The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1916-04-29

mate. The facts are as follows:
In 1914 this Montana farmer
leased q parcel of Indian land ir-
rigated ny the reclamation SER
vice His water bill amounted to
S22S.12. Just prior to harvest, a
hail storm destroyed his entire
crop. He could not pay for his
water. Early in 1915 he managed
to obtain sufficient credit to lease
another bit of land and prepared
it for planting. When asked to
turn on the water, without which
his lease and labor were wasted,
spelling ruin, the reclamation SER
vice declined until the 1914 water
bill was paid in full with inter-
est. The photograph shows an In
terest charge of $3.50, which is
described as being "one per cent
per month since December /,
1914" This added sum was of
course paid by the kindly dis
posed people who advanced the
first credit. The receipt Is dated
March 81, 1915, signed by a gov
eminent official, and bears num-
Der 118, F1athead Project. 1t
seems to me the parable of the
beam and the mote is strictly In
point if this sample illustrates
the workings of the government
water monopoly in the West. Be
fore dealing damnation on the
heads of bankers, 1t would be
we'll for Uncle Sam to put his
own house in order.
Interest rates concern a banks
relation with its own customers.
Exchange has to do with its rela-
- - ~ ~
those in me collection centers.
For the identical reasons that
country banks cannot afford to
have income reduced from inter
est. they cannot afford to lose
exchange earnings. The argu-
ment applies with equal force to
both subjects. To lose either
item Of income Is bad enough. To
lose both merely magBifies the
distress.
between banks now falls partly
upon city merchants and partly
upon banks in collection CEN
ters. In The former case the cost
is small, and 1t is reasonable to
believe that the price charged
for goods carries the load. In
the latter case even the banks
which nave no clearing house
charge" on outside items enjoy
compromising advantages coming
from other sources That most
banks accept outside items on de-
post at par is sufficient evidence
of the fact.
In it's final analysis this cues
ton turns upon the simple prin-
ciple of balance Of trade. Each
state mas banks in its largest
cities that handle collections on
the country banks nearby. Biz
mingham performs this service
for North Alabama If a Bir-
mtngham bank gets more checks
on the Pell City bank than the
latter .toes on the former, Pell
City exchange shows a profit and
Birmingham a loss, as each is
presumed to charge exchange on
it's own checks received from the
other. This being the situation
with all collection centers as re-
CARDS the country banks, the pro-
posal TO clear checks at par re-
lieves the city bank of an item of
expense and denies the country
bank an item Of profit.
Country bankers therefore con-
tend:
/. That banks in collection
centers already make SUFFICIENT
profit without their net gain be-
ing augmented at a correspond
ing loss to country banks.
2. That country bank net profit
Is too small to stand a loss that
represents perhaps one-third OF
total net carvings.
3. That the city banks enioy
compromising advantages to of
set the cost Of country clearances
4. If collections are unproft-
able why do city banks accent
them? They advertise for this
business. Indeed. they fight tol
it.
In spite of these we'll known
facts, Ignoring what the loss OF
revenue means to two-thirds Of
the national banks. and what 4
would cost the Federal Reserve
Banks to clear at par for mem.
bers, Congress wrote into the Law
a very ague section to enforce
this facility and considerabI,
pressure IS being exerted to hav,
il put into prompt execution, re
CARELESS of consequences.
The matter of supervision pre-
sents an issue between the coun
try bank ard the Comptroller. I
has % do with requirements ii
routine management, examina
tons hnd reports of condition