Evening star. [volume] (Washington, D.C.) 1854-1972, 1921-02-04
PLAN LEGAL|zA7|0N
Of CHECK EXCHANGE
North Carolina Banks Warn.
edssThat Reserve System
= Will Not Yield.
ny 1. A, FLEMING.

North Carolina state banks are evil
IDENTIFY preparing to make hght TOT
their exchange charges. having gone
so fafras to have a bill drawn up
which The Richmond Federal Reserve
Bank. in whose district member
banks of North Carolina are included,
predicts may shortly become law.
1t is recognized that no state law
would have any effect on national
banks or trust companies or state
banks that are members OF the led
eral reserve system.
The proposed law authorizes non
member state banks and trust com
panies chartered in North Carolina to
make deductions of one-eight or 1
per cent on items sent them for col
lection. with a minimum charge OF
10 cents.
The measure further provides that
IL checks are presented through an
express company. post ofhce or
through federal reserve bank. the
bank on whom the checks arc drawn
has the right to refuse payment in
cash and may tender exchange. even
though the check is presented by an
agent in person at the counter of the
drawes bank.
Protest of the check is forbidden if
the drawee bank refuses cash and
tenders exchange. Change of the con-
ditions of the check through notation
or the use of rubber stamp are for
hidden.
The provision regarding payment in
exchange rather than Sh is made, I'm
order to prevent accumulation OF I'M
necessary amounts of currency IN the
vaults of banks and trust companies
Checks drawn to the order OF the
State of North Carolina CT the federal
government are exempt from the ex-
change provisions of the proposed law
The mea sure does not make its proVi-
sions obligatory, but 1T the option of
the draWee bank
VIII Not Take Exchange.
The Richmond Federal Reserve Bank
announces that in the opinion % its
counse' any such measure. wou'd be
unconstitutional as the federal reserve
banks cannot permit my deductions or
charges on checks for exchange.
If the bill is enacted. the Richmond
bank will. in the event of refusal o;
North Carolina banks 20 remit II pi-.
as soon as possible, present ch,"ks for
payment al the counter OF the dr'twha
bank or banks. refusing to accept ex-
change or permit deduction for exchange,
and if then refused payment will return
all checks with formal notice pt dis-
honor in lieu of protest.
The bank will not be responsible for
DELAYS occasioned by inability To FRO
cure agents to make presentations over
the counters. nor for failure to secure 4
formal protest.
The timate Result.
1t would seem that banks receiv-
ing large deposits of checks and
drafts drawn on North Carolina state
institutions would ultimately be COM
PEELED to refuse to accept them for
collection. as the delays incident to
their practical "dishonor" and return
to original depositing bank would
be unbearable, the more so as there
would be no relief from repetition.
In time makers OF checks would
find their paper unacceptable and. in
the long run. the very law by which
the state institutions hope to profit
may rebound to the profit of the
national and other member banks.
The federal reserve banks are
obligated to par collections and for
hidden to accept any shaving for ex-
change or other charge.
Potomac Electric debenture 6s and
Capital Traction IS furnished the,
principal business in today's local
bond market. The latter sold to the
extent of Sl0.500 at 81, while the
former eased to 81.
Capital Traction shares firmer at
$40 to a strong closing at SIS. Small
sales of Washington Gas at 80, a
slight advance.
Mergenthaler was sold at 1c2 and
Lanston shares at 74H. -
A New. York syndicate is bringing
out a new issue of 100000 francs.
offered at go and bearing per cent,
bonds of the Paris-Orleans Railroad
Company. principal and interest
guaranteed by the French govern
ment. The proceeds will be expended
in the United States for equipment.
The issue is free from French taxa
ton.
Chile will soon obtain a large loan
here. $25,000.o00. At the same time
Argentine and Brazil hope to be able
to land loans for more millions in the
near future. The Chilean loan is said
to be for a period OF five years and
ho ~ Int 10