The Birmingham age-herald., 1920-01-22
P AR CLEARANCE OF CHECKS MANDATORY STATES WELLBORN
Reserve Bank Governor De- clared That One-Third of
 NOn-Par Banks Are in
 Sixth Reserve District

o1e-third of the banks in the United States that do net clear checks at par deposited for collection are in the sixth Federal Reserve district, according to statement made yesterday by M. B. We'll born. governor of the Sixth Federal Re- serve Bank. Alabama, Florida, Georsl' and one or two other states compose ths Sixth district.
 Mi. Wellborn states that of the So,2@ banks in the United states only Ssio are not on par clearance basis. His state- ment follows:
 "The question of rar clearing of checks through the federal reserve banks sald Mir. Wellborn, lis enc of the mandatory provisions of the federal reserve act, as enacted by the Congress of the United States by an almost unanimous Note' Since the beginnipg of operations ot the federal reserve system it has been the endeayor to impress upon the non-nen- Der state banks tie wisdom and necessity of {, central agency in each district through which checks could be collected at par, and at present 26,315 banks ou- or a total of 30,260 rational and state banNs in the United States have joined the col lection system instituted by the federal reserve These banks do approximately s5 per cent of thc commercial business and do not ehargS for paying checks.
 MANY REMIT AT PAR
 "1n tke district known as the Federal Reserve Bank of Atlanta district all na- tional hanks and 4sO state banks at pres ent remit at par fCl checks sent them 9y the Federal Reserve Bank of Atlanta or it's branches, leaving in the district lloS state banks that do not remit at par. srx- .t1<Hy- tNaNN I.l in the entire United States not on the par list.
 Under the law federal reserve banks are not permitted to pay exchange charges for collection of bank notes and drafts payable upon presentation-and m compliance with the law federal reserve banks must receive on deposit, at par' checks and drafts, payable upon pre- sentation, drawn on any bank in the United States, whether a member of the federal reserve system or not. So that state banks not members of the federal reserve system have no tenable grounds for refusing to pay checks on them by their customers, at par, when sent ttem by the federal reserve bank. All national banks and the state banks that have | ioinsd the federal reserve system remlt at par for all cnecks drawn on them and i any loss of prof. for performing this service for their customers has not caused the banks to pass dividends. The public speaking through Congress has decided that checks must be collected at par. thu | business interests demand it and cus | toners of banIs have a right that theil 1 checxs shall be paid at par whether pre- 1 scented at the bank window or througi the maI The banks depositors are en titled to the service. for the reason tha they leep their funds in the bank, whici
 item is the main earning power of th' | bank.
 LOSS OF MILLION
 'Tn a recent statement by the Coun 1 try Bankers Association of Georgia l was claimed that if the law of Consres 1 prevails and the state banks not mcm bers of the federal reserve system hay | to remit at par, it will entail loss Q | a million dollars to the country banker | of the state. If this is true, the genera business and agricultural interests of tn 1 state will be the gainer and the eariie the law is compiled with the better. To | a bank to charge exchange for paying II own customers checks sent them throug tke mail is a burden and an unnecessar. 1 toll or commerce.
 "Tne Farmers Educational and Co loperative Union of America the Nat;ona Grange of the United States, representa- more than a mil,,on farmers, the naticna 1 associations of hardware merchants, gro cerv merchants, retail dry goods mer chants. credit Inen and various other or
 ganizc1 bodies of the commercial, agri
 cultura. and industrial interests of tn nation. are on record before Congress a
 opposed to any change in the federal re
 serve act with reference to exchang
 charges on bank checks.
 "In order that banks may not inci any expense in remitting for check ldrawn upon them by their customers an payatlc upon presentation, the Fefers
 Reserve Bank of Atlanta in sending thef
 such items will:
 Enclose in each letter a stamped CT lyelope for return remittance.
 Permit the bank to send us curr rsncs at our expense. in payment or letter CT | closing items 70 them.
 "Or permit barks to open with us
 non-r1ember clearing account and sen
 to us for credit. al par. items drawn Q
 anv of the 25.voo and more banks in th
 United States shown on our par list "O- will accent in payment therefo
 usual bank draft.
 CT, answer to the question, What doe the federal reserve bank propose 10 a ) shouIl 2 state h,nk dishonor check ( tbeir customer by refusal to pay upc
 nreasntation through the mail by tn | fadaral reserve bank on account ot nc
 heinz permitted under the law to chare tha federal reserve bank any "exchans charge Governor Wellborn stated: CANT PAY EXCHANGE CHARGl . "U-hile the law does not permit us { r.v anv exchange charges we are pei nitted 10 incur expense in the adoptio [ of tn, most convenient method of makin 5 sucb collectionq I fell, however, that r ,,iew of the public interest that has bee st;rrad t.p over this question that nor
 r,emner state ba-ks will continue to joi 5 inc na- list and thereby obviate the net essitv of any experse on our part Tn tN . collection of checks
 3 In connection with the statement issue 5 covernor Wellhorn furnished data show 5 ing the scope of rar facilities Of the fe' leraI reserve system as Of January ] ? 192o ,u,.o
 Total number of banks in the Unite States. 3026o, r,., 2 ctatas on federal reserve par list tbo
 Ion New York, Philadelphia. Cleve'an 0 Ranrss City and Dallas federal reser' . districts entirely par). 26,315.
 ! Toto1 number CT banks in the Un'tf r c.ates not on federal reserve part lis s T,tal number 6f banks in the Six e Federal Reserve district (Atlanta) m on federal reserve par list 116s. T,tal number of banks in the remaino | of inc United States (eleven federal r
 serve districts) nc. on the federal res@r
 par list 2777
 Percentage of non-par remltting pam :. l,ocatod in inc Sixth Federal Reserve di } trict fAtlanta) a. compared 10 tne .''
 number of non-par remitting banks
 .,-...o rrritaJ States g per cent.