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<-;_- .,. rl.. F.EDERAL RESERVE BOARD WASHINGTON X-3359 March 13, 1922. SUBJEC'J:': Dedsion in -~tlanta PaT Clearance Case. Dear Sir: There is enclosed herewith, for your information, copy of the opinion rendered by Judge Beverly D. Evans of the United States District Court in Georgia, in the litigation between the Federal Reser~e Bank of Ptlanta and a group of non-member banks in Georgia, as received by the Federal Reserve Board in telegraphic form. Very truly yours, Governor. ENCLOSURE GOVERNORS OF llt.T; F .R .EJ\NKS COPY TO CH.AIRMEN ~ _3.) c 0 p y X-3359a r ;;. -'.q ·- "Beverly D. Evans District Judge: This case was heard by me on its merits and., after consideration 1 find as follows: a.rgumant and due 1~ Under sections 13 and 16 of the Federal Reserve Act the Federal Reserve Banks are e11powered to accept any and all checks payable on presentatiol} when deposited with them for collection, 2. Cheeks thus received must be collected at par. The Federal Reserve Banks are not permitted to accept in payment of checks deposited with them for collection an amount lass than the full face value of the checke. 3. In the discharge sf its duties with respect to the collection of checks deposited with them, and with respect to performing the functions of a clearing house., the several Federal Reserve Banks are empowered to adopt any reasonable measure designed to accoZ~plish these purposes. To that end a Federal .Reserve Bank may send checks to the drawee bank directly, for remittance thro~ the mails., of collections without cost of exchange. lf the drawee bank refuses to remit without deduction of the cost of exchange., it is in the power ~f the several Federal Reserve Banks to employ any proper instrumentality or agency to collect the checks from the drawee bank, and it may legitimately pay the necessary cost of this serVi ca. 4, The process of the daily collection of checks., in the exercise of the clearing house functions 1 is not rendered unlawful because of the fact that Of the checks handled two or more of them may be drawn on the same bank .. 5. It 1~ a legitimate feature of the clearing house function of a Federal Reserve Bank to publish a par clearance list., that is, a list of banks on which checks are drawn that will be collected at par by the Federal Reserve Banks. But inasmuch as a conclusion may be drawn from the appearance of a bank's name on the par 1 ist that it agrees to remit at par, or has agreed to enter the par clearance system., 1 do not think such list should include the naroo of any non-member bank, unless such non-member bank consents. l see no objection to including in the par clearance list the names of towns or cities, with .a representation that the Federal Reserve Bank will undertake to collect at par checks drawn on any bank (member ~r non-member) in such town or city. 6. In the inauguration of its par clearance system, I find that the Federal .Reserve Bank of the Atlanta District was not inspired by any \<erior purpose to coerce or injure any no~member bank which refused to remit at par. Specifically I find the charge that the federal Reserve Bank at Atlanta would accumulate ch~cks upon country or non-member banks until they reach a large amount, and then cause them.to be presented for payment over the counter, so as to oompel the plaintiffs to maintain so much cash in their vaults a$ to drive them out of business, as an alternative to agreeing to remit at par, is not sustaiped by the evidence. :~ "~ X-3359a - 2- 1· I find the evidence insufficient to sustain any charge in the bill that the Federal Reserve Bank was acting illegally.,. or exercising any right it· had so as to oppress or injure the plaintiff banks. With regard to the publication of the names of non~ember banks on the Federal Reserve Bank's par list while I do not think the evidence justifies a finding that such publication was done to injure o:r oppress plaintiff banks, nevertheless I do not think the names of plaintiff banks, or any of them, should be included in the list without their consent. The general result of my findings is, that the plaintiffs are entitled to the writ of injunction ·against the inclusion of their names on the par list without their consent1 but are not entitled to an injunction for any other matter complained agai~st the respondents. Let an appropriate decree be submitted giving effect to the foregoing findings. This March llth 1922~. March 13., 1922 ..
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