The Barre daily times. (Barre, Vt.) 1897-1959, 1915-01-21
AMERICAN CAPITAL
FOR FOREIGN BANKS
Favored BY John ]. Arnold, President Of
First National Bank of Chicago, In
Address Before National Foreign
Trade Convention.

st. Louis, Jan. 2l-Amendment to the
federal banking laws whereby Ameri-
can institutions could unite with Ameri-
cans interested in oversee commerce in
capitalization of foreign banks, was
urged by John j. Arnold, vice president
of the First National Bank of Chicago,
in an address before the national foreign
trade convention here to-day.
He said
"A method which has been given some
consideration is that of organizing a sep
arate banking corporation, the capital of
which should be subscribed by Ameri-
cans interested in the trade of the coun-
tries where such an institution is to be
established. Under our present banking
laws this would necessarily be confined
To- individuals or corporations rather
than banking institutions.
ut is my Judgment that movement
of this character should be launched by
the banking institutions of our land, and
] should like to see this body endorse
the recommendation that our banking
laws be amended so as to permit Amer
lean institutions TO subscribe not more
thar an aggregate amount equal to five
per cent of their respective capital to-
ward the capitalization of foreign banks.
And such subscription should be car
ried by the banks concerned as an in
vostment, and in this way, eliminate the
necessity OF having such foreign bank
subject to examination on the part OF
American bank examiners, feature
which is Objectionable to foreigners do
tng business with such banking insti-
tuition. This undertaking would also
have the advantage of being cooperative
IL character and coextensive in labili-
~, with reasonable limitations as to the
latter, while where the parent bank es
tahlishes a branch the entire resources
OF the parent institution might be placed
in jeopardy by the mismanagement OF
such branch or branches. The subscrib.
crs OF the capital, however, should not |
he limited to banking institutions. but
should be open TO American exporters
and importers as well as to the capital
cf the countries in which the institu. |
tions are to be located.
During recent months, a great deal |
has been said, pro and con, with regard
20 America making loans TO the belliger- !
ent nations | think We all are agreed |
ANhN An' h'-NA nAAiDAA VI AAlt IIUntIlN 4
Is an economic waste and that in con.
fict such as that which is now raging in /
Europe, the entire world will have 10 /
help bear the cost, and the United States /
Of America is quite an important fac /
tor Of that world. IL is therefore a /
reasonable conclusion that the longer the
war j. prolonged the heavier will become 4
cur part OF the cost. From an ecoHom-
ie standpoint we can only conclude that
making loans 70 the belligerent nations
Is furnishing them with sinews Of war.
in my judgment, therefore, il would be
much wiser and saner procedure to en-
large upon that which has recently been
done and supply the countries with
whom We are seeking trade development
with funds which they require for the
Development Of commerce. Such loans
should BE- made against proper security.
with the upbulding Of the export and
import business az the ultimate aim.
European capital in the past has been
furnished 10 South American govern.
rnents and corporations for the build.
ing II wharyes. railroads. shin lines and
ether industries. A. a result, Europe
an engineers were In charge Of the work
and in turn specified the use Of Europe.
On material and insofar a. practicable.
employed European contractors. This
character Of loans necessarily resulted IN
benefit 20 Europe a. wei a. 20 south
America. ndef the operation of our
federal reserve act We are uoW PLACED
~ position shere our credit facilities
~ made more elastic and on this &C.
c5unt ] believe that the time j. most
lropitious for American capital b ssek
ilcployment iu this manner. What ap- !
plies b. south America applies 10 the
rr1ent o. weu II