Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-05-09
PRESSING HOME NEED OF
CONSERVATISM AND DEFLATION
Imitation of Paper Currency and Debts Of
World Reserve System Is Functioning
to Satisfaction of Most Bankers.

, record that further taxation at A
time when federal taxes are stran
Cling business would be a serious
STEP
Frederick w. Allen of the old time
! bond house of Lee, Higginson & Co.
of Boston made the assertion recent
ly that the federal income taxes had
eliminated the investment class.
Protesting Federal Reserve System.
During the past week there have
been meetings in this city of a large
number OF bankers from small cities
who are protesting against the fed
eral reserve system with numerous
charges and who are especially OPP
posed to par check collection.
When the system was first or
ganized and the par check collection
plan installed the big banks We're
just as sore as the smaller institu-
tions are today.
They saw in the proposed scheme a
loss of their long enjoyed profits
from exchange charges. and some of
the very largest banks in the coun-
try protested strongly, but as the
success of par collections was estab-
lished, as the advantages of the sys-
tenn and the speedy work in returns
came to be recognized as compared
with the slow returns that were fire.
quently made before it's introduction.
the big banks ceased their plant and
changed their tunes to peanS of praise
that are still echoing in this city.
where the system is about to be used
to make settlements of clearing house
balances and to pay cash on reserve
bank orders to local bankers.
The reserve banks of Boston. New
York and Chicago are doing the same
thing for their members and the sat
isfaction of the latter is general
Not only does this par collection of
checks extend to the member banks.
but to banks outside the system.
therein being the rub. 1t bothers a
bank that does not pay it's checks at
par to compete at home with a bank
that does.
Some Of the state banks having re-
fused to concede par payment of their
checks have been met by the reserve
system. with presentation of their
checks over their own counters for
payment, much to the discomfort. pre-
sumably, of the banks referred to-
The great banks Of the country are
welded to the federal reserve system
and would oppose any scheme where
by skids were put under 1T or mon
key-wrenches thrown in the machin-
cry.
for their cash should not be so par
ticular regarding their small ex-
change charges, a side line compared
with regular banking.
Find Fault With Profits Of System.
The opposing banks have found
fault with the big profits of the fed
eral reserve system and believe that
there should be a division with mem
Der banks.
When the system was put into ef-
feet and the member banks had to in
vest a certain percentage of their
capital in the reserve bank of which
they were a member with a promise
Of 6 per cent dividends. If earned,
there were many who expressed all
manner of doubt as to the ability OF
banks to pay anything.
The system has made good. The
profits after dividends were to go to
the commandments needing
the funds-after the establishment of
good reserves for the banks.
Some day these same twelve federal
reserve banks. placed in various sec
tons of the country, in order that the
needs Of all sections might be han
died without more than day or a
nights delay, may furnish the nucleus
for the payment of millions Of liberty
bonds, for the liquidation of large
share of the national debt. IL the
profits were SO diverted. while the
payment of s per cent interest is
sufficient return to the member banks.
plus the wonderful service that is
being rendered daily.