The Portland daily press., 1893-07-21


the actual cash. These sums are SO
enormous as to be quite incomprehensi-
BILE to any one not possessed Of the mind
of an astronomer. Tho proper enumer-
alton and the reading of these figures
would be excellent exercise for the young
mathematiciaus who read this letter.
have spoken of the power of the
clearing house. 1t has been exerted to
the fullest extent but four times in the
life of the institution-in 1873, in 1884,
in 1891 and in 1898. In each case the
exercise of this power has prevented seri-
GUS financial disaster and relieved mon
etary stringency. The last instance was
on June 80 of this year, when several Of
the New York banks were fearful that
it would be necessary for them to call in
some of their heaviest loans because of
large withdrawal Of deposits that had
been made by customers in order to tide
over the then approaching July A. Had
il been necessary for them to take this
course, the situation, already strained,
would have Immediately become crit
ical, and it was decided by the Clearing
House association to relieve the tension
by the issuance of clearing house certifi-
Gates, which should be treated by the
banks and the clearing house as cash in
the settlement of balances and other
transactions from day to day.
One of the strongest banks in the city
led off by taking very large amount of
the certificates, these being secured in
each case by the banks depositing bonds
and other securities that were thorough
/. ly gilt edged, 10 per cent only of the
value of the securities deposited being is
sued in certificates. As all newspaper
readers will remember, this action on the
part of the clearing house produced the
desired result, and the serious trouble
that was feared was averted.
Another great financial power in New
York is welded by the savings banks.
Of them it has been complained in some
quarters that during the present strin-
gency they have boarded their money
and thus contributed to the general ten
sion. But in their own defense they say
that, while it is true that they have
sought to increase their surplus as much
as possible, this has been done in>order
to protect them from nervous depositors
who might in case Of sudden and I'M
reasoning runs not fully provided for by
ready cash in the vaults of the banks
precipitate the panic every one is striv-
ing SO hard to beat back. The savings
banks control many millions, and though
their power is silent it is great. They
are under the control of the state author
tiles and are not directly connected with
the, clearing house in any way.
The trust companies are another pow
erful factor in the finances of New York
and the country. They may not have
membership in the clearing house, but
in most instances they have q sort of left
handed connection Herewith through the
fact that their stockholders are often prac.
tically the same. Although the national
banks of New York make vast sums Of
money, and one Of them, the Chemical,
is the most phenomenally money making
institution in the world, yet the trust
companies possess advantages in the field
of profit nos shared by the regular bank
ing institutions. The national banks
cannot act as trustees for estates and
are limited to discount rates. These re-
strictions are not placed upon the trust
companies, and they are therefore very
valuable in the reorganization of railroad
companies and other corporations and
in turn reap large rewards for their serv-
ices in this direction.
Not long ago one of these companies
made nearly $a,00O,OO0 in fees through
the reorganization of a corporation, and
similar golden reward would have
been realized by another company dur
ing the present month had not the pres
ent stringency come upon us. The men
who control the trust companies are
among the ablest in the land. Fred Oh
colt served two terms as comptroller of
the state, and had he stuck to politics
might have been made governor. G. S.
Fairchild is well known as secretary of
the treasury during MIR. Cleveland's first
term. John R. Stewart is not very well
known to newspaper readers perhaps,
but in financial circles he is recognized
as an exceptionally brainy and sagacious
man, and his name is tower of strength
among financiers.
After the trust companies come the
private bankers, like Drexel, Morgan &
Co., Barry, Magoun & Co., and SO on,
though they are not SO strong In the
banking business proper as in ''fnanc-
ing" The insurance companies are also
a great power, and the banking depart
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