Omaha daily bee., 1920-01-15
STATE BANKERS
ATTACK RESERVE
|B A n K METHODS
Organize to Resist Practice Of
Holding Checks and COL
Letting Big Total at
One Time.

Attempts to force state banks not
members of the federal reserve sys-
tenn to par checks, the holding and
accommodating of checks till they
total large sums, and the collection
of these checks from payee banks
through express companies or
agents, all alleged to be the practice
OF the Federal Reserve bank, will b..
met with organized resistance, it
was resolved by state bank officials
who met at the Hotel Fontenelle
yesterday. nj.
The alleged holding of checks on
state banks until an important ag-
gregate has been accumulated was
declared "in defiance of well estab-
lished usage and custom and in de-
fiance of a decision of the Nebraska
supreme court" that bank check
must be promptly presented by the
state bankers, and the collection of
such checks through express COM
panles or messengers was declared
an act on the part of Federal Re-
serve banks to embarrass payee
banks.
Bankers Name Committee.
To resist these alleged practices
the bankers resolved to appoint a
committee Of three with full author
ity to act for state banks of Ne
braska, to employ counsel, to make
assessments against state banks to
defray expenses, and to take what
ever action is necessary to secure
relief from Federal Reserve bank
practices. r .s. .
The cooperation of Omaha banks
where state banks maintain reserve
funds was asked and representatives
in congress will be requested to de-
mand an investigation of these al
legged practices of the Reserve
bank. State banks which have agreed
to par items for she Federal Reserve
bank will be requested to recall such
an agreement promptly, it was de-
cided.
The committee appointed to resist
efforts of the reserve bank to pay
checks and other alleged acts of
reserve bank against state banks
consists of c. A. McCloud of York,
Woods Cones of Pierce and c. F.
Gund of Blue Hill.
Describe Rough Tactics"
During the meeting yesterday al
legged rough methods used by agents
of the reserve bank in collecting
checks against state banks we're
graphically described.
Woods Cones, president of the
Cones States bank of Pierce, Neb.,
one of the speakers during the
morning session, declared that the
Federal reserve bank was employ
ing gun men" to collect cash on
checks on his and other Pierce
banks. In an effort to force his bank
to join the federal reserve system
the Federal Reserve bank has been
holding checks on his bank for as
long as three weeks, until the
amount is very large, then sending
rough agents to collect cash on the
checks, he said.
"Gunmen" to Collect
-Four men, we'll armed, arrived
in Pierce recently, with large bun
die of accumulated checks" he said.
1.-TWO of them entered my bank with
those checks and demanded cash
for them. The other two remained
in the car and kept it running in
order to be ready to make a quick
getaway in case something should
happen.
"The two gun men who came into
the bank, talked in rough, loud
voices. One of them said he was
from the Federal Reserve bank and
wanted cash on the checks at once.
While the cashier was paying the
checks to one of the gunmsn the
other man walked about the bank
telling clerks what bad man his
partner was.
To Clean Up Nebraska.
"He told them he was a United
States marshal and would hesitate
as nothing. He said he had cleaned
up kansasand was going to clean up
Nebraska next"
There are two men from the Fed
eral Reserve in Pierce now, Mr..
Cones said. One is cashing checks
sent him by the Federal Reserve
bank, and the other is trying to, or
ganize national bank, Mr.. Cones
declared.
Frank Pilger, president of the
Pierce State bank, concurred with
Mr.. Cones statements.
"The arbitrary methods being used
by the Federal Reserve bank to
force nonmember banks to pay
checks re CARELESS of any legal rights
in the matter have stirred ,up so
much i'll feeling among state banks
of Nebraska" Mr.. Pilger said, that
a meeting to protest was absolutely
essential. We will determine, if
possible, whether or not we are
going to be governed now and here
after by rulings of the Federal Re-
serve bank. We feel that the prin-
ciple of the matter is an important
ISSUE"
Mr.. Pilger also told of methods
he alleges are used by federal re-
serve banks in accommodating checks
totaling large amounts then send
ing agents to collect cash. They first
tried to collect these checks through
an express agent and the postmaster,
he said hf1f the Dnstrna sfer refuced
to handle them. Then they began
to send gunner" he says.
Piled Coin on Desk.
1.-TWO men recently entered my
bank with checks accumulating $780,
000," he said, "and demanded cash
payment. They refused to take a
draft on an Omaha bank where we
have large reserves deposited. and
uhere than ,x,a1.ld lonica1lxx Yta nj 20