The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-04-30
NEW PLAN ADOPTED
IN CHECK CLEARANCE
System Operative Juno Is
Will Permit Collection With
out Cost to Payee.

WASHINGTON, April 29.--The Federal
Reserve Board announced to-day the
completion Of It's plan for q nationwide
check clearance system which will per
init OF the collection Of checks drawn
on national banks without cost to the
payec. The new system will become
operative June Is.
Administration of1cials believe the
new clearance scheme will constitute one
Il the most popular features OF the new
Durrency system. Hitherto banks havr
rad the right to charge graduated sums
| FOR the collection Of checks the
| always was forced TO stand the
barge.
Tho inconvenience and loss resulting
ell largely. It Is understood. upon col
ctors Of small checks drawn OH dlstan
' ranks m many larger banks had
adopted the custom OF eliminating col
lection charges for the beneft OF their
| regular and important customers.
In many casos banks. officials say. orc
not enforce their charge schedules evenly
and the matter never was susceptible Of
thorough investigation because the
Comptroller OF the Currency could not
insist that n bank charge It's customers
for collection unless 1t chose to do no.
The board issued this statement In an.
nouncing the new currency plan:
The Federal Reserve Board mailed
this morning 10 the Federal reserve
banks for distribution to all their mem.
Der banks It's circular announcing a plan
for countrywide check clearing and col
lection. The salient points Of the circu-
lar are:
The Federal Reserve Board. actinS
under the authority OF the Federal re-
serve act. has designated the Federal
reserve banks TO act as clearing houses
for the clearing and collection Of checks
tor their members.
Board has iaid down certain general
principals. but has left It for the exeru.
tive officers OF the Federal reserve banks
TO work out the details. The board
evidently recognizes the immense amount
of detail work that must be don In
order to put such a vast machinery into
smooth operation and has set the time
for beginning the operation Of the system
as June Is.
THE important features Of tho plan
are:
"uD The Federal reserve banks will
accept at par all checks from member
banks whether drawn against other
member banks. non-member banks or
private banks. An exception il made at
the outset in the case OF checks drawn
against non-niember banks which can
not be collected at par.
"t2) All checks thus received from
member banks will be given immediate
entry. although mounts thus credited
will not be counted As reserves nor be-
come available until collected.
"(3D In order TO enable member banks
to m how oon checks sent in for
collection will he available either AZ re-
serves or for payment of checks drawn
against them. time schedules, giving the
minimum time for collection. will be
furnished by each Federal reserve bank
TO It's NH banks.
20 The actual cost. without profit.
Of the clearing and collection of checks
will be paid by the Federal reserve banks
and assessed against the member banks
IN proportion to their sendings.
",5) The whole plan Is based on
generally accepted principles under which
clearing and collection plans have long
been. operated. a Federal reserve bank
will not debit "A member banks reserve
account with Items forwarded to II for
collection until the remittance of the
member bank. in payment Of such items.
shall have had time to reach the Federal
reserve bank."