Perth Amboy evening news., 1922-09-25

in Chicago. On a given DAY CnlcaSo
would cash more New York cheIks
than New York would cash Chicago
checks. The accounts would not
balance. Consequently, New York
owed money to Chicago. The New
York banks actually would be re-
quired to bundle up and ship notes,
gold or any kind of available legal
tender by express.
AS the accounts were changing
from day to day, not only between
New York and Chicago but between
all cities in the United States. there
was a constant criss-cross Of ship
ments of gold and money. 1t was
the hey-day of train robbers. 1t
will be seen that while this actual
money was in process of shipment,
subject to all the delays and risks
of transportation, it was not in use.
This money in transit is known in
banking parlance as the float" The
float has been estimated at as much
as $4,000, 600, 600. The interest on
$1,000, 000, 900 constantly out of use
il a big item-at 5 per cent. it is
$3.50, 100000 a year. This was a
dead loss.
Under the Gold Settlement Fund
plan. the general pool of gold is
NNPl dL SloIl' II llOW aIllOuIlLS
to nearly $4,000, 600, 000. Now when
New York, at the end of the day,
finds she owes Chicago 10000 00
as the difference in the balance, a
Geographic instruction is sent to the
Federal Reserve Board at Washing
ten. 1t tells the boards officers in
charge OF the fun to make an entry
on the books of the fund transfer
ring $40, 900, 600 of New York's gold
to the credit of Chicago. The very
next day the situation may be re-
versed in which case Chicago will
telegraph Instructions to shift the
ownership back to New York.
Big Economic Saving
Telegraphic ~clearances are made
every day by all twelve Federal Re-
serve Banks which, in turn, are act
ing as clearing houses for the men,
Der banks in their distances. There
is a constant shifting back and forth
OF the ownership of this gold. The
big economic saving Is that there is
no loss in the float because all the
time this gold is serving as reserve
for note issues and the risk of loss
by robbery, by wreck or fire 10
which actual shipments constantly
were exposed disappears entirely.
]hioo, lil6 pdllhS saw lIle tApISSS
charges which they formerly had to
pay on the shipments as well as the
heavy insurance rates.
This saving accrues chiefly to the
banks themselves. The greater saw
ing accrues to the public. The
banks passed on to their customers,
Sd far as possible, the los of all
this shipping and they made what
profit they could from the various
transactions. The collections of 10
to 25 cents on 500 would amount
to big figures on $1,000 and $1,000
600 checks. 1t totalled about $75,-
100000 a yea This now Is all
saved by the public.
1t is a rule that all banks which
are members of the Federal Reserve
System will cash checks without
charging these fees. AS most of the
big banks of the country are men,
bers, 1t is seldom that the fees are
encountered excepting in some of
the Southern states. In the South.
however, hundreds of banks have
refused to join the system and par
ticipate in this par check collection.
These banks desire to continue the
collection of the exchange fees as
they regard it as n of their prin-
Cipal sources of revenue.
A strong campaign has been car
ried on by them against the Sys-
tenn and they have argued that it
is a part of the general aggression
OF the money trust which controls
the big banks to force the smaller
institutions out of business by de-
priving them of this source of rev.
enue. They have declared that the
Federal Reserve Banks have over
stepped the bounds of fairness and
even of legality in extending rhe
system and have sought to coerce
small banks to enter the system by
discriminating against them and at
tempting their ruin.
There have been lawsuits in which
the Federal Reserve Banks have
been rebuked for coercive measures
ard in which the constitutionality of
the plan and the propriety of its
general scheme have been upheld.
Both sides have won rounds and me
fight was thought to be over. as
nearly the entire country now is on
a par collection basis, when the
Chamber of Commerce sent out its
referendum QUESTIONABLE.
The chamber asks it's business
men members whether they want
the old system of paying 20 have
checks cashed or the new system of
having checks pass for its face value