The Washington herald., 1911-01-08
NEED OF AMERICAN BANKS
ABROAD TO INCREASE OUR
FOREIGN TRADE RELATIONS

European financial system - MARKS,
franc. or pounds sterling-but seldom. II
ever, in American dollars. Does It not
follow that the American, In naming
his price, unavoidably directs the mind
Of the customer to the European COM
petitor? Say what you will, American
prestige b bound to suffer from these
indirect financial transactions.
+ Would Extend Trade.
More than that. Apart from the ques-
tion Of exchange the American mer-
chant, trying to extend his trade, suffers
from the lack Of intimate contact and
confidential relations with the business
life Of other nations. which well could
be supplied by resident American bank
ers. American banks abroad would be
dependent for their prosperity very
largely upon the extent of American
commerce in their territory. and. by
reason Of self-interest, would be the
most potent promoters Of American en-
terprise, just as experience has proven
the European international bank to be a
vitalizins element in the all-nations trade
of Europe
English banks are as universal as Brit
ish commerce, while those Of France.
Germany, and Italy are coextensive with
~
system under which these banks are
operated make it possible for them to
utilize the credit and funds of the entire
institution. when. where. and as needed.
and, by means Of the power Of accept
ances. to furnish the most stable and
least expensive way for the transference
of credits.
No such freedom has been granted the
banking capital Of America. The United
tofa mil, nnA IN q
operating chiefly in the far East. This
unique position Of a nation attempting
to build a foreign commerce without the
equipment Of foreign banks is due to the
restrictions of the American banking
laws-restrictions that. in effect, prohibit
the setting up of such institutions. The
national bank act was enacted at a time
when little thought was given to foreign
comme4ce.
Under existing conditions it is possible
to establish a bank in the United States
in one of three ways-under the national
banking act, under State law, or as a
private copartnerShip.
Section $50 Of the United States Revised
Statutes-part of the national bank act
sets forth the following edict:
"The usual business of each national
banking association shall be transacted
at the Office or banking house located in
the place specified in its organization GER
tifcate.'
Positively Prohibitive.
This section has been interpreted by
every Comptroller OF the Currency as pro-
hibiting a national bank from establish
ing branches. The only exception to this
prohibition has come by the conversion of
State banks into national institutions un-
der the authority Of section 5155 Of the
act.
Only a few Of the States Of the Union
allow State banks to have branches out
side Of their immediate State or abroad,
but II 1t were permissible to convert them
into national banks. their branches would
have to be designated before such CONVEX
sion could be effected, thus making the
organization inflexible as to its subse-
quent growth, either as to the number of
branches Or the amount of capital avail
able for their separate use. 1t is true
Of the greater majority Of the States that
a bank organized under State law is re-
stricted to one place OF business, or at
least to branches in the city specified by
its charter as the place where its business
is to be conducted.
Nearly all of the States prohibit any
foreign corporation other than a national
bank from receiving deposits, dscounting
notes, or carrying on the usual transac-
tions of banking within the borders of
the State. The International Banking
Corporation, chartered under a special
act OF the Connecticut legislature, has an
organization with branches in England.
China, the Philippines. and Panama. with
its executive offices in New York Withal,
it is not permitted to do any banking
business in New York. and hence is oblig-
ed to carry on its transactions in this
country through an agency. on exactly
the same basis as that OF foreign coun-
tries, hindrance technically valid under
the law. but in reality a poor recognition
of the patriotic spirit and intelligent en-
terprise that prompted the founding of
that institution.