Evening star., 1916-01-05
War Changes Situation.

"On account of the war this situation
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-
tcally unheard of prior to this year, is
assuming constantly charging impor-
tance in the financial world and is rap
idly becoming popular as a means of
meeting international obligations
Two provisions in the federal reserve
act, the report says. have been of ma
terlal 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
p: In thus establishing branch banks in
{foreign countries" the report continues.
; we are following the lead of England
Germany and other European countries.
winch have used their banks as trade
outpoStS. European exporters have
been able. because they had their o,yn
banking institutions on the ground. to
extend credit to their customers when
such credits were. deserved. Our cx-
porters have been hampered by the lack
OF these facilities. Iore important
than this, documents containing often
the most confidential facts of our mar-
chants and manufacturers have been
open to the scrutiny of our competitors
L !.
OF credit or bills of exchange drawn in
dollars. Usually the American mer-
chant has done his business in pounds
sterling, often paying the cost OF con-
version The inaugura tion of branch
banks obyIates the necessity of this
practice and makes il possible to do
business in dollars. With an increas-
ing volume of dollar exchange and
WIN WIN an increasing number of branch
banks and American banking institu-
uons. dollar exchange Will become more
stable. At present dollar exchange is
preferred in the money markets of the
world. Whether il will be after tie
restoration of normal conditions in Eu-
rope remains to be seen.
Means of Securing Big Prizes.
we can never hope to realize the
really big prizes in foreign trade until
We are prepared to loan capital to
foreign nations and to foreign enter
prlses- The big prizes in foreign trade
are public and private Developments
OF large proportions, the building of
railroads. construction of public serv-
Ise pants, Improvement of haTbois and
COCKS and digging of canals
New countries generally are moor
hey look TO older and richer countries
10 supply them with the capital to
make their improvements and to de =
Neiop their resources. The country
which furnishes the capital usualI,,
sells the materials and does the work
ne country that wants the business
must hnance the purchases The same
thinS IS true, but less directly in the
case of government loans But there
is no doubt that the loans of one ma
tion to another form the strongest
KIND OF economic bond between the
tWo IL rs commonly said that trade
follows the flag II is much more truly
said that trade follows the Investment
or the loan
DR.. Pratt emphasizes the need for
trained men 10 handle foreign trade
problems and urges their education
along special lines. Schools and col
reyes so far have seemed unwilling 20
see the need. he says. or if they do have
TAILED to give the thorough instruction
necessary.
Commercial preparedness advocated
ny DR.. Pratt would foresee that yyar
prohts are not permanent and that a,
the end or the war new markets must
be sought by American business.
1T is possible he says. that when
the war and the immediate readjust-
nent to follow are concluded large
part of our present exports will cease
10 flow TO Europe. II is probable tha
Eyope viii be unprepared to resuns
her purchases from the United States
on scale as large as before the war
Moreover the sales that Will be made
VIII be probably largely on credit for
considerable time 1t would seem
therefore, TO be the part of prudence
for us TO distribute our- trade (,
widely over the worlds markets thai
the cessation of our business VIII
Europe will be proportionateIy less i'm.
portant."
The war has demonstrated saws Dr
Pratt. that the United States is moi
economically independent The busi.
ness public. he says. does not full,
appreciate the financial crisis through