Evening star. [volume] (Washington, D.C.) 1854-1972, 1915-05-02
IAL-LOCAL AND OTHERWISE.
BY I. A. FLEMING.

The special committees appointed by
the American Bankers Association at
the Richmond convention last Septem-
Der TO advance plan for inducing
state banks to enter the federal reserve
system will meet at Old Point Com
fort tomorrow morning. B. +. Saul OF
the Home Savings Bank is a member
of this committee from the savings
bank section of the association.
Bankers generally express the belief
that there is but little chance for the
wholesale DETECTION of state banks to
membership in the federal reserve
banking system, at least until such
time as the latter has been more thor
oughly tried and its usefulness de-
veloped.
The claim is made that state banks
and trust companies have distinct ad-
vantage over banks in the federal SyS-
tenn i'll times of norma! conditions, IN
that they may have less capitalization
and may obtain larger returns from
their surplus funds through the pay
ment by other fiscal institutions OF in
tcrest on deposits, whereas reserve
member banks receive no interest on
their balances, carry much of their re
serves in the regional banks, on which
no interest is payable and are further
more forced to contribute to the main
tenance and support of the entire sys-
TEN. including the federal reserve
board.
The federal reserve board according
to reports, has deemed it advisable to
rea sSure state banks of the fact that,
in entering the reserve system, they
simply have to conform to the require
ments of national banks in the matter
of capital and holdings of stock In the
regional bank of the district in which
they are located. They still retain their
state organization, are subject TO
state examination, etc, and do not
come under the supervision OF the con-
troller of the currency.
Although the federal reserve system
has been in operation since the middle
of last November, its initial operations
have been greatly restricted, a fact for
which the law that created the system
is largely responsible in that it re-
leased from the requirements of re-
serve limitations hundreds of millions
of dollars. Then. too. the inactivity in
building, real estate operations and In
general business of the last few months
has enabled the banks, both in and out
of the federal reserve system to make
loans at more favorable than reserve
discount rates. to the lessening of the
business of the regional banks
The federal reserve system" said
one banker. lis brought together for
the sole purpose of dealing with emer-
gencies. In times of small emergency
there is small use for the system. and
until some real emergency demands the
use of the powers of the system they
will not be fully employed. Once the
necessity of help arises it may induce
state banks to rush into the federal
reserve system: otherwise they will not
come forWard-unless the operation of
the system shall show some benefits to
be derived, that have not yet been
evidenced
Continuing. the banker said:
The trust companies have griev-
ance against the federal reserve law, in
that section of it that gives banks the
right to exercise certain functions
heretofore pertaining entirely to trust
companies and which the courts will
be asked to pass on. They need not be
expected to enter