The state chronicle., 1893-02-03
The Need OF an International Bank.


Reciprocity, with its inforced prefer
entail reductions in favor OF the
United States, has given US material
advantage in the race for foreign COM
merce which other nations do not en-
ioy. This the result of intelligent
governmental action, has solved part
of the problem, elbow to secure for
eign commerce without the loss OF
home market, without degradation to
American labor The other, the
financial portion of the problem must
be solved before we shall succeed In
acquiring our coveted trade, as this
new field is without precedents in this
country, and our proper financial
foundation must be derived from pre-
cedent established and maintained by
competing rivals.
To establish safe financial system
of banking, may we not, from study
of English banking methods, derive
precedent for safety and practicabllity !
England has the greatest export trade
of any nation in the world, and she
has demonstrated the practicability OF
trading at minimum risk with foreign
nations throughout the entire world.
This trade has been secured and profl-
tably and safely through its CONNER
cial banks.
| q commercial bank is not bank OF
issue or deposit, but bank to facili-
tate foreign or international commerce.
International banks are the foundation
of international trade. 1t matters not
the price Of the commodity if there
exists not basis for credit.
American producers and merchants
view six or eight months credit with
dismay, and have expressed opinions
of the impracticability Of foreign
commerce which conn., pels long credits,
and especially in strange lands where
laws governing the respon sibility of
purchasers are unknown. Yet this is
condition with which We must con-
tend if we would increase the con-
sumption Of home pr oduction by ex-
tended trade with foreign nations. j!
is to protect the merchant that inter
national banks are necessary, witt
branches established in the entry port:
of the different nations with whom WI
would trade.
The greater part OF this trade i
transacted on the Letter of Credit
basis. The correspondent OF agen
representing in particular Location
the international or commercial bank
upon statement and upon investiga-
tion of the liability of applicants (wh
must be proved beyond doubt responsi
BILE merchants) issues to the amount G
his requirements, credits to purchas
to the amount of the credit granted
commodity of particular individus
stated in the credit. These credit
run six, eight or twelve months, as th
case may be. The credit when Sc
J cured is forwarded the merchant o
producer in England trading with th
consumer in the foreign State
The English manufacturer or mer
4 chant selling his particular produc
= upon shipment, forwards the bill
II lading (made at the order of the Inte
- national Bank, with invoice for sue
= goods to the International Bank, VIII
4 upon receipt of same, credits II
~ amount of the invoice on Letter
.e Credit, and forwards the seller in th
70 country note covering the sale, pl
o the interest for six or eight months,
h is written in the credit. This no
- upon Endorsement is used as any 9th
% paper, and disposed Of at the regul
= discount. The interest added to t
az note is of course paid by the foreig
on consumer, who through the corr
ne pondent of the bank must forward |
ri money plus interest, when due at t
>, home bank.
:, These acceptances are readily CO
= verted into cash, as they carry GO
'ed rate of interest, and are safe inves
we ments, inasmuch as they are issued
nd bank, and this, without consideri
49, the endorsement of the seller or the
sponsibility of the purchaser, insu
y its payment. The safety of tn
the credits rests of course upon the int
as ligence Of the agent OF the point
try issue, and also, as now, upon !,
vow shrewdness of the seller. The ba
"a assumes the greater responsibility.
~ This system of banking is the o
- practical method of conducting fore
1t. business, and dispenses TO certain
tent with the necessity Of mercan
agencies, as the international Bs
acts in this ca pacity as much as is
the sible.
t in The international bank may
re. utilized in other ways. At pres
,oo the channel of all exchange is thro
~ English banking houses. This
was itself would give a great volume
the business to legitimate Ameri
suit bank. 1t can readily be seen tn
Q to nation with such banking facili
H. throughout the world is in posi-
10 control markets which must be
'he yond the reach of a nation will
tors such established system of dea!
ate. Such is the position of England in
epa. great struggle on our part for for
b;,o markets England has an inte
tional banking system; We haze
''ho Indeed, We consiGer that to day it
no this system of banking which is t
3 10 feared most by American produ,
the in event of a revenue tariff, and "
~ would be a great factor in destro
- the home trade, for to the respon
small English dealer the letter
credit is Of infinite value, as it eus
the him to conduct larger business
small capital, from the fact that b