The Sentinel=record., 1915-01-23
MODIFIED BANKING
LAWS ARE NEEDED
JOHN J. ARNOLD THINKS PAN.
AMERICAN TRADE COULD BE
GREATLY INCREASED.
Means to Capitalize Foreign Banks
Urged as a Means to Solve the
Trade Problem.

St Louis, Jan. Amendments to
the federal banking laws whereby
American banking Institutions could
unite with Americans interested in
oversee commerce, in capitalization
of foreign banks, was urged by John
}. Arnold, vice president OF the First
National Bank of Chicago. il an ad-
dress before the national foreign
trade convention here today
He said
"A method which has been given
some consideration is that or organ.
izing a separate banking corporation,
the capital OF which should be sub
scribed by Americans interested in
the trade Of countries where such an
institution is to be established Under
our present banking laws this would
necessarily be confined to individu-
ais or corporations rather than bank.
ing institutions.
1t is my judgment that move.
ment Of this character should be
launched by the banking institutions
Of our land, ald l should like to see
this body endorse the recommends
ton that our banking laws be amend
ed so as to permit American banking
institutions to subscribe not more
than an aggregate amount equal to
5 per cent of their respective capital
toward the capitalization of foreign
banks. And such subscription
should be carried by the banks con
cerned IS an investment, and in this
way, eliminate the necessity of hay-.
ing such a foreign bank subject to
examination on the part of American
bank examiners, feature which is
Objectionable to foreigners doing bus
mess with such a banking institution.
This undertaking would also have the.
advantage of being cooperative in
character and co-extensive in liaOil-
ity. with reasonable limitations as to
the latter, while where the parent
bank establishes a branch the entire
resources of the parent institution
might be placed in jeopardy by the
management of such branch OF
branches. The subscribing of the
capital. however, should not be limit,
ed to banking institutions, but should
be open to American exporters and
importers as well as to the capital
of the countries In which the institu.
tons are to be located.
During recent months a great deal
has been said, pro and con, with re-
Gard to America making loans to the
helligerent nations. l think we all
are agreed that the destruction of
life and property is an economic
waste ald that in a conflict such as
that which is now raging in Europe
the entire world will have to help
bear the cost, and the United States
OF America is quite an important fac
tor of that world. 1t is therefore a
reasonable conclusion that the long
er ME war is prolonged the heavier
will become our part of the cost.
From al economic standpoint we can
only conclude that making loans to
the belliserent nations is furnishing
them with sinews of war. In nv
judgment therefore, it would be
much wiser and saner procedure TO
enlarge upon that which has recent
ly been done and supply the coun.
tries with wAom we are seeking trade
development with funds which they
require for the development of com
merce. Such loans should be made
against proper security, with the M
building of the export and import
business as the ultimate aim.
European capital in the past has
been furnished to South American
governments and corporations for the
building Of Mharfs, railroads ship
lines and other industries AS
result, European engineers were in
charge of the work aad in turn speci-
fled the use of European material.
and insofar as practicable. employed
European contractors. This charac.
ter Of loans necessarily resulted in
benefit to Europe as well as to South
America. Under the operation of our
federal reserve act, we are now plac-
ed in a position where our credit ia
cilities are made more elastic, and
on this account, I believe that the
time is most propitious for American.
capital TO seek employment in this
manner. What applies to South
America applies to the Orient as
we'll"