Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1915-04-30

night, was the new regional reserve
banking system.
While, OF course the individual bor-
the regional reserve system or the
district reserve bank, still the indi-
vidual borrower as we'll as the gen.
eral public is or should be very much
interested in it's operation and should
know all about it.
The connection of the individual
borrower with the reserve bank Is by
and through his own local member
bank. And of course the local men,
ber bank must know all about the
system, else the member bank would
not know how to go about doing bus
mess with the district or parent bank.
1t is understood by large part Of
the general public, of course, that all
banks follow a practice Of borrowing
much Of the money they use in their
business. This is especially true OF
the smaller banks, and in a sense 1t
is true Of the larger banks, but as to
the latter, under somewhat different
conditions.
The larger banks Of the great mon
ey centres are commonly referred to
as reserve" banks. There are also
smaller banks in these reserve CEN
tres that perform the same functions
as the smaller banks in this section;
but as general thing the larger
banks do most of their business with
the smaller banks, lending to them
just as the smaller banks lend to in
dividuals.
BY reason Of the larger volume of
business, and the presumably better
security offered by the smaller banks,
they are, Of course, able to obtain
from the larger banks better rates of
discount than the individual Is able
to secure from the smaller banks. The
reason of this Is obvious, and the op-
Grafton. of course, Is proper. Unless
the smaller bank could make profit
on the money it borrows for its GUS
toners there would be no inducement
for such borrowing. Besides 1t Is en-
titled to pay for it's trouble, for its
credit, and for the. exercise of its
judgment and discrimination in the
selecting Of loans that are morally
and financially sound.
Since the function of the regional
reserve bank is the same as that here
tofore exclusively performed by the
great corporate and privately owned
reserve banks, and there are now GER
tain conflicting inducements that
have many of the smaller banks in a
position of doubt as to where they
should carry their accounts, whether
with the correspondents with which
they have been associated or with
their district reserve banks, the situ-
alton may very fairly be held to be
in a transitory stage that is more or
less embarrassing.
At first blush, it would naturally
seem that since the member banks
are the stockholders in and owners
of the capital Of the district reserve
bank, they would take their accounts
to the district reserve bank. But this
does not necessarily follow. There is
competition for the business. The
established reserve banks will not
give up their old customers as long
as they can get a profit out of their
business, and naturally they are Of
fering inducements calculated to hold
on to that business. These induce
ments include the same or lower rates
of discounts, and mayhap better
guarantees of renewals. in case Of ne
cessity, than the reserve banks have
yet offered.
Mr.. w. ]. Roddey, president Of the
National Union bank of Rock Hill,
one of the few member banks Of this
section that have transferred their
accounts to the regional reserve bank,
was one of the speakers in Columbia
Tuesday. One of the most striking
things he said was that In the case
of the Richmond Regional reserve
bank, the member bank had right"
to demand the discounting Of per-
fectly good paper, while in the case
of the big northern correspondent
banks, the question of discounting
any paper was more matter of priv
ilege or favor in the option of the
corresponding bank. He also char
acterized the Federal Reserve system
as the compulsory education Of the
banking business"
Mr.. William Ingle, chairman of the
Richmond Reserve bank. was very
much struck with Mr.. Roddey's char
acteriZation as to right" and "priVi-
lege," but was not prepared to accept
it fully. He explained that of course
the governors of the Richmond bank
must exercise the same kind OF judg-
ment and discretion that is expected
of member banks.
All bankers, those who carry ac-
counts with the regional reserve
banks and those who do not, agree
that the regional system is a great
one-probably the greatest banking
system in the world. But even this
fact does not smooth away its diff
culties. 1t is realized that to come
fully to it's own it must largely sup
plant u great private system already
established, and it is quite natural
that this great private system is not
going to be supplanted as long as 1t
can help itself, and therein is a
source of friction, the removal Of
which may require a long time.
- With the battle in Flanders SEEM