The Birmingham age-herald., 1920-10-24
WELLBORN URGES STATE BANKS ID
 BECOME MEMBERS
Sees Need of MobiIizing Re- serve Deposits to Meet Pres- ent Unsatisfactory Finan-
 ciaI Conditions
By Associated Pre.s

Atlanta, October 2S.-Gov NJ. B. We'll born of the federal reserve bank of Att lanta in statement today urged the ad-, visibility of non-member banks joining the federal reserve system and mobiIiz- ing their reserve deposits with those of member banks to meet the present un- satisfactory financial conditions in this district
 Public opinion" said Governor We'll born, which Is the governing power in this country. should. we think. take a hand in this matter and urge upon the stata banks the necessity of becoming members of the federal reserve bank and thus strengthen our great financial sys- tenn. so that all tho people in the Att ianta federal reserve district will get the benefit of the added mobilization of the state bank reserves.
 Tt is evident that the public at this time is more than ever before looking to the federal reserve bank of Atlanta ito finance the agricultural and commer- cial interests of this district. There is salmost stagnation in business owing to the very heavy decline in cotton, which IS our chief staple crop, and the welfare sof our section depends largely upon tho proper financing of cotton to bring about prosperons business conditions.
 While the feleral reserve bank of Att slanta has been able to take care of the situation by extending credit accommo- xaation to its member banks, and through -4t,<,Sa herLS ;n1;~~><tw al l3;v,<, x.<,-. v,.~,, ber institutions, it must be remembered xhat indirect aid has its limitations. How much better would we be able to cops with the problems confronting us if tho non-member state banks had mobilized their reserve deposits. which they ara required by law to maintain, with those of the 460 member banks who are now bearing the burden. There are approxi- mately 1,500 state banks in this district which have not become members of the federal reserve system. The resources of the state banks who are not mem bers amount to $l3 300o.ooo approximately s61s per cent of the total banking re- sources of the entire district
 TWO MAIN REASONS
 Mir. We1lborn pointed out that there are two principal reasons why q largo number of banks have not joined the federal reserve system. The first iA. he said, ''that they are unwilling to forego their charges of exchange for re- uniting for cheeks drawn on themselves by their customers; this in banking terms is called par remittine. The second Y that they are not willing to keep their legal reserves with us without interest being paid them. The amount of reserve that is required varies in different states. In Georgia the state law requirements are IS per cent of demand deposits and 5 per cent of time deposits. But If q cCun- try state bank in Georgia is . member of the federal reserve system it's deposit with the federal reserve bank of Att lanta of per cent of it's demand de- posits and 8 per cent of it's time depOs- its are considered as complying with the state laws, as is the case in the ma-. jority of states within our district. In Georgia there arc 63S state banks and only thirty-six are members of the fed eral reserve system.
 Tt is therefore apparent that, while tho reserve deposit with the federal re- eerve bank would not be paying interest. there would be available to the present non-member bank for loan purposes m additional per cent of demand deposits and per cent of time deposits, which obviously would bring far greater re- turn at the commercial rates of to x per cent than would be possible on . total reserve of 15 per cent at the to per cent that is paid between bank ing institutions other than the federal reserve bank"