The commonwealth. (Scotland Neck, N.C.) 1896-1929, 1916-07-28
BURLESON AIMS
BLOW AT THE
BANK EXCHANGE
Orders PostmasterS to Collect Checks
To Save Exchange. Outrageous
Says Claude.

a monkey wrench into the smooth fuE
ming Democratic machinery by issuing
an order ordering postmasters through
out the country to receive and collect
checks from the federal reserve banks
when drawn upon non-member banks
for collection.
In the opinion Of practically every
Democrat here this will not only work
a hardship upon the patrons of banks
in small towns but will result in at least
5000 of the 14,5OO small state banks
and trust companies throughout the
country going out of business.
1t is contended that the small banks
in the towns and villages make the
most of their profit on the small fee
they get from the exchange of checks.
To cut this revenue off will make it
impossible for these institutions to do
business.
Majority Leader Claude Kitchin de-
heunced the order as one of the most
outrageous proceedings he had ever
heard of and declared that it was the
most unjust proposition that any head
of any department Of the federal gov
ernment had ever issued.
In a statntneht prepared for the Daily
News in which Representative Page
concurred, he said:
I'm my Judgment this is the most
revolutionary and unjustifed order ever
issued by any department of this gov
eminent. If enforced, it will deprive
four -ffths of the state banks Of at
least so per cent Of their net income,
and out of the 800 state banks in the
United States, at least 5000 of them
will be completely destroyed. The banks
destroyed will be those in the smaller
towns and villages, and of course. will
deprive the farmers and others living
In the rural districts OF the tenef.s ef
the banking system.
cit is simply an outrage and when
the people interested in the state banks
find out what the order means they are
going to raise Cain and ought to- If
the department insists on the enforce
ment of this outrageous order, the state
banks can evade it by printing on all
checks the following; Payable in New
York exchange at current rates
''Theh when the postmaster pre-
sents one Of these checks for collection
he can only get the New York exchange
in payment, less the cost of same, and
not the current funds as is eontempla-
ted in this infamous order
The order issued by Mr.. Burleson
follows:
"Notice to all postmasters:
coffee of the postmaster-g general,
Washington, July 10, '16.
''The chairman of the federal re-
serve board has transmitted to this de-
partment the following letter, dated
July Is, 1916:
"'f have the honor to give below
copy of a resolution today adopted by
the federal reserve board, as follows:
"Whereas, it is necessary and desir-
checks presented through member
banks, in cities and towns where there
may be no member banks to act as
collection agencies; now, therefore be
it resolved, that the honorable secre-
tary of the treasurer, chairman OF this
board, he officially requested to pre-
sent to the honorable postmaster gen
eral the desire that the honorable post
master general shall authorize post
masters to receive checks from federal
banks drawn upon state banks non
members of the federal reserve svsteE1
that they be requested to collect these
checks in currency and remit the cur
rency to the federal reserve bank 5y
registered mail; the federal reserve
bank of the district to pay all expen
ses for postage and registration fees
upon funds thus remitted.
sAs YOU know, the clearing and
collection plan, covering the country
wide collection of checks at par b,
fedora! reserve banks went into effec'
on July Is, 1916. The request con
tanned in the resolution is intended tt
enable the federal reserve board tt
make use of postmasters for the pre-
scntation of checks at the counter o.
banks which refuse to remit the fed
eral reserve banks. 1t is desired tha
having received payment of thes
checks, the postmasters remit the pro
ceeds to the federal reserve bank of thu
district While it is not anticipated
that it will be necessary to make u.s.
of this expedient to any wide extent
the permission to do SO is much deslr
ed by the board as part Of its clearing
and collection plan. It will be neces
.ary only in towns or cities wher
there is no member bank OF the sys
TEN to make the collection
Postmasters are authorized to RI
ceive checks from federal reserve bank
drawn upon state banks non member
Of the federal reserve system and the
must comply promptly with the reque.
of the federal reserve board to collec
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