Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-12-22
First. They would furnish a direct

First. They would furnish a direc,
| financial exchange.
| Second. They would provide a safe and
efficient means Of obtaining credit infor-
| nation, Independent as to foreign mer-
chants and impartial as to American ex-
pOrters.
Third. They would correctly present
to foreign customers the standing of our
own export houses.
Fourth. They would furnish capital or
credit at the foreign market.
Fifth. They would bring American
| financial interests in touch with foreign
create business for the American ex-
porter.
Volume Of Foreign Trade.
Our foreign trade today amounts year
ly to four billion dollars. American goods
now traverse the world. In some staples
we control the foreign supply. There are
no geographical barriers to our world
markets.
But what of our banking system? 1t is
still circumscribed by the boundaries of
country in the world, have no world
credit. We cannot control our gold sup
ply. We alone of all civilized countries
collapse periodically under money panics.
Our banking system is unique. Unlike
any other country, We have independent
banks. They have no way of co-opera-
ton. But complete banking cooperation
Is absolutely necessary to control arising
panlcS. Other countries have proved
this Our banks have demonstrated IL by
being compelled in times of stress to fall
back upon their local clearing house as
sociations. the only means-but a crude
means-of cooperation that We have.
The necessity Of cooperation is a funda-
mental banking principle. 1t is not to
be argued against. But aside from this
theoretical truth, We have the obvious
to guide us. They do not have panics
abroad: We do.
Again it is only by cooperation. and
the consequent fixing of a uniform rate
of discount, to be raised or lowered as
circumstances demand, that We can con-
troll the flow of gold to and from this
country. This is fundamental to interna-
tional credit 1t is also a banking prin-
ciple.
No Broad Discount Market.
A second striking popularity Of our
banking system is that We have no broad
discount market such as they have i'm
Europe. Our banks are forbidden by law
to accept business bills for discount In
stead they take. for instance, the business
mans promissory note. In other words,
a merchant in this country who has sold
a bill of goods and wishes to realize at
once on the sale cannot change this
prime evidence of exchange into a credit
instrument. He gets credit at his bank
on his paper promise to pay" But this
latter instrument. showing no transaction
to goods. is confined to the one bank that
takes 1t. The makers ability to pay is
unknown at other banks. So this kind of
credit instrument has no circulation
powers whatever.
In Europe, on the contrary, the bust
ness bill becomes in itself credit in
strument The bank accepting 1t stamps
it as q banking instrument. 1t Is good
at any other bank in that country. 1t may
be rediscounted at the central bank of
all these banks, or 1t may travel to other
European countries.
Now, aside from the ready elasticity OF
credit that such a discount and redis
count market gives to business at home.
it must be apparent that it has also a
direct effect upon foreign trade. Today
our local credit instruments do not pass
current in the worlds markets. AS a
consequence the American shipper Is
forced to buy foreign exchange. Aside
from the fact that for this unnecessary
accommodation we pay annual tribute to
Europe of millions of dollars. 1t must be
apparent that the whole period Of our
foreign trade expansion has been seri
ously hampered by banking accommoda- |
tons which are necessarily worked upon
q limited scale and which aSsuredly have
no reference to the broader needs of this |
country.
The general and further result of the |
workings of our discredited monetary |
system is the isolation in measure Of
the whole American market.
International enterprises prefer to es- |
tablish their headquarters in countries |
whose banking systems are upon more |
stable basis. They cannot anord the'