El Paso herald. (El Paso, Tex.) 1901-1931, 1916-01-05
j. s. IS POWER
IN MONEY WORLD
Dollar Exchange Supplants
Pounds Sterling; Position
Can Be Maintained.

Washington, D. c.. Jan. 5.-Thro - h
the accident of a world war. the Unit cd
States now ranks as a power of the
first Importance among the great
nations of the earth economically, in
dustrially and financially How this
has been done and how this country
can hold its place are told by Dr. Ed
ward E Pratt. chief of the foreign and
domestic commerce bureau of the de-
partment of commerce in his first an
nual report
Commercial Preparedness Urged.
What the country has gained tenn
pOrarily through the fortunes of the
European conflict. says the report, IL
can hope to hold in the commercial
struggle that will be resumed at the
conclusion Of peace only by the most
far-sighted commercial preparedness.
Two grave problems face development
and maintenance of foreign trade The
first is declared to be that Of finance
and the second that Of training men
for the work
The financing Of our foreign trade"
il saws. land in fact by far the larger
part of the financing Of the worlds
trade. has hitherto been done through
London. During the last hundred years
London has been the worlds financial
market.
any large part in financing foreign
trade because of the comparatively
small part of that business carried on
here and because also of the IN
familiarity of many of our bankers with
the methods of international finance.
Nor has the United States taken any
large part in supplying capital to other
countries. On account Of more profit
able investments at home We have
chosen TO invest here rather than
abroad. This also has been true be-
cause OF our position as debtor
nation. but probably also TO a consider
able degree because of a mental debtor
nation attitude on the part Of our
financiers-
Situation Is Changing.
"On account of the war this situa-
ton is rapidly changing. The volume
Of foreign business done through New
York is continuously increasing, and
New York banks are rapidly providing
facilities for Americans who wish TO
export. Dollar Exchange. a thing prac-
tically unheard of prior to this year, is
assuming constantly charging impor-
tance in the financial world and is
rapidly becoming popular as a means
of meeting international obligations"
Two provisions in the federal reserve
act. the report says have been OF ma
terial assistance TO the foreign trade: /
One is the introduction Of the use OF !
acceptance and the other permission |
granted to national banks to establish !
foreign branches,
In thus establishing branch banks |
in foreign countries" the report con- |
tinues. I'VE are following the lead OF |
England. Germany and other European !
countries. which have used their banks !
as trade outpOsts- Our exporters have
been hampered by the lack Of these |
facilities More important than this, |
documents containing often the most |
sf MI m a
manufacturers have been open to the /
scrutiny of our competitors
1T has been rare sight 10 see |
letters of credit or bills of exchange |
merchant has done his business in l
pounds sterling. often paying the cost |
OF conversion. The Inauguration OF /
branch banks obviates the necessity /
of this practice and makes it possible !
to do business in dollars At present /
money markets Of the world. Whether I
II will be after the restoration OF nor /
NAL conditions in Europe remains TO be /
seen.
Must Lend Big sums.
I'VE can never hope 10 realize the /
really big prizes in foreign trade until
we are prepared 10 loan capital to
foreign nations and to foreign enter
priSes- The big prizes in foreign trade
are public and private developments Of
large proportions. the building OF rail-
roads, construction Of public service
plants, Improvement OF harbors and
docks, and digging of canals
New countries generally are poor.
They look to older and richer countries
to supply them with the capital TO
make their improvements and TO de-
velop their resources. The country I
which furnishes the capital usually
sells the materials and does the work ]
The country that wants the business
must finance the purchases The same
thing is true. but less directly, in the I
case Of government loans. But there
is no doubt that the loans Of one
nation TO another form the strongest
kind OF economic bond between the
two. 1t is commonly said that trade
follows the flag. 1t is much more truly
said that trade follows the investment
lr the loan"
DR.. Pratt emphasizes the need for
rained men to handle foreign trade
problems and urges their education
llong special lines. Schools and col
eyes so far have seemed unwilling to
zee the need, he says. or if they do have
allied to give the thorough instruction
Necessary.
Dr. Pratt urges a definite foreign
commercial policy by the United States
his. he says. is gradually taking
hape under a wise and careful admin
stratiOn. American investments abroad
re being encouraged But after all
he continuing of a foreign commercial
,olicy is not so much dependent on
fficers of the government as on the
american public-on public opinion
ng TO a realization Of the situation"
.