The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-05-19
May DROP CHECK
COLLECTION PLAN
Federal Reserve Boards .Ac-
ton Merely Tentative, in
j. X. Lynch's Opinion.
HE ADDRESSES BANKERS

PHILADELPHIA. May iS.-James *.
Lynch. president Of the American Bank
ers Association. made all address to-
night at the convention of the rennsyl-
vania Bankers Association. which is
being held here.
In the first part Of his address Mr.
Lynch discussed the influence OF compr.
tition among banks on the interest rates
they pay on deposits and on their gener
osity in giving service to customers
without return. He commended the poi.
Icy of Analysing bank accounts SO ,s
| to SHOW their cost TO the banks and til,
profits. Applying his remarks to til
plan of check collection adopted by the
Federal Reserve Board. .Mr. Lynch said
When the Federal reserve act was
being framed the matter of charges OIL
country checks was considered OF such
Importance that the attempt Wa made
to impose the burden OF their %collec.
ton on the reserve banks. but It was
done In such a manner AS to have but
little force and also to Indicate some
confusion OF mind on the part of the
NiiFgit III out UdTdkTdDn tle TeStTNt
banks are ordered to receive such check
Oh deposit at par and IN another the!
are permitted to charge the cost of COLI
lection, which IL not at all the same
thing.
Charges made for the collection O.
, country checks were spoken of as 4
burden on the industry 81 the nation,
and II was asserted that there was ~
more reason why a charge should b.
made on IA Florida ,,hepk circulating
In California than on the note OF 4
Florida national bank. Now "A cheUK
circulating out of the region in when
II has some exchange value il a bur
den. and the only question is who should
bear the burden.
In mos, eases /, is the man VIII,
sends the check outside Of its lcgiiimata
district who should pay the tan. as he
usually does il with a full knowledge
or the circumstances and with the de-
sire to shift TO others what pertains
to himself. Unfortunately IL is no, al
ways easy to place the responsibility,
where It belongs and in too many cases
some unoYending bank is the victim.
The Federal Reserve Boa al has Just
announced a plan for the countrywide
clearance Of checks az par but with
certain reservations, such as allowing
member banks to ship currency through
the reserve bank at It's expense. In de-
fault OF exchange and crediting proceeds
Of collections only when they come IN
the hands OF the reserve banks in the
form Of cash. II is needless 10 say that
such delay In credit is not at all the
treatment which banks have grown TO
expect from their metropolitan core
s%pondents. although 1; 10 unquestioraole
sound banking prctice.
THE country banks. which have been
accustomed 70 derive A considerable rev.
enue from exchanges on the collection OF
checks. are naturally alarmed AT the los
of revenue threatened. ana, on the othe.
hand. the governors OF he reserve ba nks
look with some dread on the heavy en-
pense that will be imposed on them
through this plan.
The rules governing the check coll
lection plan have not yet been formu-
lated and Il is unfair Ia form opinions
unit II is actually Working Bankers
are very Naturally adverse to radical
changes. and justly 50, but We have ON
more than one ocCnsIon fp,I>d that pre-.
dicted evils did not come t, pass, and !,
ina well be ~ In this instance.
III the plan reduces ih. expense Of
check collection 4, must in the end pre-
vail ard We mast admit that present
methods are ~astefui and involve a great
amount OF duplication OF work. From !
what ! have heard Of the dispos it'olI %"
the Federal Reserv. Board | am con-
WINGED that the present plan IL tentative.
shat II will be amended or even aban-
doned II found wanting and that there is
no intention OF working hardship or IN
justice on any OF the banks."
The Pennsylvania bankers discussed a
wide range Of subjects, including pre- !
p~aredness. good roads. lower interest
payments on deposits. Federal cservc |
banks and other topics.
The association went Oil record in
favor Of paying lower interest on depos- |
its and froured on methods that involve
loss OF profit on accounts that are Sc |
cured Al a disproportionate cost.
Charles =. CalUell. president OF the
corn Exchange Rank, discussed the Uol. |
lis vursl credits bill and declared that |
the measure Is a composite OF the be-;
features OF similar laws throughout the |
world without any OF their defects.
|