Weekly journal-miner., 1910-01-12
A STILL BIGGER BANK MERGER

Consultations of the trust com panies and great private banks of New York are proposed which would place at least a quarter of a billion of bank capital and deposits in one bank. How much foundation there is for the rumors it is impossible to say, but there is nothing improbable in them. The men whose names are mentioned in connection with the deal are quite capable of consolidating anything which it would pay to con solidate, and there is an obvious need for such a financial institution as is proposed in aid of our foreign commerce if for no other purpose. We are an energetic people and if we once set our face toward exploit ing American interests in neutral markets we shall do it on a scale which the world has not yet seen. And for that purpose such a bank ing institution as is proposed is es- sential.
 The public generally has very lit tie idea of the financial mechanism of foreign trade. It is assumed that when a firm sells a hundred thous- and dollars worth of material to a foreign country the seller gets his money within a short time, and that is the end of the matter. That, in fact. is the way that most of our foreign trade has to be carried on, and that is one great reason why we get no more of it. In domestic trade A in San Francisco sells to B in New York to the value of $10,000, payment to be made in thirty or sixty days. He makes draft on the purchase which his bank promptly discounts and the seller has his cap ital to use again. That is safe busi- ness for the banker who knows the seller, the nature of the commodity and the market for it, and also knows, or can easily find out, the standing of the buyer. But in un- developed countries from four to six months time. and possibly a year, may be required in which to pay for the goods and no ordinary bank, and few very large banks, have the knowledge necessary to enable them to discount the bills. They know the seller, but have very little informa- ton about the other elements of safety. The financial machinery re- quired for a large export trade with undeveloped countries is a great home bank with branches in all such coun- tries with which we do business, and considering the magnitude of modern business transactions a quarter of a billion of capital and deposits is lorpa Dneesl11- ho1 billion could be used to advantage.
 For one essential factor in com merce with undeveloped countries is the ability to underwrite enterprises for the development of those coun- tries. It is in that way that Europe, and especially Great Britain, has got and kept its hold on foreign trade. How important this is regarded from national standpoint was shown by the surprise and evident dislike with which Europe regarded our unex- peeted persistence in demanding share in the Chinese railroad loan. One of the important uses of a cen tral national bank is the aid which it could give to foreign commerce, but such a consolidation of private banking capital as is proposed would be far more effective than a national bank, which of necessity would be restricted from doing business involv- ing serious risk because it must be relied on to protect domestic credit in times of financial stress. In fact. some of the national banks of New York are worrying about the proposed merger lest its ability to do business which is prohibited to them may at attract large accounts away from them.