Evening star. [volume] (Washington, D.C.) 1854-1972, 1919-06-29

Very often, however, the member
banks buy and sell exchange from
one another to settle balances from
of taking cash. This. however. does
not do away entirely with the han
ding of cash that goes on daily, IN
volving the counting of the cash after
it has passed through the clearing
house and the risk incurred by the
banks in having their messengers
! carry large sums through the streets.
Avoid Handling Cash.
I'VE desire to recommend that due
consideration be given to some ar
| rangement which will do away with
the handling of cash in the settle
line. for instance, the method en-
ployed by the Baltimore clearing
house banks, in which the handling
of cash is entirely done away with.
In the Baltimore clearing house
there are two clearings. The first
clearing is held at SIS in the morn
ing, which consists of the exchange
of checks that have come over the
counters of the banks during the
previous days business. The repre-
sentatives of the various banks take a
| receipt for the total amount left at
| this clearing.
AT GAS there is second clearing.
consisting of the. mail items and
deposits that have come in early
enough to be included in time to
reach the clearing house. The totals
of these two clearings are then set
! tied. The credit banks then receive
I credit in their reserve accounts for
their credit in the clearing house,
and the debit banks are charged in
their reserve account with the debit
balance. This seems to be an ideal
| scheme. which is made practicable
by the Baltimore branch of the Fed
eral Reserve Bank of Richmond.
No Branch Bank Here.
Under this system the banks have
| until 2:30 p. m. with most federal re-
| serve banks. and until 3 p. m. with
| others, to have their correspondents
| serve banks are located deposit for
their credit with the federal reserve
bank Of their district, for their credit
with the Baltimore branch of the
federal reserve bank of Richmond,
where they are debit in the clearing
and have not sufficient cash to de-
post with the Baltimore branch.
Washington, unfortunately, has not a
branch federal reserve bank. There
fore. the plan that is being used SO
successfully in Baltimore would re-
Quire modification for use in Wash
ington.
I'VE believe that pretty nearly
| every banker at some time has ex-
perienced the situation of having a
large withdrawal Of funds come to
| him through the clearing house un-
expectedly. and being in the position
| Of being unable to sell exchange
| among the banks. thereby having to
dig SO to speak, to get SUFFICIENT
cash to pay his debit. It can be seen
that in the Baltimore plan this con-
dition does not exist.
I'VE, therefore, believe that a plan
somewhat along these lines might be
put into operation here in Washing
ton. There Is a condition which exists,
we believe. with practically all ma
tional banks. where the sendings of
| the federal reserve bank of its DIS
trict to that bank exceed the send
ings Of the bank to the federal re-
! serve bank, which, together with
Of funds on which 3 per cent is car
ried in to the reserve. to which 10 per
cent. is carried, such as the change of
| time certificates of deposit to demand,
increase In cashiers checks, etc, Gre
ate the condition Of placing the mem
Der bank in a position Of practically
always making up during each day
an amount to make their reserve good,
as required by the federal reserve
act
Modified Plan Suggested.
Bearing in mind the condition that
clearing house banks of Washington
as a rule are required to replenish
their reserves daily, and do so easily
! through deposits with the treasurer