Evening star. [volume] (Washington, D.C.) 1854-1972, 1915-08-29

| Bankers generally are divided on the
advisability Of joining the collection de-
partment of the regional banks OF 'he
federal reserve system. Naturally Tie
federal reserve board would be pleased
| to see the collection system used by all
| member banks in the intradistrict collec-
tions as a means to forward general IN
terdstrct collections.
| Bankers who favor the turning over OF
their intradistrict checks to the regional
bank for collection claim that 1t Will at
once eliminate collection charges; Will re-
suit in the accumulation Of balances estab-
lished by miscellaneous checks at point
on which a draft is readily acceptable by
all banks, and will bring direct and
prompt presentation Of checks. many OF
which would otherwise go through numer-
GUS and various sources.
| These advantages would not accrue to
a bank not engaged In hahdllhs NUMEROUS
| accounts for other banks.
Some bankers contend that the chief
4 complaint against the system is that
originating with small national banks VINO
do not have a large collection business, OF
do much of a banking business with otner
Institutions Every one admits that the
greatest good from the system would be
| forwarded by the general adoption of the
facilities offered.
| Those who have taken advantage OF the
opportunities for having their 1ntradlstr1ct
checks collected at par in the Richmond
district are loud in their praise OF the
active and energetic handling OF matters
by the officers and board OF directors
| There is a large number or BANKERS
| that have not Joined the system in
| their districts for various reasons
| which seem to appeal to them, chlet OF
which is the attendant loss OF proht
| from exchange transactions. Many OF
| these banks receive much more than
| they pay out in collection fees. 1t IS an
| item of profit that makes up no small
| part of the aggregate annual earnings
| of many Institutions
| Taking Washington as an instance.
| many of the banks here get southern
| items sent from banks in reserve cities
| and elsewhere for collection and from
| the west in much larger quantities than
| Washington items are accumulated
here and sent for collection to the
bankers in other cities. This is not a
| manufacturing or great wholesale cen
| ter hence the rather limited general
| distribution of direct items on local
| banks.
Another factor seen as an object
! ton to joining the collection system is
| advanced in the necessity of maintain
! ing balance, more or less elastic, IN
| the regional bank, on which no interest
| is paid, while in keeping reserve in
central reserve cities and other places,
| to produce clearngs, the balances draw
| . per cent interest. Il very desirable
| factor in these days of close reckoning
| in ma king ends meet.
1t does not require that a large re-
| serve be maintained with the regional
bank, immediate notice of exhaus-
| ton reduction of balance to the
credit of a bank is given at once by
| the regional management, and can be
| responded to overnight.
While bankers ire SO divided in their
| likely that the wishes of the federal
reserve board for the general adoption
| of the system by the regional banks
| will be carried on. 1t looks as if it
might require compulsory adherence
| to the collection system to secure the
| united support of all members. as but
comparatively few of the banks in the
| federal reserve system have given the
measure their support.
| 1t is the belief of some bankers that
the sponsors of the federal reserve law
in Congress will force through law
compelling all member banks to send
checks for collection to their regional
banks. this being recognized the
preliminary to interdistrict collection,
the passing of checks at par through
out the United states. with an end to
the exchange business of member
banks.
Many members of the system favor
ing intradistrict collections of checks
by the regional bank are opposed to the
They argue that there is no reason
why bankers should not make collec-
tion charges on items on cities in other
districts, save OF central reserve cities;
that there is no reason why bank
should take checks at par and be out
of the use of their funds several days
while checks were in transit, without
REIN bursement.
Bankers differ on the question of
prompt return of checks being a good
thing. Some believe that the money in
their own vaults while the check is
working it's way home is just good
as A one days return. while others hold
that liability attaches to the collecting
bank, in the event of failure OF The
bank on which check is drawn, provid-
routing is not made.
The Richmond regional bank is
acknowledged to be one of the best
managed and profitable banks of the
twelve regional institutions. and the
chances are that stockholders will re-
ceive dividends before very long on
their stock subscriptions, in the event
of the federal reserve board approving
such a disposition of profits at this
time.
Expensive Collecting.
1t is rather interesting to note that
the cost of collecting dollar tax by
the internal revenue bureau, according
to Commissioner Osborn's report, was
1914 per cent, or Sl64l on each $1,000
collected.
On the face of it this looks like
very large collection fee. 1t was great
err than last year by SO cents on the
1000 Gross expenses of collection of
internal were $6,71O.000 as compared
with $5,7s4,00O for collections in 1914.