The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1920-10-21
RESERVESYSTEM
IS UNDER FIRE
Non-Member Banks Condemn
Methods of Federal Board;
Houston Speaks.
(sy Associated Press.J

Washington, Oct. 20.-While a sur
vey of the financial policies of the
government by Secretary Houston,
drew the attention of delegates today
at the general session of the American
Bankers association convention, state
bankers. in their section meeting which
followed, brought administration of
the federal reserve system under fire.
They adopted resolutions ''condemning
and deprecating methods employed by
the board in its relation with state
banks which are not members of the
reserve system, although the board did
not lack defenders during the dis
cussion
Indignation against the boards reg
ulation compelling the collection of
checks and remittance of the face
amount at par was freely expressed.
Governor Harding was styled ''usurp-
er" of authority and a committee was
named to seek amendment of the re-
serve act so as to guarantee to all
bankers the rights and privileges" of
fixing charge on the handling of
checks drawn on all excepting local
banks.
Speakers declared Governor Harding
had employed force and coercion by
enforcing the use of the par clearance
system under which many state banks
were said to have been compelled to
enter the reserve system or lose Ger
tain classes of business. This was
mot only unfair, but without basis in
law it was asserted.
Charles de B. Claiborne, of New
Orleans, declared the service rendered
by the banks in the transfer of checks
was legitimate and the banks were en-
titled to compensation. He asserted
that the arrangement ordered by the
reserve board for par clearance docs
not make every check worth 100 cents
on the dollar because there is nearly
always an exchange charge so the
merchant who supports par clearance
does not gain anything
If the merchants have benefited by
the system. Mr.. Claiborne contended
it reflected in reduced prices"
The reserve boards staunchest de-
fender was O. Howard Wolf, of Phila-
utlpllids NllO dSSCI tSu tiid1 dDOlltIbu III
the clearance and remittance charges
and establishment of the country
wide gold settlement saved bankers
and commercial interests Si35,000, ,O0C
last year. This amount, he said, would
have been exacted as "a tax on busi-
ness had not the board organized a
system to clear all exchange of bank
drafts.
Although he joined in the protest
against the par clearance regulations,
E. C. McDougal, of Buffalo, who was
elected president of the state banks
section of the association, expressed
unqualified approval of the principles
of the reserve system. He declared it
had "come to stay and urged the state
bankers to work together for its
growth instead of complaining about
it all of the time"
Mr.. McDougal warned the bankers
that '.the fools paradise through which
you have lived for the past two or
three years" would not always con-
tinue He urged restoration of the
conservation which prevailed in bank
ing circles prior to the arrival of the
sellers market when anybody could
make money, because immunity from
losses" cannot go on indefinitely.
The state bank section elected r. B
Hecht of New Orleans. vice president
and Fred Collins. of Memphis, chairman
of the executive committee.