Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1914-08-07
NEED BANKS IN
SOUTH AMERICA
United States Traders Handi-
capped by Lack of Back
ing in Financial Way.
CHANCE FOR INVESTMENT
European Manufactures Have AdVan-
tase In Competition, Says De-
partment of Commerce.

Washington, d. c., Aug. ALTHOUGH
American trade is well established in
Argentina, Brazil, Chile and Peru. and
is growing despite the lack of direct
banking facilities, steamship accom-
modations, etc., American banks are
imperatively needed in South Amer
lea as a dependable resource in the
campaign for greater trade. This Is
the conclusion of E. n. Hurley, presi-
dent of the Illinois Manufacturers as
ISOLATION, who has submitted to the
department of commerce a report on
banking and credit in South America
based upon a careful investigation of
that field Mr.. Hurley was assigned
to this special task by Secretary Red
field, who is making a strenuous effort
to increase the sale of American pro-
ducts in South America and was in
strumental in securing an appropria-
ton from congress for this particular
purpose.
Foreign and native banking houses
reasonably we'll accommodate the or
binary routine of American trade, Mr.
Hurley states, but they naturally with
hold the full measure of interest and
solicitous support accorded to enter
prises of their own nationality. More
over, many valuable collateral bene
fits arising from the financing of over
sea trade are lost through American
reliance upon London banking media
ton, while the compulsory use of Eu-
ropean materials in many South Amer
lean enterprises financed in Europe is
steadily restricting the potential mar
ket for American goods. American
statesmen and trading houses also lack
the support given by foreign banks to
their national trade seekers.
Mr. Hurley's study of the problem
of banking and credit in South Amer
lea was made from the point of view
of the manufacturer. 1t is not tech
nical banking report, rather it deals
with the financial environment of
American trade in Argentina, Brazil,
Chile and Peru, its disadvantages and
examples from the experience of other
nations that have considered oversee
banking operations essential to their
conquest of foreign trade.
/ Two Classes of Banks.
Banks in South America fall natur-
ally into two classes-foTeign banks
and native, or domestic banks. At
certain points the business of the two
overlaps, but, generally speaking, the
foreign banks transact business per
tanning to foreign commerce, steadily
extending their network of branches
and exerting their influence to the adj
vantage of European trade. To this
end European banks finance trade not
only (preferentially) between their
| Ann r-in h1rf
also between the various Latin-Ameri-
can nations and between the United
States and South America. The func-
tions of these foreign banks may be
summarized as exchange, collections,
loans and discounts, credit informa-
ton. and investment
The United States pays London an
nually large toll in the form of bank
ers' commissions, but more important
is the fact that once an American obi
CATION is converted into bill on Lon
don and slips into foreign financial
channels it passes out of the hands of
those who might be interested in OBJ
tanning return purchases by the sell
ing country, and an obligation that
ought to stimulate demand for pro-
ducts of the United States is trans
ferred to London and exerts an infiu-
ence toward purchases from the Unit
ed Kingdom.
Whether or not banks are ideal col
| lectors is a question on which much
difference of opinion exists, but they
do offer the most effective means open
| today to the American exporter to
| South America, and foreign banks reap
the profits of such business. Loans
| and discounts are at once a source of
great profit and great risk TO banks
in the largest South American coun-
| tries.
Since the foreign and native banks
! in South America are called upon to
accept drafts representing credits |
| they must maintain credit-information |
| services, no less for their own protec- |
ton than for the accommodation of |
customers. For many years these |
banks have supplied this need, but |
mercantile credit agencies have also |
| been established in recent years. For
| eign banks supply their home offices !
with the ratings and characteristics |
of South American firms and individu-
ais. German trade has been extended |
largely by the aid of longer credits |
than are granted by other countries. |
and German banks have been more /
minute in their organizations of this j
service. AS South American countries |
are being developed largely with funds I
from European countries information /
as TO the character and standing of |
persons back of the various enter
prises is the first need of those whom |
they approach abroad. hence foreign |
banks have become channels through |
which investments are made in rail. |
ways. light and power companies. etc.
Without the detailed information that |