Evening star. [volume] (Washington, D.C.) 1854-1972, 1916-06-18
BY I. A. FLEMING.

A meeting of the Washington Clear
ing House Association was held Friday,
at which the proposed general par col
lection system of the federal reserve
board was considered from its various
angles. While the association did not
go on record in the matter, it is under
stood that sentiment was more or less
against the proposed system, unques-
tionably due to the loss of collection
charges that would follow the in
auguration of the free collections
through the medium of the various re-
gional banks. The members also recog-
nized the fact that despite the opposi-
tion among bankers to the free collec-
ton of checks the federal reserve board
will make theiR plan effective July Is.
All over the country bankers, and es-
pecially those in the smaller towns and
cities, are offering objections, based on
the loss of exchange charges, which in
many instances. form a vital part of
bank earnings.
But the smaller banks are not alone
in their objections. In the largest cities
the objections are just as strong. this
because of the necessity of smaller
banks maintaining balances as guild
pro quo for the collection charges on
checks sent to the smaller institutions.
In the central reserve cities the ma
tional banks, and others also. propose
to use the federal reserve collection
system only to the extent compelled by
law. and they are flooding their GUS
toners with circulars in which they
make their announcements to ~ ef-
feet.
Some of the complaining oSyinls
-~ts&rge that the transfer of funE las
a a nj
the banking business, and that it is
service that is entitled to a reasonable
charge, calling attention to the fact
that the government through the postal
money via the postal order system.
Opposition to the system, however, is
by no means unanimous.
Friends of the collection of checks
at par by the regional banks believe
that the benefits will more than offset
the loss of exchange; that balances
now carried with large banks. on which
2 per cent is paid in interest, can be
put into general use at to s per cent
and even better.
The contention of many bankers is
that the federal reserve system was
created to meet an emergency, to fur
nish a safety valve in time for stress.
to furnish the means of rediscaunting
the assets of the banks, and not as
competitor of the member banks.
But the regional banks. II they are
going to make an effort to pay the pro-
posed rate of 6 per cent on the stock
held by banks. must enter the market
for investments and in this way enter
into direct competition with the bank
ing fraternity.
borrowed 100000 for a few months
from a federal reserve bank, at IN
per cent. lower rate than any bank
could have made, and in direct competi-
ton with investing bankers all over
temnfed
the low rate will make Application Tor
consideration.
One thing is certain. that the federal
reserve collection system Will have 10
the harmonious and united support OF
the member banks: moreover, 1t Will
have to make good, too. with but the
tacit support Of a large percentage of
its members.
New Russian Credit.
A syndicate has been organized
among the leading financial institu-
tions and firms in New York city to
float a new Russian loan of 100000 900.
The Russian government undertakes to
retire the credit. for 1t will be credit
loan. at tho end of three years or
sooner, with interest at 81 per cent.
both principal and interest being pay
able in dollars in the city of New York.
To provide for the possible retirement
Of the issue Of credit before date Of
maturity the syndicate may sell rubles.
credited to 1t in State Bank of Russia.
at three rubles for each dollar of Gre
dit or to purchase in lots, of not less
than S5,00O,0 900, $55,402,000 par value
81 per cent, imperial Russian gold
bonds, which are to be held subject
to the order Of the syndicate: and
which, II purchased. will be paid for
out Of the ruble credit established. at
aSIk cents a ruble, payable In dollars
in New York city. The price for these
bonds II the option is exercised. is to
he 94N plus interest, less N per cent
The net profit from the sale of the
honda. will be pro rated among the
PARTICIPANTS upon final settlement OF
the account.
Scarcity Of Bonds.
II 10 evident that the floating supply
Of bonds on the Warrington market is
growing apprsciably smaller. This is
especially true Of hish-grade bonds.
washington Gas and CAPITAL Traction
IS, for which tho current price Is
around 10TH, rather better than bank
ets care to pay. but which investors
viii pay.
held. ~ are Railway. 4s. and that they