The Birmingham age-herald., 1914-02-06
| BIC BALANCE OF
CLEARING HOUSE
NOT NEW RECORD
And Yet One Bank Had a
Credit Balance of Thirty
Four Millions
SHOWS COOPERATION
AMONG THE BANKS
Government Can Always Be Big Fac
tor in Presentation of Harmoni-
Gus Relations in Bank
ing Circles
BY HOLLAND

New York. February 5.-tSpeciaL lit
mas been reported that a recent clearing
mouse transaction, the record of which
on clearing house sheets showed that the
Bank of Manhattan company had credit
of ss4ooo.ooo round numbers, was the
largest single transaction on record in
the 60 years of the life of the clearing
house. The statement is not exactly ac-
curate, for while the credit balance of
sS4,ooo,WO was the largest balance of that
kind ever entered to the credit of a
single bank, not only in New York. but
probably in the entire country. vet the
transaction was surpa ssed some years
ago, although on the reverse side of the
books, SO to speak. At the time of the
settlement made by the Union Pacific
Railroad company with the United States
government of the debt due to the gov
ernment by that company, a debit balance
of $S7.oO000o, round numbers, was record
ed on the sheets against the Bank of
Commerce. Those figures represented the
settlement with the government of this
large debt. Not at any time has any one
bank upon any one day stood in re-
lation of such magnitude to the Clearing
House association as did the Bank of
Commerce upon that day.
The size of the figures representing the
credit balance in favor of the Bank of
Manhattan company WILL of course, make
the record traditional one. But there
is really a greater significance than that
of mere size behind the figures which rep
resent the transaction.
Almost all the other very large clearing
house records in the form of credit or
debit balances against single institutions
reflect transactions in which the govern
ment was a party. This latest and largest
clearing house transaction in the form of
a credit balance reflects no financing op-
Grafton in which the federal government
had a part. 1t happened curiousy
enough, at time when the transaction
in all its details can be studied with
prsnt both at Washington and in the
larger banking centers of the country, for
the reason that it serves to show how
great the dependence is upon cooperative
action among the banks when there is
large and very important financing to be
done The history of the various steps
that were taken before the sale by the
state of New York and the delivery to
the purchasers of a block of state bonds
of the par value of So, 100000 should re-
ceive careful attention. from those who
are disposed to make drastic legislation
which would absolutely forbid director
of any one bank from serving as di-
rector of any other bank or of any rail-
road or industrial company which may
have dealings with the banks.
Cooperation in the Past
In the past Is years cooperation be-
tween the banks and the government in
the financing of large and highly impor
tant transactions has been illustrated con-
spicuously in three instances. After the
treaty of peace by which friendly rela-
tions were restored between Spain and
the United States. the federal government
was obligated by the terms of that treaty
TO make immediate payment to Spain OF
$50 600 in gold for certain lands and
other properties which the United States
secured in the Philippines. At that time
1t was deemed essential that there be no
actual transfer of gold, but that the un-
derstanding should be financed by CO.
operation between the federal government
and the National City bank of New York.
1t was so financed through the aid of for
eign exchange and there followed not
the slightest ripple in the money market.
Several years later, the government Sc
cured the title of the French company