Business: Billion-Dollar Bank

Ever since the first stockmarket crash there have been stories of a "trouble-spot'' in Manhattan banking. When remedies from within fail, a sure ointment for financial and industrial troubles is a merger. Long has it been hoped that this treatment would be used to assuage the Manhattan sorespot. Recently just such a merger was rumored. Remarkable feature was that it involved the unique plan of consolidating four banks (TIME, Nov. 10 ). They were: Manufacturers Trust, with resources of $463,000,000, greatly expanded during recent years; Public National Bank, with resources of $246,000,000, a bank which has grown steadily and conservatively; Bank of the United States, with resources of $254,000,000, which, like Manufacturers, has recently expanded; International Trust, with resources of $29,000,000, and closely affiliated with Manufacturers.

Merging four banks at once would be difficult at any time. Unusual obstacles arose which threatened to block this long-awaited deal. A peculiar situation was known to exist in Bank of the United States. In 1913 this bank was formed in Manhattan's lower East Side. By 1928 it had grown one thousand-fold without a merger. Then, after Goldman Sachs Trading Corp. acquired a large block of its stock, it began to whirl through a period of expansion. Since May 1929 it has lost one-fourth of its deposits; its shares have tumbled from $91 to $13. Recently it has been understood that officials in Washington have been closely watching its affairs, perhaps anxious that no harm should befall a Manhattan bank whose name sounds so significant. While Bank of the United States deposits were dropping 25%, Manufacturers Trust's deposits slumped 15%. In Manufacturers Trust, Goldman Sachs Trading was likewise a dominant stockholder. Obviously complicated were the problems of determining the value of all four of these banks in terms of the other three.

For these reasons many a banker feared last fortnight that the negotiations had been dropped. But over the weekend a group of prominent bankers met with a banker of great skill and fame, James Herbert Case, chairman of the Federal Reserve Bank of New York. When the new week started, it was announced that the merger would go through, that Banker Case would be chairman of the consolidated banks, that an able new board of directors would guide its affairs.