The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-09-07
WANTS NATION TO AID
BANKS BUILD CREDIT.
Gonzales, Foreign Exchange Ex-
pert, Advocates Guarantee
ing Of Drafts.
THINKS ACTION NEEDED
Believes It Will Hasten Trade
Expansion and Make Indus
tries Prosper.

| " Gonzales, foreign exchange and bank
ing expert Of the National Association
OF Manufact ures. advocated yesterday the
scheme OF having the Federal Government
guarantee the foreign drafts Of the Amer
lean banks and thus create an interna-
tiona credit by doing so. he said. the
United states could give the needed in
| centlve 10 foreign trade that would build
up she countrys industries and increase
Its business despite the war.
Mr.. Gonzales points out that the ma
iional Indebtedness Of England is 500
per head. while that of the United States
Is only $40 per head. He argues that II
Great Britain hss such n wonderful credit
with such debt the United States ls
| In a still better position to guarantee
foreign drafts. Mr. Gonzaless statement
| follows in part:
London was the worlds money market.
Every bank In every country was proud
OF carrying balances with London banks
This is how London had such an enormous
amount OF money TO lend TO the whole
world--and the worlds own money too.
] The first shot In the European confiagra-
ton closed those powerful banks for A
week and the British Parliament granted
them moratorium OF thirty days In
this way not only large amounts ot money
OF the banks OF the world became tied
up but no more could London lend to
the world the worlds own money.
Local banks everywhere have become
disabled for time, and they can neither
dispose OF their own money nor dispose
Of the credit they were granted by those
London banks and which was utilized
everywhere TO move the trade on credit
We bought on credit Products from all
over the world were imported on letters
OF credit issued by American or fore gn
hanks 70 draw on London. London banks
were paid by the American banks with
drafts drawn here against our exports.
These drafts ultimately were paid by
buyers OF our exports with cash created
/ after some other credit transaction had
been performed
The credit OF this country is practl-
cally intact and Il should he used TO main
tain whatever portion Of the worlds trade
can exist Banks are permitted 10 accent
drafts to-day. and although at this mo-
/ ment there is no open market 20 red! =
count such paper Il can be created Other
banks Nncluding the new Federal re-
serve hanks) can discount " AT first and
then the public will come by itself
IT t. rue that our direct banking re-
latlpns abroad are very few as we used
always agencies OF foreign bank. every
where but superhuman efforts are needed
To establish them within reasonable
time.
We also must create credit for other
countries, having In mind that what We
would give them is not money but good
and that the money would remain IN the
country
Manufacturers will sell on credit II
banks will finance their drafts cor ac-
counts) and II they will take it'll.
care OF their interests in foreign coun-
tries. Banks carving large quantities
Of foreign drafts san unpaid all over
the world may not he willing 10 10 fur
Their Int" the business. But there are
other banks, and there is ultimately the
American Government, which can Just rs
well back banks. create banks or g7iaran-
tee drafts 'as the British Government has
done) as 1t has been prepared TO buy
ships which private capital could not or
would not buy.
IF the guarantee ~ tho British Gov
eminent which owes NOR, than 500 a
head % population Is good. the guar
antoe of the American Government. which
owes less then so head - Formulation.
IS better. and It is not Il question of bill
lions of dollars Government INT. rfercuce
is not a bit desirable In business and tho
more business IL left alone the better off
~ Is But under these circumstances n
cannot he helped and II Is desirable.
Without such help all our dreams Of
grandeur Will become smoke"