[441] This explains the estimates of Wall Street men that the Clearing House reduces checks by two-thirds. For their purposes, the saving is almost that much, of the items offered for clearings. Cf. Van Antwerp, The Stock Exchange from Within, pp. 121-122.
[442] Ibid., p. 273. There is one billion difference between Pratt's estimate and mine. I incline to the view that mine is correct, the more as he puts his figure, 14 billions, as a safe lower limit. But a billion one way or the other is trifling!
[443] An official of the Bankers Trust Company has secured for me from a broker at the "Money Post" an estimate of 20 to 25 millions as an average, with 50 millions as a maximum, for 1915. The Pujo Committee, in its report in 1913, p. 34, gives a similar estimate.
[444] P. 34.
[445] Annalist, Aug. 14, 1916.
[446] N. J. Silberling, "The Mystery of Clearings," Annalist, Aug. 14, 1916, p. 223.
[447] There is one further piece of evidence which has been obtained through the courtesy of a New York brokerage house. At the request of the gentleman who has supplied the figures, I have altered them by a constant percentage, to prevent possible identification, but the proportions among them hold as they were given. The figures show the business of the house for the month of March, 1916. The figures show:
Market value of stocks and bonds bought, 1,644,630
Total deposits made during month, 1,475,502
Average borrowed from banks, 952,000
For this house, then, for this month, the deposits were less than the value of securities sold, by 11.5%. The month, however, was unusual. It was a month of reduced activity, following large activity. This is strikingly shown by the figure for the average bank loans for the month—over two-thirds of the total deposits for the month. The house had a large bull clientèle, which was holding its stocks, and not selling on a bear market. The turnover was very slow, as Wall Street goes. It was a time of extraordinarily easy money when banks called few if any loans. The broker, in explanation of his figures, says: "The most of our checks were to other brokers. Checks to banks about equaled checks to customers. Your assumption that we did not pay off many loans in March is, I think, right." The same broker states in another letter that he thinks that, in general, the bulk of checks to and from brokers are in dealings with banks. In this month, then, with this factor reduced to a minimum, we still have deposits undercounting sales by only 11.5%. The figures do not prove my thesis that brokers' deposits greatly overcount their sales, but they at least show that they do not greatly undercount them. In view of the peculiarities of the month chosen, with transactions between banks and brokers cut to the minimum, they are quite consistent with the contention that normally the brokers' deposits will much exceed their sales.
[448] Kemmerer's main figures are merely indicia of variation, rather than absolute magnitudes, for trade. On p. 136, d. (loc. cit.), however, he indicates that his figures for "total monetary and check circulation" is also a figure for "total business transactions"—and counts 89% of it as wholesale trade.