The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1912-12-22

cessive loses this country has sus
tained from our periodical money
panics, brought on directly by oul
panic breeding banking system.
Our Aptiquated System.
Our present system was founded on
war debt. IL dates back TO 1858.
when the country faced great crisis.
The Federal treasury was empty; gov
eminent credit was gone. The tempta-
ton 10 use banking for this purpose
was too great TO be resisted. Perhaps
il was excusable then. but in neglect
ing a revision OF this system TO meet
modern requirements what q terrific
price has been paid.
In framing these banking laws no
thought was had for the coWtry y
great development in agriculture. COM
merce and industry. No provision
whatsoever was made for foreign trade.
In fact, the laws forbade the estab-
lishment OF American banks abroad.
To-day. as an instance. European banks
are firmly established ~ South Amer
lea and are actively furthering there
the interests of Eur opean trade. Prac-
tically all the ports of Latin America.
large or small. have them. Yet in our
own sister continent you Will not find
a single banking institution bearing
a North American name.
American banks in foreign markets
would be powerful aids 10 the upbuild-
ing Of our commerce; manifestly and
for the subioined reasons are they In
dispensable:
First-They would furnish a direcs
financial exchange.
Second-They would provide a safe
a. nj ~ 81 obtaining Cradif
information. independent as to for
eign merchants and impartial as 10
American exporters.
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 for
eign enterprises which. II exploited.
would create business for the American
exporter.
$4,000, 600, 900 of Foreign Trade.
Our foreign trade to-day amounts
yearly to $4,000. 100000. 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 bound
aries of the United States. We. the
wealthiest country in the world. have
no world credit. We cannot control
our gold supply. We alone of all civ
ilized countries collapse periodically
under money panics.
Our banking system is unique. Tn
like any other country, we have indie
pendent banks. They have no way Of
cooperation. But complete Banking
cooperation is absolutely necessary to
control arising panics. Other coun-
tries have proven this. Our banks
have demonstrated It by being COM
PEELED IN times OF stress to fail back
upon their local clearing house asso-
Citations. the only meanS-but "a crude
means-of cooperation that we have
The necessity Of cooperation Is
fundamental banking principle. II 10
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, IL is only by cooperation and
the consequent fixing OF uniform rate
OF discount, TO be raised or lowered
as circumstances demand, that We can
this country. This is fundamental to
international credit. 1t is also a bank
ing principle.
Broadening Business Credit.
A second striking popularity of our
banking system is that we have no
broad discount market such as they
have in Europe Our banks are for
hidden by law to accept business bills
for discount. Instead they take, for
instance. the business mans promin-
sorry note. In other words. 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 In
strument. He gets creiit at his bank
on his paper promise to pay" But
tbs latter instrument, showing no
transactions to goods. is confined TO
the one bank that takes II. 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 IL
stamps IL as a banking instrument 1.
is good at any other bank in that
country. 1; may be rediscounted at the
central bank OF all these banks. or it
may travel TO other European, coun-
tries.
Now. aside from the ready elasticity
OF credit that such a discount and re-
discount market gives 20 business at
home IL must be apparent that IL has
also a direct effect upon foreign trade.
To-day our local credit instruments do
not pass current IN the worlds mar
kets. As a consequence the American
shipper is forced 20 buy foreign en-
change. Aside from the fact that for
this unnecessary accommodation we
pay annual tribute 10 Europe of mil
lions Of dollars, - must be apparent
that the whole period Of our foreign
trade expansion has been seriously
hampered by banking accommodations
which are necessarily worked upon
limited scale and which assuredly have
20 reference 20 the broader needs OF
this country.
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