The Washington herald., 1922-04-08
FEDERAL RESERVE
SYSTEM MAY LOSE
LOCAL INSTITUTION
Nom Borrowing Banks
Not Benefited, Is
Belief.

ters Is. being contemplated by Bal
timore institutions, and possibly bs
a local banking house, IL wa,
learned from an authoritative
source here yesterday.
1t is pointed out that. to become
a member of the Federal Reserv.
system, II Is compulsory for mem.
Der banks to maintain approximate
ly 10 per cent Of their deposits a.
balance with their regional mem
ber. On this amount no Interest
is paid. resulting in a loss of many
thousands of dollars per year tC
the institutions.
Locally, with the exception of 4
single instance, none other thar
national institutions are members
OF the Washington Clearing Hous,
Association, which clears through
the Federal Reserve Bank OF Rich,
mond, making it necessary for al
associate members to clear through
the various national banks. II 1,
pointed out that. with this privilege
denied them, members of the Fed.
eral Reserve system who are moi
members OF Washington ClearinE
House Association would profit ma.
terially by Withdrawing their !;
per cent with Richmond and main.
tanning this balance with banks il
various cities receiving interest or
such funds.
Those contemplating taking the
above action do not deny the great
BENEFITS derived from membership
in the Federal Reserve system
especially IN the South and West
where II is necessary TO borrow
huge sums for crop harvesting pur-
poses, which sums invariably come
from the Federal Reserve banks
treasures II but claim there is n
benefit derived by nonborrowinp
Institution.
Important announcements to thi,
effect may be expected within tht
next few days
Last Years Bank Failures.
Reports received from CONNER.
cial agencies and other sources
Shcw that during the calendar year
1921 some 52s State and priva.t
banks were closed. OF which. how.
ever. l63 were able to reopen O,
ehect satisfactory arrangements
with other banks or otherwis;
hquidate their liabilities. according
to announcement by Comptroller
Crissinger's office yesterday.
From data at command the liza.
btlities of the ass failed banks ar.
Eregate approximately $4,000. 900
making the average per bank
rountly, s263.O0O. In respec. NJ
number OF bank failures and vol.
time of liabilities. the Southern geo.
graphical division was most serl
Ously affected. Therein there wer,
131 failures. the liabilities beI1.
over $4,000, 900. In the westerr
states the failures number 12z, tn,
liabilities being in excess of SIS
100000 Only hve bank failure,
occurred in the Eastern States AND
four in the New England States
liabilities being $500. 900 and ST.,
100000, respectively.
Gardiner Voices Denial.
A. S. Gardiner. president of tn,
Standard National Bank. yesterda,
vehemently denied his institution
had incurred any loss in connec
ton with a recently cashed checl
for S2,650. as Indicated bv errone
Gus impressions conveyed by III,
press.
Mr.. Gardeners statement follows
"RH.Sneyd opened an account will
US. and several days later came I,
with a check drawn to his order
and indorsed by him. with a re
quest that IL be cashed, which wa.
refused He was told that the onl,
way any money would be paid ou
would be after the cash had bee,
collected by this bank, and IL h,
wished US to send same through
collection we would do so Thi,
was done. The check was returned
with the statement that 4 wa,
good. but was drawn against ;
savings account and the saving
bank passbook muSt ACCOMPANY
same. Upon being advised OF this
Sneyd brought the passbook in, anc
the check and passbook were sen
through for collectionA The Stand
ard later received a draft en- a %
cal national bank for the sum o
s2.55O. which draft was collected
No money was paid out OF the ac
count until s2,550 In cash for tn,
draft had been received by tn,
Standard Bank"
Federal Reserve Ratio.
While the reserve ratio for tn,
Federal Reserve system as a Who'll,
remains virtually unchangd TO
this week. showing a decline O
only L per cent. there was con.
tinued improvement in the reserv,
position of the five banks who's,
ratios In past months have beer
below the average. Thus the per.
Centage Of reserves to note anC
deposit liabilities in the Richmond
bank rose during the week from
53.s to 57.1: that Of the Dallas bank
from ST. to $40: Kansas City from
sos to So; Minneapolis from 73.;
to 74.s, and that of Atlanta from
"a to 75.s.
The gold reserves OF the system
increased during the week $500.
900 and the Federal Reserve note
circulation was larger by $4,000.
900. while bill holdings were les.
by S15.400.OOO. The shrinkage ir
discounted bills indicates a slack
demand for credit for agricultural
and business purposes. and help.
explain the abundance of funds fol-
speculative purposes in financial
centers.