The Birmingham age-herald., 1919-06-21
ID URGE LAWS ID PERMIT BANKS ID
 HOLDEXPORT STOCK
Amendment to Federal Re- serve Act Which Will Un- lock S100,000,000 Capi-
 tai to Be Suggested
By Associated Press


 Washington, June 2o-Legislation to permit all national banks to become stock holders of corporations engaged in pro- noting foreign trade will be recom- mended to Congress tomorrow by the fed- eral reserve board.
 An amendment to the federal reserve act will be suggested which wilt unlock perhaps $100,000000 of capital for financing the tremendous purchases which other nations desire to make in this country. By furnishing a basis for long term credits to countries already heavily in debt to the United States action by Con- gress in accordance with the boards rec. concentrations, is expected to hasten a return to normal conditions in Europe and at the same time contribute material ly to the continued prosperity of America. Financial experts of the treasury regard the boards recommendation as one Of the most important steps in reconstruc- ton yet taken.
 All-day discussion with the committee of the federal advisory council, composed of James B. Forgan, Chicago; l.. l.. Rue, Philadelphia; Daniel c. Wing, Boston, and W..S. Rowe, Cincinnati, preceded the an -nouneement of the boards decision. It
 was said the board and the committee were in entire accord, that the matter of
 providing longterm advances for Eu- rope presented an investment rather than a banking problem, and that the neces- sary funds must therefore come from the investment market It was the opin- ion of the conference, however, that as q step toward supporting plans for the
 financing of the nations foreign trade,
 It was advisable to make it possible for I 3tinnal a n xS n Tla ri Ia in for
 nation of trade groups, such as that now tn process of organization by the cotton interests, so that Europe might buy raw materials immediately on collateral oi adequate security. Aside from the actual capital put into such enterprises by the banks, it is felt that the general house will be encouraged by the banks par tcipation to take stock also, which will be indirect stimulation of the saving believed to be necessary to provide new capital
 OWNERSHIP LIMITED At present national hanks are limited by law in their ownership of other enter prises. A bank must have $1,G00,000 in capital and surplus in order to apply to the board for stock in corporation en-
 gagged in international or foreign bank ing, and may not invest more than IL per cent of it's capital and surplus. The amendment to Section 25 of the act to be sent to Congress tomorrow would ! permit any national bank until Janu- ary 1, ,-1921, without regard to the amount of it's capital and surplus, to invest ar | amount not exceeding in the aggregate per cent of it's paid-in capital and sur plus in the stock or one or more corpora l tions chartered or incorporated under | the laws of the United States or of any state thereof, and regardless of it's loca- 1 ton, principally engaged in such phases of international or foreign financial op erations as may be necessary to facili- 1 tate the export of goods, wares or mer, | chandise from the United States to any | foreign country; provided, however, thai l in no event shall the total investments authorized by this section by any ons national bank exceed 10 per cent of its | capital and surplus"
 l The tine limitation of the amendment was said not to contemplate that any bank should give up stock purchases by l it, but merely to emphasize that ths emergency was one of war reconstruc tion. As only few of the very large banks under the existing law own stocl l in corporations doing foreign banking | the limitation of 10 per cent subscrip | tion by any one bank will not affect 2 large amount of capital. The combined capital and surplus of national banks is l approximately 5000, ,oO0, 900, making pos
 sible subscriptions to export corporations i of s100, 0,600,000