Evening star., 1925-07-19
BY L. A. FLEMING.

The problem Of improbable deposit
accounts has been before the bankers
Of Washington for many years but 1t
was never presented in quite the COM
plete and drastic manner in which
John Poole. president of the Federal
American Bank, laid 1t before the
bankers in convention assembled at
Hot Springs. Va. Mr.. Poole has
pioneered in the study and analysis of
all departments of banking, and for
many years has kept valuable statis-
tics, making an intensive and complete
study of local conditions. Because of
his familiarity with the problems of
Improbable accounts he was the logi-
cal chairman Of the clearing house
committee, being ably assisted by
Frank J. Stryker and Harry V.
Haynes. This committee worked joint
ly and in closest harmony with a SINH
lar committee appointed by the Bank
ers' Association.
Favorable Results Expected.
Cooperation and a desire to conduct
the banking business on a better basis,
so that each account shall pay its
proper share Of the cost and be credit
ed with a proportion OF the profit, has
reached the stage where the prime
movers in the matter actually expect
results that will be agreed upon with
more or less unanimity.
The clearing house committee con-
sisted OF John Poole, Frank j. Stryker
and Harry V. Haynes.
The Bankers Association committee
included w. J. Waller, chairman; Boyd
Taylor. Avon NJ. Nevius. l.. o.
Slaughter, c. II. Pope, Victor B. Dey-
Der, f. G. Addison. jr.; Robert S.
Stunz, Maurice Otterbach and L. p.
McLachlen.
This joint committee wisely decided
to begin at home, and its first ef
fort was at self-examination. Each
member began gathering facts about
his own institution, and when satisfied
with analyses brought the facts before
the general committee and laid them
on the table for digestion.
Much Technical Study.
When the facts were laid before the
joint committee 1t discussed pro
and con various methods. facts and
figures TO be used in arriving at a
basis for the calculation of expenses
and the distribution thereof.
Banks have many sources Of eX-
penditures and but few of income.
Interest on loans is naturally the
money in selling bills of exchange on
foreign countries. Investments in
bonds and other securities give good
returns on much OF the money that
cannot be employed in legitimate
loan channels and there is some little
gain in domestic exchange when bills
are bought by other than customers.
The days of gain from collection
charges on checks have long since
been gathered to their fathers, al
though many small banks in the
South are still fighting for their fees
for this service.
Banks have any number of expense
accounts that must be met If Il profit
able business is to be conducted.
Taxes form one item of large ex-
pense, not only circulation and real
estate taxes, but tax on gross profits
running from a straight per cent on
the gross profits OF national banks
to per cent on gross earnings less
interest paid on savings banks gains
Clerical help is one of the big items
in a banks expense.
Deciding Factors.
The joint committee decided to OBJ
tain average daily balances of check
ing accounts; to credit a return of 5
per cent on ledger balances, after al
lowing for the various legal and cash
reserves as well as items in process
of collection.
The net result of carrying a check
ing account depends on its activity
and average balances. Even a SIS
! deposit will pay a very small return
to the bank If there Is but one entry
against it during a month, while a
much larger account may be unprofit-
able when more checks are drawn
than the size of daily balances will
support.
The joint committee had completed
| its calculations on cost of operations