Evening star., 1934-01-06
HEARING DATE SET.
FOR BANKING CODES.
Fair Practice Rules Will Get
Further Attention on
February 10.
BY EDWARD c. STONE.

II vas announced at JIle OIuCe Ol
Deputy A. A. Whiteside today that the
next hearing on the bankers codes OF
fair practices will take place on Feb
ruary is. These are the codes held in
allowance by Gen. Hugh S. Johnson
when flood of kilograms objected to
the service charges mentioned in the
code for New York City. The opinion
is freely expressed in Government and
banking circles that the codes will be
approved by Gen johnson as soon as
he has given all the. details careful
study Today's announcement, however,
means that they will not go into effect
February l.
Dame rumor says that the split be-
tween Gen. Johnson and the bankers
would never have occurred II Deputy
A. A. Whiteside had not been out of
the city when the New York and Balti-
more papers published the details Of
the code and scared thousands of de-
positors into thinking that they were
going to have a great many different
service charges charged directly to their
accounts. Deputy WhiteSide presided
at all the hearings on the bank code
and was familiar with every detail
Could have answered any questions in
stantly.
From bankers it is learned that many
of the service items were not to be
charged directly to customers, but were
for use in analyzing patrons accounts.
The figures would show what it cost
to handle an account, demonstrating
whether the account was returning
profit or a loss. In case of a loss, the
depositOr would be told Of the situation
and sufficient service charge made to
prevent further loss to the bank. Many
banks have been using some such
methods for years in order to stop un-
profitable business.
Limits on Free Services.
In case a customer has satisfactory
balance, one yielding his bank a rea-
sonable profit, the patron would never
know that the codes had been put into
operation For years competition has
been so keen between banking lnstitu-
tions that much business has been done
at a sacrifice merely to hold business
it being hoped th3t all accounts would
eventually return a profit to the bank
To accommodate customers, financial
institutions have handled countless
items without charge, the cost coming
on the bank. For example. the banks
have sent hosts of kilograms at their
own expense when the sole profit was
to the customer One telegram means
nOlNlIlg DuG IlOuSdIUS Ill year illdhS
a real dent in profits.
Service charges on checking accounts
under a certain minimum have been
applied by most banks for long time
Under the codes these charges will be
kept in force. The real aim of the new
rules, bankers assert. is not SO much
to build up profits as the plug up losses.
The temporary N. R. A code. which
went into effect in October, boosted
operating costs. The permanent codes
are expected to help meet the new con-
6itions.
Customers will find some fees that
they have not known in the past, Such
fees had the approval Of Deputy White
side, who considered them fair to both
sides He and his assistants gave them
q great deal of study. Furthermore,
f1nanciers say they could not impose
many direct charges on patrons with
out creating bitter opposition. Too
high prices in the retail trade field
cause buyers strikes" Banking does
not differ from trade, so far as dealing
with the public is concerned.
Banks Asked N. R. A. Inclusion.
The Nations banks were not orig
inally included under the National Re-
Covery Administration. They asked in
clusion in order to help recovery. Now
they are in and expect to stay. The
codes differ slightly in different clear
ing house areas. but all are aimed at
strengthening these institutions by fair
methods.
How soon the new banking rules will
be signed remains to be seen. If Gen.
johnson insists on changes, of course
they will be made. The temporary
code is working with marked success.
Of -cyl- 41oo
manent codes is not to be lost
That there was little reason for so
much alarm among depositors in New
York is the claim of Gotham financiers.
Due to confusion and misunderstand-
ings, they say.
So far as Washington is concerned,
the local clearing house adopted a code
of fair practices during the last week
in DeCel lber. The new set of rules will
be operative soon after approval by the
n R. A. chief,