Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-10-24
URGED To MOBILIZE
BANKING RESERVES
Georgia State Banks Action
Advised in Statement by
Federal Financier.

ATLANTA, Ga, October % (by the
Associated Press).-Gov. NJ. B. Well
born of the federal reserve bank of
Atianta In statement today urged
the advisability of non-member banks
joining the federal reserve system
ana mobllizing their reserve deposits
with those of member banks to meet
the present unsatisfactory financial
CONDITION in this district.
fuollc opinion. said Gov. Well
porn. which is the governing power
OF this country, should. we think,
take hand in this matter and urge
upon the state banks the necessity of
becoming members of the federal re-
serve bank and thus strengthen our
great financial system so that all the
people in the Atlanta federal reserve
district would get the benefit of the
added mobilization of the state bank
reserves.
1T is evident that the public at
| inns time is more than ever before
looking to the federal reserve bank
OF Atlanta to finance the agricultural
and commercial interests of this dis
trlct There is almost a stagnation
IN business, owing to the very heavy
decline in cotton, which is our chief
staple crop. and the welfare of our
section depends largely upon the
proper financing of cotton to bring
Indirect Aid Limited.
While the Federal Reserve Bank of
Atlanta has been able to take care of
the situation by extending credit ac-
commodation to its member banks
ana through those banks indirectly
aiding non-member institutions, it
must be remembered that indirect aid
has its limitations
How much better would we be able
TO cope with the problems confront
ing us II the non-member state banks
rad mobilized their reserve deposits
"hich they are required by law to
| maintain with those of the $50 mem
Der banks who are now bearing the
burden
There are approximately 1900 state
panks IN this district which have not
become members of the federal re-
serve system. The resources of the
state banks which are not members
amount to $4,000. 900. approximately
30 L per cent of the total banking re-
sources of the entire district"
Mr.. Wellborn pointed out that there
are TWO principal reasons why large
! numper OF banks have not joined the
ieoeral reserve system. The first is
ne said. that they are unwilling to
forego their charges of exchange for
RENTING for checks drawn on them
selves by their customers; this in
ting"
Handling OF Reserves.
The second is that they are not
wiling to keep their legal reserves
win us without interest being paid
them. The amount of reserve that is
required varies in different states
In Georgia the state law requirements
are 10 per cent of demand deposits
ana per cent of time deposits, but
IL country state bank in Georgia Is
member of the federal reserve sys-
tenn its deposits with the Federal
Reserve Bank of Atlanta of Z per cent
of it's demand deposits and per cent
OF its time deposits are considered as
complying with the state laws. az
IS the case in the majority of states
within our district. In Georgia there
are 63S state banks and only thirty
SIX are members of the federal re-
serve system.
1T is, therefore, apparent that
while the reserve deposit with the
federal reserve bank would not be
paying interest, there would be avail
able to the present non-member
banks for loan purposes an additional
: per cent Of demand deposits and
per cent of time deposits, which
OBVIOUSLY would bring a far greater
return at the commercial rates of 6
to per cent than would be possible
on a total reserve Of Is per cent at
the to 3 per cent that is paid be-
tween banking institutions other than
the federal reserve bank"