The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1915-06-29

itio uoddt1A 4
Deen forthcoming on some terms
proves nothing but that they to the
mn have been fortunate. Undue
soilcltude tor the future should no
longer be one of he burdens to be
borne by a bank man whose institu-
ton is a member Of the reserve sys-
tenn, II he when necessary will oniy
set ms house in order, gradually if
you choose, and be prepared in having
some reasonable share of his assets in
iiquld condition, to send such eligible
paper to his reserve bank, there to
have it converted into either currency |
or credit as his convenience might
suggest.
This is all very fine, will say not
only many State banks but some |
member institutions, but how about
the other side of the picture? We
snail nave to take stock in a reserve
bank and the stock will yield US a
bare six per cent and no commission?
This is true, but the income is apt to
be steady and certain, while the Sc
curlty Of the principal is worth con-
sideration.
Then again, our friends will say
that they viii be required to maintain
certain reserve balances and, just to
think Of It, these balances are to yield
no interest. Why, this is nothing
short Of highway robbery under the
sanction Of the law? But let US look
a bit closer into this point. Forgetting
that it is Fundamentally unsound to
pay or expect interest on balances
maintained as reserve and thus temp
their investment in directions where
to yield a profit they will not be
liquid, the fact remains that under
the new law no loss of income will be
experienced by 3 reennhe bank for the
reason that a eertas0 minimum share
OF its reserve is to De witt its reserve
bank. The I%essening Of serve require
rnents permitted by the Reserve Act
and the loaning at horne at full cur
rent r&tes ~ the sun 81 released will
fuzzy oaAet the anoant heretofore re-
ceived as interest on reserve balances
The smaller reserve is now permitted
and is safe, for the reason hat any
shortage in funds can Immediately be
met by -rediscounting. Then it must
be remembered that on Dor fide time
and savings deposits only five PEI
I cent reserve is now required, an(
right here is to be seen an actual
Z profit.
. Again it is urged, and this time will
vehemence, that the sometime hon
I ored and so-called exchange charg'
n is to be thrown into the discard ant
with it will go real money with Whicl
= certain expenses heretofore have beel
met. Let us look into this for a mo
ment. 1t is not desirable to go int.
the morals Of the situation on a wee
: day. although maybe the theme woul
: furnish material for an eminent
II practical Sunday discourse based upo
: the summary Of the law and prophet
: as given in the Gospels. 1t Woul b
y wiser to get down to real practice
:: arithmetic.
"a h average interior bank in com
y petition for business is apt to pa
:. four per cent for the use of its too
of trade. This and eve more is III
:. blushingly confessed. A costly PR
H. ceeding and some one must pay tn
~ freight. and who SO helpless as tt
y holder Of a check drawn by a custom
"a er of the ank under necessity
IN meeting this heavy charge against d
OF posts.
= 1t is held to be impossible to chars
n a local customer for service rendert
in converting into cash a check {
% some distant point, and thus reco,
j. part of the expense of the account
=, such depositor, SO the charge is levi
~ upon the innocent third party, Il
io holder of the check who, in sellil
We he local man 500 worth of goo6
m receives in payment only 1878. B
s let us pursue this subject a hit
further. The interior bank gathe
II together its daily receipts of out
ny town checks converted n cash
"a, par for its own people, lists them
NJ a letter, and charges the total
LII some reserve CITY account, ana on [
elf balance made up of such dispatch
the interior bank receives intere
ID This has been possible for the rea
bic that the old laW, soon to be fully d
ny carded in so far as it relates to I
cts serves. gives this fictitious quality
ute reserve to balances so maintain,
nd This quality will ultimately disa
pear, but under the old order
thing the same cost would attach
the TINA liquidation of these SCI
tered checks as has heretofore be
las. the case. The banker in the rese1
a city, however, is not at all Interest
tial in this reserve quality attaching te
balance from an interior bank, as "
SSH him it is merely a question Of sc MI
edit balance against SO much service-p
eat profit. He IS paying interest TO
interior BANK and Is aoie IN the pr
&c IAHce of a certain balance 10 30 TO