El Paso herald. (El Paso, Tex.) 1901-1931, 1920-11-19

III NLs tUAEl ALSO III DEAEE 70 pro-
4 vide machinery through which invest
I meut funds might be utilized in
] financing long term export credits.
] the Edge amendment to section p Of
/ the federal reserve act was passed BY
] congress and approved by the presi-
] dent on December q, 1913. In pass
I ing this amendment. congress had in
] mind TO assist, as far as possible, in
] relieving the acute situation which is
I the result Of the war, but as is stated
/ by the federal reserve board in its
] regulations recently promulg gated
] touching operations under the amend
/ ment. congress also had 10 in mind TO
provide for the establishment OF a
I federal system Of international bank
| ing, OF financial corporations operat-
I inE under federal supervision, with
power sufficiently broad to enable
them TO compete with similar foreign
7 Institutions and to afford the Amerl-
can exporter and importer at all times
a possible means Of financing their
I foreign business The solution OF the
question Immediately at hand, which
IS how the south can dispose OF its
surplus OF low grade cotton. is really
Of minor Importance as compared
with the larger question OF providing
a permanent and efficient credit sys-
TEN that viii tend TO obviate the re-
currence Of such condition
1T is impossible to anticipate all
Of the different ways in which the
southern corporation would be OF ma
teriaI assistance in the cotton indus
try. Those who have given the matter
study believe that time viii deVel-
CD innumerable phases from which
such corporations can become impOr-
tant factors. A few Of the most Ger
tain activities can be described
Probably the first step would be
careful Investigation on the ground
Of the European conditions as TO the
~ q H-H Of
paying for IL. The representatives Of
the corporation would establish
agencies in Europe through which IL
would function, and would arrange
for the proper securities and guaran-
tees upon which to predicate the ex-
tension Of credit. After these securi-
ties and guarantees were taken, the
coHporation would be prepared TO act
as a medium between the European
mill and the American exporter.
How II Would Work.
'For instance. suppose a mill. or
number Of mills, after giving tie cor
poration the required securities and
guarantees and otherwise making
their financial arrangements with the
corporation, desire TO purchase lot
Of cotton from a Texas exporter, the
price and terms having been agreed
upon between the parties, the proceed
ure will then be as follows: Tbs
American exporter viii draw a draft
upon the European parties the draft
to be payable at the office Of the Edge
CORPORATION with the shipping docu-
ments attached. At the same time
the Euronean party viii draw its
draft upon the Edge corporation for
the proper amount. The corporation
VIII accept this draft, and turn II over
to the European party for sale or sell
IL for him as the case may be- The
proceeds from the sale Of the accept
auce VIII be used in 1Quidaung the
draft Of the Texas exporter. In this
way the European mill has been en-
abled to buy the cotton and the Texas
exporter has been paid cash FOR MS
product
s.The character OF paper thus ere
ated will be subject 20 purchase Dy /
the federal reserve banks and IL rs 4
reasonable to suppose that at times, 4
when the investment rllaEaet VI $3.50. no
absorb this paper. the federal reserve l
banks will absorb a very great part /
Of it Il is quite likely that some or I
an Of the acceptance paper created I
BIZ such transactions viii be bought |
and carried By the very Texas bank /
Ia. has been financing cotton at this I
point. 1t Is a well known tact tnat 10 1
4 very large extent in the ordinary i
year. Texas banks, as cotton begins 20 ]
be Mquidated. buy enormous sums Q! 1
and thereby lend their funds 70 the j
industry issuing the paper II would I
certainly seem that these same banks /
would soon find It more sensible and /
profitable TO invest these funds IN the ]
PAPER created by the cotton industry /
rather than that created by industries !
Ia which they have not the remotest I
interest The prediction is made that \
II many seasons a very large part II I
not ali Of the paper created BY the /
southern cotton export finance cor
Doration will be absorbed by the fin
8ncial interests Of the south At the 1
same time in those seasons IN which l
there are no funds for this character
the credits viii have been so ar
ranged that investment funds from /
other parts Of the country can be
irafted into the cotton industry. Time I
viii probably develop a practice ]
among Edge corporations OF issuing ]
their debeutures based upon the Sc i
curities IN their vaults. and using the ]
proceeds Of these debentures IN the !
financing OF such transactions The /
Edge law makes specific provision ]
for such debeutures-
1T must not be supposed that the I
lrEauizarion OF the Southern Export ]
corporation viii prove a per-
nanent cure for all the evils incident /
10 the cotton market There are a /
number Of potent factors constantly ]
influencing the cotton market One OF I
these. which is eLerting a depressing 1
influence at this particular moment, /
Is Europe's inability to pay IN cash /
Is the function OF the Edge corpora /
inn