Evening star. [volume] (Washington, D.C.) 1854-1972, 1914-11-01


change between the United States ant
Argentina.
The various Argentine provinces have
provincial banks somewhat similar u
state banks in the United States. bu
they are under general supervision o.
the central government
The preponderance of British bank
: ing capital in South America appears
tutions. 1t is the perfectly natural re-
suit of the fact that for three-quarter
of century surplus British capita
found it's most profitable field for IN
vestment in South America. not only
In banks themselves. but in railway
building and other development. en-
terprises. and in general trade.
X
When Germany began to go after
South American trade she saw the
need of banking facilities. and she
therefore proceeded to get into the
banking business. The Banco Alemal
Transatlantico, or German TranSatlan-
tic Bank. whose sphere of operations
is on both coasts, was organized WIN
a capital of twenty million marks, OF
approximately $5,O00,000. 1t is in re
ality a subsidiary Of the great Deut
sches Bank of Berlin. Its sharehold-
ers are satisfied with dividends rang
ing from to 10 per cent. since they
tages from the institution.
The foreign banks usually have been
organized with a special view to the
business of the different European
in the various South American coun-
tries. Sometimes a hyphenated name
is taken, while sometimes also the
name of the European country sufnces.
So it happens that there are French
banks, italian banks, Swiss banks, Bel
CLAN banks, German banks, Spanish
banks and English banks. with or
without the hyphen, in the different
countries.
European population and it's enormous
international trade, affords the pest
example of the tendency to nationallze
the banking institutions. but none OF
them limit their business to the nation
banks have English depositors: and
the English banks have Spanish de-
positors All the foreign banks nave
native depositors in the different coun-
tries.
A recent illustration of the tendency
to form banks based on national In
terests was the organization of the
Dutch Bank of South America. with d
capital of $1.600,000, which was SUP
scribed chiefly in Amsterdam and Rot
terdam. 1t was backed by the ship
ping interests and by some grain firms
which handled part of Argentina's
wheat crop.
There is not much direct trade be-
tween Holland and Argentina. not one
fifth of that between the United States
and Argentina, yet in this instance
the Dutch were more enterprising
than the Americans. for they organized
the bank before any steps had been
taken in the United States for similar
institutions
The foreign banks in the South
excite opposition on the part of the
native banks, nor is there much COM
petition with them. All the larger
foreign banks have branches which are
enabled to do business on relatively
small capital.
Exchange on the European financial
capitals in itself affords them a very
satisfactory profit. For example. the
the different South American countries
is now s250.000,000 annually. The usual
commission of one-fourth of l per cent
on this would be about s650,000. but in
great many instances One-hal1 OF l
per cent is charged.
Heretofore practically all of this
exchange profit has gone to the foreign
banks in South America, and to their
European connections. Since the loans
of the South American countries are all
held in Europe the European banks in
South America. through their connec-
tons in Europe, generally manage to
share in the profits of these loans
They also find valuable business in
participating in the profits of commits
sions and of exchanges of the country
from which the capital of the bank has
business of the railroads, steamship
lines, factories and various industrial
enterprises already established.
The coffee colonization plan of Brazil
afforded very pleasing profits to the
foreign banks in that country as well
as to the London bankers who carried
it through and to the New York banks
which participated through co-opera-
ton with London. The great coffee
port of Santos would welcome another
colonization, but the government at
Washington would be likely to object
to American participation.
Some very romantic profits have been
made in promotion enterprises.
A big source of profit, especially to
the British banks, has been from
financing contractors, and especially
the contractors who get the govern
ment contracts for harbor and similar
improvements. Sometimes the money
is advanced by the London banks but
usually they leave it to the banks of
English nationality in the different
countries where the contracts are let.
Many of the English contractors have
credits with the banks in South Amer
lea which enable them to enter on
large undertakings. and in these cases
the division of profits with the bank is
bound to be very satisfactory to that
institution if not quite so pleasing to
the contractors.
In the less stable countries the rela-
tons OF the banks with the govern
ment sometimes are ,precariously prof
,table. The governments need advances
range big overdrafts. or temporary
loans The bank sometimes gets a COM
mission in addition to Il very large dis
count rate.
Where the government gets it's sta
bility established long enough to meet
the obligations the profits are roman
tic Where the government goes under
and a new dictate" or revolutionary
junta comes in. the void is equally ro-
mantle though depressing. The for
eign banks, as a rule. avoid this class
of loans, preferrine to leave them to
the native institutions.
Interest rates in the South American
countries are much higher than in Eu-
rope or the United States and this is
one source Of the romantic profits. Com
mercial discounts may be said to aver
age to 10 per cent. although there is
a wide variation among the different
countries Twelve per cent is not con-
sidered excessive.
In Columbia ordinary bank loan
with the discount at is per cent is not