a charge against those of their pa- irons whose checks were cleared through the federal reserve bank. In other words if MT Brown of Dothan should draw his check upon the First National bank of Dothan, in favor of Smith X Co. of Chi caso for S1oo, and that check should be returned to the Dothan bank for pay ment through the federal reserve bank of Atlanta, it was thought that the Dothan bank could charge MT. Brown b cents for having paid his check in Chicago funds. The fact, however was evidently over looked that MT. Brown would not look with favor upon this charge, which if per sisted in, would result in the loss by the First National bank of Mir. Browns ae- count Neither Is the permission given to charge for exchange sold to patrons any more satisfactory to the small bank, for i the reason that their patrons have long ], since gotten out of the habit Of buying bank drafts and make a practice of remit l ting their own checks. It seems, there l fore. in actual practice that the only charge allowed is for actual expense in- cured in collecting and remitting funds 1 which must seem mere pttance to banks that have been charging 9 cents per Sl00 Yet the federal reserve banks are re-
 
 l member banks or from federal reserve banks checks and drafts drawn upon any l of its depositors.' and the federal reserve board is charged with the duty Of carry ing out the law.
 Tt has been the earnest desire of the board to cause as little hardship as possi- ble in making these changes, and after a careful study of the whole subject and after many conferences with representa- tives of all federal reserve banks and of
 fcers of member banks, plan has beer agreed upon which will be gradual in it. operation, and which will, it is thought il
 the course of time prove effective Eacf
 federal reserve bank, in accordance witt
 this plan. has notified its member bank. , that a check clearing system will be es tablished. but that for the present tn,
 system will be voluntary one, and nc
 bank will be required to be a party {, , it except of it's own free will and accord. Tn order best to describe the work , l,ings of this plan, I will assume that tn
 member banks in Nashville. Chattanooga Atlanta. Savannah, Macon, Mobile, Talla |dega, Birmingham, New Orleans and Jack 2 son assent, and agree to permit the fed i eral reserve bank of Atlanta to charg against their respective accounts as 500
 as received checks upon each bank wf,ic
 may come into the hands of the reserv bank. Such checks will be immediatel : forwarded to banks upon which drawn. fo credit, and any checks not good are | be returned to the federal reserve ban : and recredted by it. Each of the bank L agreeing to the plan must carry with tn f federal reserve bank in addition to it Q required reserve, an amount sufficient : provide for the debiting against its ao : count of these checks. We will assum - that there are 40 banks which agree t : this plan at the start. Any one of thes S | 40 banks having checks upon the othe f 39 banks will forward them all to tl