New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1919-03-26
EXPORT TRADE FUND
TO Be OPENED soon
Loans Up to $5O,00O,OOO Will Be
Given Out

Washington, March 26.-Thc gov
ernments billion dollar fund for
financing foreign trade soon will be
opened to American exporters
through loans from the war finance
corporation. Regulations now being
prepared by the corporation to cover
advances will provide for the lending
Of sums up to s50.000,000 to any in
divldual firm, corporation, or export
association, probably at "a per cent.
for q maximum of five years, on ade
Quate collateral.
The nature of this collateral secur-
lty to be accepted remains to be work.
ed out by the corporation. but indi-
cations are that paper representing
merchandise engaged III the export
process will be acceptable. Collateral
ia the extent of 125 per cent. Of the
loan probably will be required and
loans will be made either direct to the
exporters or through banks.
Scores of informal applications for
information or for advances have
been received from individual export
ing firms or representatives of the
export associations being organized
under the Webb act, the war finance
corporation reported yesterday Prep
aratiQns for making the loans will be
rushed, in spite Of the enormous bur
den thrown upon the corporation
through the necessity of making large
advances to the railroads.
Reports indicate that exporters are
planning to make extensive use of the
governments foreign trade fund as
soon as the regulations are completed
and the corporation is ready to accept
al
three principal Influences.
First, European countries which
will need great quantities Of American
materials during the next year or two
for r'econstructiona and make up forlack
of constructive enterprises in the
war, have neither the gold nor the
| credits to pay for their purchases in
| this country and their inability will be-
| increased when at the end of the war
| the United States government stops
making loans to the Allies.
| Second, foreign exchange rates, fol-
| lowing removal Of artificial govern
| mental influences by Great Britain,
| France, Italy. and the United States
! last week, have produced q situation
| in which American goods would cost
! foreign purchasers much more than
! their value m dollars at this time if
! purchasers We're forced to pay cash.
| AS a result, American exporters must
| sell on credit if they are to sell in
! the quantities needed abroad and the
| war finance corporations funds will
| provide means Of pooling these ex-
| port credits under goVNrnm emit super
| vision.
Third, American banks have not
, been accustomed TO financing export
! transa ctions and cannot legally adj
/
| ed to finance large export operations,
! nor can they ordinarily make adj
| vances for more than ninety days.
whereas for most foreign trade tran
I sactions a year or eighteen months
| are needed on credits.
It is the last condition which has
! driven export organizations to the
war finance corporation since the law
| provides that the corporation may
/ make q loan direct to exporters only
! if loans cannot be Obtained through
| regular banking channels on reason
able terms.
| Foreign exporters doing business in
! the United States also have under
! taken informal negotiations with the
| corporation to ascertain whether they
! may share in the governm ent's credit
arrangeme They have been told
! that means probably can be worked
| out by which they can obtain adj
vances from an American bank
| which i'll turn can transfer the loan
! to the corporation. The corporation
| cannot lend directly to n foreign bus
| mess interest, however
The rate of interest to be charged
| is determined largely by the legal pro-
! vision that it must be at least ! per
| cent moro than the prevailing dis
! count rate on ninety day commercial
| paper, at present 4 "a per cent.
| This would make the minimum rate
| Of the corporation so per cent. Fifty
! million dollars is the maximum which
| the corporation may advance to any
! single business organization.
| Eighty export organizations, con-
! sisting of groups Of manufacturers,
| have notified the federal trade com
mission of their intention to operate
| under provisions of the Webb act
| Among the principal commodities
/ already developing are steel. "copper"
| lumber of various kinds. textiles,
| automobiles. machinery Of varied
| styles, raw cotton. sugar magnesia, !
| paper. tanning materials, phosphate,
! oil, and munitions. One association ,
would limit its foreign trade to
| clOthespins.
| LONG AIRSUIP FLIGHT.