New-York tribune., 1919-08-26
Credit Insurance
Urged. as Aid to
UsS.Ex:port Trade
Merchant Says American
Manufacturers Need Pro-
,eetion Against Possible
Losses on Sales to Others

tectluA ooSAAAC
/ losses ON Sales to Others
arsrDTT insurance as an agency for
" s.;rulating export trade is advo-
..i ny II. c. Ostertag, of the import.
Sc snd exporting firm OF Esteva- Ruiz
~ Insurance against loss in giving
aSi;t ne believes, should he made as
4 w available 10 American manu-
3,'.,n-ars as is insurance covering most
Nv w other known risk. A foreign
I w. insurance company sponsored
~ II subsidized by the government. MIR.
1....srtsg contends, could be organized,
s.:sntihcally and practically, to serve
y. sane useful purpose in its field as
.he fire, marine and life insurance
ssnpanies to-day in their respective
.oIsres Of activity.
PsTss banker" saii Ny Ostertag 'now
..srges higher commission and in
,a~sst 10 firms of less solid standing,
~, the general trade and the manu-
ss-nrer have no way Of protection ex-
ant by insisting on cash payment.
3-ist wolk against growth Of business.
#t is the reason why the exporter and
IT, foreign trade complain so generally
- l,
- manufacturer 70 do? He makes
H. calculations on cash payments, and
4 a.ssrofore cannot stand loss. Another
4 ,.ssos Is the fact that most. or practl-
4 .sTv sill. cur manufacturers do not
snow Row or care 70 create for them
,avss credit through trade acceptance,
,ssough ali our large bankers are max
rc heroic efforts to make trade accept.
4 ...e nynf,lar
~Now that he war is over and sradu-
.ljv. though slowly, foreign competition
1 . starting, what will American trade
y amount TO if our manufacturers, bank
| .rs and exporters do not grant credits,
4 aspsc,aily to our nearest neighbOrs in
/ Central and South America, who SIM
Dlg cannot do without credit? Shall
We allow their trade to so back to
| Europe, which is willing to extend to
J them the customary credit?
We can better afford to grant
credit than anybody else. This can be
lone without loss 10 ourselves, and
! furthermore we shall reap profit by
! giving. such credits and have the ad-
. vantage of-V,e-s:xg our customers and
/ sx,ending our tradi';~ Al that is neces-
+ sary is s,.st te.-- 's-nA nos simply trying
4 somehow 70 rauid.e- through,
"Our-go7erNne - must help us and
| will he.r US 1t Is a. much to the ad-
Il vantage O. our government as it is to
Il he American -trade in general
H The best way 10 accomplish this is
\ ~ establishing credit insurance on a
i workable bass.
Il Our great. banking institutions have
| aicient credit trPartmentsj it is only
1 recessE~ to transfer copies of their
ecit department, files (and there> is
30 fear tha- .hey- are not farsighted
nd patriotic cnoLgh to do so wiling
to : : fvGsT 70. Neserve Bank. which
sill then haze a compiled record en-
racing .rearLls ovrry important foreign
buyer. Thus our greatest institution the
edera. AeseIEe Bank, Viii establish.
With -t--~ aid ard through rfe medium
# commercial consular agents ap-
pointed and paid b. the United States
government. IN every larger port or
city, an agency for credit and COM
aeIcial information. It is already a
act that our regular consuls have
made better reports of trade conditions
han any otber nations representatives
nave the British not excluded.
This credit Information reservoir
as,abhshed ny the Iederal Reserve
5snk-wlll classify every foreign firm
or Individual -sing credit. whether
borrowing none IN shape Of bullion.
merchandise. blank credit with or with
out collateral.
IL may be necessary for Congress
70 pass law, under which no financial
institution accepting deposits, may &C
'epI or discount 4 draft on foreign
oank corporation, firm or Individual.
without having the same insured
against the risk Of nonpayment on due
ia.e oy q credit insurance institution
established in connection with the Fed
aral Reserve Bank, charging premium
according TO the credit classification
u the debtor This premium in the
case OF eligible draft or acceptance
night amount To 1872 Of per cent a
month or even less, and would neces-
arliy De paid By the bank or party
Hrst- receiving the same. This pre-
MUM would De included in the collec-
ion or acceptance commission or in
'erest charges, to be paid by the
drawee, and not appear as separate
enagge item against the foreign Gus
.oomer Thereby the party discounting
.ected
A foreign credit insurance company
siaouid be sponsored and subsidized by
'ne government supplying an amount
'MiAeaiatel H. payable of. say, fifty mill
.on dollar; an equal amount to be
subscribed by the Federal Reserve
oanA through its associate members in
proportion TO their holdings in the
FEDERAL + eserve Bank. according to
trade.
The premium collected would not
only provide for all possible loss and
expenses through nonpavment of for
e.sA oiaIts, but also defray the cost Of
g:epafng and keeping up to date the
les o. credit Information. Besides, a
zee y gns he charged for Information
service This wculd leave substan-
.la' dividend for the subscribers of the
= This system Of universal insurance
VI Iorelgn drafts would strengthen and
support all honest business men, cor
aec1 some abuses ard smoke out the
uhde slrah-es. All customers would
S SSOoh learn that it does not pay to dis
MVNor ones draft. for the resasons
mat al protested on unpaid drafts
"ould a. once be reported to the for
e'eh credit insurance company and
ao'e1 Ia the files, and that the rating
=. y. tAe dlawee would be lowered and
mefeoy the premium Increased, and in
eN'teme cases his name be blacklisted
~ ~l~ N1s t. no more accepted by
nc FEDERAL Reserve or any other bank
I" sne- Dnstea States.
me manufacturer or exporter or
scceptlNg N order would ask the near
sss agency for the credit insurance
ra'e OF the customer and include this
paelnianle IN his Qu uotaton just the same
PACKING or shipping expenses.
tals system were .conscientiously
sa taa I'm m2aItially established the advan-