The Birmingham age-herald., 1913-09-24

of the figures. but also because it stands
alone, 50 far as is known. in published
bank statements.
The item has been read with interest in
financial circles here because it is ex-
centional, but there is really a deeper
significance in the figures than the mere
fact that for the first time foreign ex-
change has been included in an itemized
list Of the resources of financial insti-
tuition.
The national banks of New York which
have been accustomed to handle foreign
exchange have probably included these
securities under the general head of bills
receivable" or some other general appel
lation when making their reports to the
comptroller of the currency at Washing
ton
At one time there appeared to be a dis
position at Washington to compel the ma
tional banks to itemize specifically such
of their resources as We're included uns
der the general heading of foreign ex-
change, and it has generally been pre-
surued that this may have been the reason
why several of the banks decided 1t would
be the better part not to continue that
business
Cannot Issue Currency
In the first place the institution which
now reports that it possesses among its
resources considerably over S30,0O0000 in
foreign exchange is a state chartered in
stitution. 1t cannot issue any currency.
1t has no relation, excepting indirect and
through the clearing house. with the ma
tional banking system. The currency bill
now before Congress will, if it becomes
law. affect only indirectly this institu-
ton. 1t is one of the largest banking
corporations in the world, possessing re-
sources of nearly S220, 100000 and carrying
deposit account of nearly $l6S, ,000, 600. If
Congress should decide that it is the bet
ter part to prohibit any national bank di-
rector from serving in that capacity in
any other banking institution, several of
the directors of this institution would be
compelled to make choice between it and
the national bank directories upon which
they serve.
Magnitude of Foreign Exchange
In the next place, this item discloses the
fact that single institution in New York
now possesses resources in foreign eX
change of the value of $50, 100000, round
numbers. Presumably this foreign ex-
ton finds it the part of business wis
dom at this time to accumulate one of
the best securities, namely foreign eX-
change. then it may reasonably be in
ferred that other large institutions in New
York city are also aecumulating at this
time resources of this. kind.
There is no way of discovering how
large these accumulations are unless the
incorporated institutions report the item
A. this great trust cOmpanY has lust done.
The leading international bankers are un-
doubtedly buying foreign exchange at
this time, and it is fair to presume that
if one institution obtains resources of this
character in so great amount others as
well as the international bankers are at
present somewhat occupied with similar
business.
Where Ii Comes From
Foreign exchange as distinguished from
so-called finance bills represents COM
modities. while finance bills represent
credit sometimes backed by collateral Sc
curities IT, therefore, a single insti-
tuition in New York is now carrying as
a part of its resources foreign exchange
worth $50,0000 600, there must be behind
this exchange actual commodities The
bills are presumably drawn against COM
modities that have been sold to Europe
and the money with which they will be
paid will be furnished by Europe prob
ably chiefly by London. These funds viii
establish in London, unless they are inl-
mediatelv drawn upon, large available
credit for New York banking Institutions.
In this way some of the apprehended
financial embarrassments Of the fall may
be averted II the figures in this one re-
port are to be accepted as fairly well in
dcating foreign exchange transactions
in New York, then there should not he