The Richmond Virginian. (Richmond, Va.) 1910-1920, 1916-07-26
CALDWELL HARDY TELLS
Of COLLECTION SYSTEM
Explains to Credit Mems Meeting
Great Benefit To Be Derived
From New Service.
DISCUSS REPORTING BUREAU
Credit Mems Association To Invesd-
gate Feasibility Of Establishing
Innovation or of Enlargtng Bureau
of Credits.

characterized as the greatest piece OF
constructive legislation in the history
OF our country, Caldwell Hardy. chair
man of the Federal Reserve Bank OF
Richmond, in his address before the
Richmond Credit Mems Association at
their meeting in the Business Mems
Club last night, called upon them for
their cooperation in putting into
operation the collection system. which
he referred to as the superstructure
of that great foundation. the Re-
serve Bank.
'Tt 10 true" he said, that the
Federal Reserve Bank does not deal
with you directly. but 1t does deal with
your bank. and your attitude to your
bank has much to do with helping It
and US by mutual cooperation, to
achieve for all Of US the full measure
of benefits from the collection sys-
tenn
Calling attention to the fact that
| checks are not money. Mr.. Hardy said
that the total volume Of checks In
this country represent 90 per cent of
Its transactions, and II was the aim
to extend their usefulness since 1t
would be impracticable to use actual
money. The check, therefore. he
said. Is necessity and the facility
of it's use Ia the measure of its use
fulness
Checks Two Hundred Billion.
Stating that the check clearings
reported for last year approached
two hundred billions, and for 1915 It
would be even larger. Mr.. Hardy
said II could be easily seen what q
vast volume had to be handled. On
! these. he stated. "a large quantity
would be in process OF circulation
frequently passing through the hands
of half a dozen banks before reach
ing the point on which the check was
drawn. This multiplies the checks in
circulation, which increases the loss
OF interest All this. he said, is for
I the purpose OF avoiding the exchange
charge OF the home bank.
| Mr.. Hardy stated that the country
bank charge for collection should be
eliminate since by making a charge
on their customers checks gwen to
| city merchants and others they are
levying a tax indirectly on the business
OF their communities for the benefit of
the few IN the community who are
stockholders in the bank. The city
merchants and others who have been
] receiving these checks at par in the
I payment OF bills must stand the ex-
+ renGc OF collection and recoup them
selves through a direct charge TO
drawer. or put II In the bill OF goods
Must Draw Line of Service.
! While the Federal Reserve Banks
declared Mr.. Hardy. are disposed 10
serve on the most liberal terms the
/ interests OF IT'S member banks, and
/ through tn EN-, tho interests OF the pub
/ lie, the line OF service must be drawn
! II have already called your atten-
ton to the millions locked up In the
! circulation OF checks. Your banks
I ho1, ,trD tu do
considerable volume of It can be elm
mated by more scientific and direct
method OF collection. the Federal Re-
serve Bank cannot assume this load
as IL would soon swallow up even
their large resources. II must there
fore. be carried by the banks, and
while the Federal Reserve Bank is
aiming TO eliminate collection charges
In so doing It must incur large ex-
cidentals. for which II must impose
small charge OF about one and one
half cents an item. irrespective OF the
amount The most liberal policy pos
sible will be pursued by the Federal
Reserve Bank in the future. as prao-
teal experience IN the new departure
may develop It's possibilities"
Due to the enormous expenditures
of the banks, no bank can accept
checks as cash and extend customers
discount accommodation at reasonable
rates unless the customers maintain
sufficient balances to cover the float
daily deposited.
The check clearing amounting TO
nearly two hundred billions through
local clearing houses previously re-
ferred to, consisted Of local checks on
the banks. mem bers of each particular
clearing house. These checks were
offset against each other and only the
balances resulting. which were small
compared TO the total volume OF
checks handled. were left for settle
ment in cash. You will ready under
stand the enormous economic ad-
vantage OF such a system"
Another point made by Mr.. Hardy
was the fact that instead Of the bank
draft on New York, which has been
accepted anywhere in the past, an ar
rangement will be adopted between
the Federal Reserve Banks 10 which
draft of any member bank on It's
Federal Reserve Bank will be honored
by every other Federal Reserve Bank.
This will also prevent the concentra-
ton of funds in New York.
The matter OF establishing a collec-
ton system and reporting bureau In
connection with the Richmond Credit
Mems Association was discussed at
length by the members. By such an
installation the national association
would recognize the local association.
and render II country wide help.
There was divergence OF opinion as
TO whether such bureau and system
should be established. or whether the
Bureau of Credits properly extended
would serve the members of the as
sociation Finally. 1t was moved to
appoint committee to investigate tho
feasibility of establishing a bureau or
taking over the Bureau Of Credits and
1t will be named by the president to
report at the next meeting.
There was some statements made
by members In regard to the local as
sociation not proving itself Of the
proper service to its members and an
appeal was made for an awakened in
terest SO that the Credit Mems or
ganization here would compare well
with those Of other cities