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1 I -404- EXTRACT FROM SPEECH Relating to the Clearing of Checks -byHonorable Carter Glass of Virginia On the Subject of the Conference Report on the Federal Reserve Act Delivered in the House of Representatives December 22, 1913. ooOoo "No Charge for Exchange.11 "One of the moot important provisions of the currency bill passed by this House was that which sought to put an end to the flagrant abuse involved in excessive charges by banks throughout the country for collections .and exchanges. The House bill pro vided that exchanges should be made at par and that charges for collections should not exceed the actual cost to the banks. This item of the bill, as most of you remember, was bitterly controverted in the Democratic caucus* and also in the House. Naturally thous ands of banks deriving largo profits from the practice Of charging constructive interest-upon checks in transit and very arbitrary . charges for collections and for exchanges exhibited great distaste to this provision of tho bill. They vigorously protested to members against the inclusion of this prohibition, and thus the effort to remove this tax burden upon the business of the country was con tested with the utmbst pertinacity* Howavor, those of us in the : House who sought to tear down these toll gates upon tho highways of commerce prevailed. The fight was renewed in tho Senate, and that, body so modified tho House provision as to leavo it sololy within the discretion of the Federal Reserve Board- to diminish or abolish the evil complained of, as it might please. The House conferees declined to yield on this point. They insisted upon such a modifi cation of tho Senate, amendment as will exact exchanges at par and restrict charges for collections to the actual cost of such trans actions to the bankSj In brief, as the bill is now.reported to the House, the banks can not make exchange and collection charges a source of profit; ^hey can not any longer charge constructive interest; they can not exact a tax for a theoretical transfer of funds from point to point whep no transfer is actually made, but only an entry t 4 702 *-404s> on the hooks. TJioy can no longer harass tho commerce of the country nor penalize the business men of the Nation by an unjust tax. While the House conferees did not succeod ip en^ . tirely restoring tho provision as it left this Chamber, they vastly improved the amendment .made by the Senate* Tho pro vision-, as it standst will result,in an ii^uense-saving to the tradespeople of the United States. I t ;will eliminate the amazing wastefulness incident to many independent collection organizations by substituting one Gompa.ct collection system. It will abolish the exchange charges altogether and apprecia b l y reduce charges against collections. I speak thus confi dents, WMjl) in anticipation of wise action by the .Federal Re serve Board when appointed. If the Board will have the wisdom and courage to establish immediately a comprehensive an economi cal plan of bank clearings, it wiil be difficult to compute . the advantages that this section oi the currency bill will secure. While some banks will have their profits diminished, it will be profits to which they are not fairly entitled and for the loss of which they will be more than compensated... by the better and speedier facilities afforded for the transaction of business. n 11/3/15