The herald and news. [volume] (Newberry S.C.) 1903-1937, 1920-10-22
Exceptions Filed
By State Bankers
Methods of Federal Reserve Board
Sharply Attacked in Meeting at
Washington, Condennning and
Deprecsting Methods.

ton drew the attention of delegates
today at the general session of the
American Bankers association con-
yention, state bankers in their sec
ton meeting which followed brought
administration of the federal reserve
system under fire. They adopted
resolutions ':condemning and de-
.precating methods employed by the
board in it's relations with state
banks which are rot members of the
reserve system, although the board
did not lack defenders during the dis
cussion.
Indignation against the boards
regulation compelling the collection
Of checks and remittance of the face
amount at par was freely expressed:
Governor Harding was styled a
ssusurper" of authority and a COM
mittee was named to seek amend
ment of the reserve act so as to
s"guarantee to all bankers the rights
and privileges of fixing a charge on
the handling of checks drawn on all
excepting local banks.
Par Clearance System.
Speakers declared Governor Har-
ding had employed "force and coer-
cion" by enforcing the use of the par
clearance system under which many
state banks were said to have been
compelled to enter the reserve sys-
tenn or lose certain classes of bus
ness. This was mot only unfair but
without basis in law,'' it was as
serted.
Charles De. B. Clairborne of New
Orleans declared the service render
ed by the banks in the transfer CT
checks was legitimate and the banks
were entitled to compensation. he
asserted that the arrangements or
dered by the reserve board for par
clearance "does not make every
check worth 100 cents on the dollar
because there is nearly always an eS-
change charge so the merchant who
supports par clearance does not gain
anything" If the merchants have
benefited by the system, Mr.. Cialr-
borne contended "the public has net
been able to see it DETECTED in re-
duced prices"
The reserve boards staunchest de-
fender was O. Howard Wolfe OF
Philadelphia, who asserted that
abolition of the clearance and remit
tance charges and establishment OF
the countrywide gold settlement
saved bankers and commercial in
terests 135,Ooo,ooO last year. This
amount, he said, would have been
exacted as "tax'' on business had not
the board organized a system to clear
all exchanges of bank drafts.
Strong for System:
Although he joined in the protest
against the par clearance regula-
tions, E. C. McDougal of Buffalo who
was elected president Of the state
banks section Of the association, ex-
pressed unqualified approval of the
principles of the reserve system. He
declared it had ''come to stay" and
urged the state bankers to work to-
gether for it's growth instead of
complaining about it eli of the
time
''Many country banks are much in
censed," he continued, 'against the
federal reserve banks because Ct
their policy of forcing par collec-
tions from banks which are not mem
bers of the system. Personal feel
ings of the officers of these non
member banks is also a factor ii
keeping them out of the reserve sys-
TEN. The question of collection
charges is one thing; the question
of proper mobilization of reserves IS
another and entirely different thing.
However resentful country bankers
may be on the question of collection
charges, they, in common with all
banks of the country, contribute
their fair share towards the expense
of maintaining our gold reserves.
Mr.. McDouglas warned the bank
ers that 'the fools paradise through
which you have lived for the past
two or three years" would not al
ways continue. He urged restoration
of the conservatism which prevailed
in banking circles prior to the arrival