Evening star., 1919-09-21

| tive OF Ine government, receives tuC
paper money notes from washington
and delivers the money on application
to the federal bank in this district.
whatever sum is demanded, provided
it is first covered with the necessary
eligible paper as collateral.
The reserve agent is not required to
hold 40 per cent gold reserve; the
bank does that. but the agent must
cover the paper to 100 per cent in
gold, or eligible paper or both. Thus
the Sc. notes. for a time, were Sc
cured by 100 per cent to federal
bank itself. This condition obtained
until federal reserve circulation in
creased to an abnormal extent.
Reserve Circulation Increased.
| AS eligible paper matured it was
released and new collateral substitu-
ted, so that each day came to have
its own turn over old realeased and
new accepted. During the war the
rapidly. with the old h.c.l., the fac
tor that was responsible. Reserve
notes then replaced much of the
national currency, gold certificates,
legal tender and national bank notes.
Accounting Efficiency.
Accounting between the twelve
i federal reserve banks has reached a
WONDERFUL stage of efficiency COM
bined with speed.
| Much accounting was necessary
business coming in and going out,
telegraphy transfers, gold fund set
Elements weekly. etc, etc.
| Attempts to reduce and eliminate
many accounts was not entirely sue
wire system between the board and
| the regional banks enabled speedy
action Richmond pressing for daily
clearings by wire through the gold
tical plans therefor that the reserve
board put the scheme into practical
use-another tribute to Richmond.
so 1T is that hundreds of millions
OF dollars in checks are now settled
daily on time; reserves are much
more accurately known and the sys-
tenn is admittedly the finest in exist
ence, so that every bank and branch
may clear every day. It is synchro-
nization ia to the highest degree:
ore to handle to the satisfaction of
| No one will claim that exchange
Is not legitimate profit. but it would
| at the bank on which it is drawn, if
| the check is good. should be met with
cash to face value. But If the payee
desired New York draft an exchange
charge would be perfectly proper.
Probably 95 per cent of most banks
, New York balances have been built
up of New York checks cashed for
customers.
This would seem to have been the
time forsan exchange charge.
Asks Short Loans.
/ a customer presenting a check on
Chicago for deposit in a Washington
9 dlr f@v
three days Some charge might le-
Ultimately be made thereon.
The whole matter is founded on the
ratio of time to money. 1t is i'm
possible to buy a cable transfer on
Europe as cheaply as a bill of ex-
| change.
Why? Simply time is money
One method of handling collections
| in certain non-assenting districts
was was to % collect the checks and have
nanies. an expensive method. but one
that was more both hersome to the
bank in being called upon to FREE
quently replenish its cash.
situations made that the non-member
banks which do not use the clearings
system are disposed to relinquish ac-
comodation for selfish ends has some
basis of fact. They are not burden
| bearers. while they participate in the
/
Nearly everyone is familiar with
the story of the member of Congress,
| owner of a bank, who, in discussing
| exchange with government officials
| was informed by one of the officials
tnat his was not bank, but toll
gate"
Richmond officials have never
| shown any disposition to use a club
against non-participating banks. The
| bankers who believe in the federal
| reserve act would welcome any ac-
! tion that would reduce the number
| of gates"
-- Maryland All Par.
The recent action of the MARYLAND
non-member banks all participate in
| the clearings Is commendatory, every
bank check on a Maryland institu-
tion is collectible at par
| In methods, the chief change made
by the Richmond Bank during the
current year was the introduction Of
the daily balance sheet, and 80 ef-
| 1ectiveiy has this been pressed home
that all twelve Of the reserve banks
are using 1t, instead of the usual
without the federal reserve system
In full operation it would have been
next to an impossibility to have
nnanced Americas share in the great
/ "oiS W odS uOLnluS OF OelnK Renef.
GUS with our pocketbook for the ben
eft of our allies.
In years gone by the nation shud-
dered at q billion dollar Congress.
| Lack of few millions sadly needed
in crop movement and in business
and stock market operations, brought
many disastrous panics. Small need
to recall '93. 1901-03, 1907-but $23,-
000. 100000 or less liberty and victory
obligations readily financed through the
| federal reserve bank without strain is
q creditable record.
| Banks that are members of the
fifth regional district are proud of
the manner in which the Richmond
bank has won its way to recogni-
| ton: in connection with other re-
| serve banks it has eliminated old
evils. and demonstrated the fitness
and the wisdom Of their being called
| into being.
Friends Of the system are con-
fident that 1t will survive the recon-
| struction period with equal satisfac-
tion and that, whatsoever demands
are made upon it, will be met and well
met
Now 1880 banks out Of total Of
$4,000 use the reserve par collection
| system.
LIVE STOCK MARKET.