The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-11-01


tons in Europe, generally manage to
share In the profits OF these loans.
They also lind valuable business in
participating in the profits Of commits
sions and OF exchanges of the country
from which the capital OF the bank has
been subscribed. and in negotiating the
business of the railroads. steamship
lines, factories and various industrial
enterprises already established.
The coffee valofization plan OF Brazil
afforded very pleasing profits to the
foreign banks in that country as well
as to the London bankers who carried
1t through and to the New York banks
which participated through cooperation
with London.
Some very romantic profits have been
made in promotion enterprises. A big
source Of profit, especially 20 the British
banks, has been from financing contrac-
tors, and especially the contractors who
get the Government contracts for har-
Dor and similar improvements. Some
times the money Is advanced by the
London banks. but usually they leave It
TO the banks OF English nationality In
the differtnt countries where the con-
tracts 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 DO very satisfactory TO that
institution II not quite so pleasing 10
the contractors.
In the less stable countries the rela-
lions of the banks with the Govern
ment sometimes are precariously prof.
table. Tho Governments need advances
20 meet current obligations. They ar
range big overdrafts, or temporary
loans. The bank sometimes gets COM
mission in addition to a very large dis
count rate.
Interest rates in the South American
countries are much higher than In
Europe or the United States. and this is
one source Of the romantic profits. Com
mercial discounts may be said to aver
age Q to 10 per cent, although there IL
a wide variation In the different coun-
tries. Twelve per cent Is not considered
excessive.
In Colombia an ordinary bank loan
with the discount at IS per cent is not
uncommon, while "a per cent. excites nc
surprise. The profit Is assumed TO be
merely proportionate to the risk In &C
cordance with the cardinal principle OF
banking, and with the knowledge that
the bankers practice OF passing the risk
along cannot be followed because there
| IL seldom any one TO whom II can bs
passed.
In Chile discount rate Of 10 per cent
| d M thu Atapr6araA
rency affords opportunities for specula.
tive profits which would make conserva'
tive bankers stand aghast. Some Of the
Chilean banks pay per cent. Interest
on time deposits.
The Chilean Government, notwith'
standing the unstable currency, pro
tects the national credit, When the Eu'
ropean war broke out Chile had about
$35.O00,oo0 gold on deposit In Londor
banks ~ a conversion fund for Its paper
currency. Some years ago q small par
of this fund was placed with New
York bank, and doubtless the Chilean
Government now wishes that moro o.
tho gold was here.
During the commercial crisis In Ar
gentina last year tho Bank of the Ma
ton maintained a discount rate OF
per cent. This was a steadying factor
but Argentina sometimes experiences &
much higher rate. especially at periods
when two name paper 10 difficult TO ne
sotiate-
The South American system Of lon,
credits has good deal To do with tn,
interest rates. Retailers who want Mn,
months from the jobbers on their i'm
ported goods willingly pay per oent
and upward Where tho jobber or i'm
'porter refuses this long time they ar