Omaha daily bee., 1920-02-01
distribution
OF U. S. CREDIT
IS NECESSARY
Trust Company Trade Review
Shows Husbanding Of
American Resources Es-
SentiaI In Reconstruction.

Jncnt-tnc nuSDdnQlnR ana Care1ul
distribution of American credit for
tho reconstructive necessities of the
worlds emphasized in the issue
OF January % of American Goods
and Foreign Markets" the semi
monthly review of the Guaranty
Trust company of New York on for
eign trade. This need, says the re-
view, is thrown into sharp relief by
the recent action OF the Federal Re-
serve bank of New York in rails
ing the rediscount rate on CONNER
cial paper to per cent, the heavy
over subscription of the $25,000,000
Belgian loan, further marked de-
clines in foreign exchange, and the
bid for North American capital
made by the Latin American coun-
tries at the second Pam American
financial conference. The review
goes on:
Banks have taken the lead in
helping to curtail the use of credit
for merely speculative purposes, and
are exerting every effort to
strengthen their reserves. During
the week ending January 10, the
Federal Reserve bank of New York
borrowed no less than $79. 100000
from other reserve banks in the sys-
TEN. As result it was able to
maintain its reserves above the le-
gal limit. In other words, the whole
reserve system is meeting the test
of a serious situation with smooth
= ness and efficiency. With it stands
the decision of the New York clear
ing house banks to limit to "a per
cent the interest that will be paid
on deposits made with them by
other banks. This, too, will certain
ly tend to increase the mobility of
available banking resources, and
favor the operations of productive
industry and commerce.
The Money Market.
II "All of these decisions and ac-
tions will have a strong indirect
I influence on the extension Of Ameri-
. can trade in foreign markets. Moth
ing is more essential to restoring a
normal balance of trade between
i America and foreign countries,
! and thereby the normal stability of
foreign exchange than the continued
power of the United States to lend
to foreign countries and customers.
The double subscription to the Bel
gian loan only emphasized this. Fhe
American investing public showed
its complete confidence in the ulti-
mate restoration of Belgian industry
and commerce, and likewise indi-
Gated its ever growing readiness to
invest heavily in foreign markets.
But disposition is not enough. The
4 actual funds or credit must be
available. They must not be wasted
in mere speculative activity. This
is the central meaning of most of
The financial events of the last fort
1 hight
."T.le entry of Latin America into
the field as a prospective borrower,
only adds completeness to the pic
ture. Our .attention has been CEN
tered chiefly on European needs and
prospects, with the expanding pros
pect in Asia as a rather alluring
background. Now our most i'm
mediate neighbors have placed be-
fore us their programs of new con-
struction and internal improve
ments of all sorts. These countries
in the past have looked largely to
4 Europe for funds. Heavy investment
@bf British and German funds in
Latin America, followed by close
shipping relations, and the establish
ment there of large buying markets
for British and German goods, H.
lustrated very effectively the i'm
mediate result of organized invest
ment. .a..
Euporean Credit Strained.
"But European credit facilities are
now strained to the limit by domes-
tic needs. If the United States con-
serves its credit resources care
fully, it will be able to take advan-
'tage of the needs of Latin-America,
to extend and improve shipping fac
ilities, as the Latins themselves re.
quest and to build on this founda-
tion the substantial trade which the
quality of our manufactures merits.
Here as elsewhere the task is to
maintain in New York a free gold
market, and, within the limits OF
good banking practice, free credit
market
T "a more detailed but equally es-
{ sential demand for the present situa-
q ton is the adequate combination OF
4 American exporters for effective
selling in foreign markets. The
Il Webb-P Pomerene law has released
! this country from previous legal
Il restrictions, and made possible forms
of combination quite as effective as
Z those hitherto adopted in Germany
England, and elsewhere. More
A than 100 organizations of American
exporters have filed papers with the
Federal Trade commission since the
passage of the Webb law, indicating
their intention of combining in this
way. They will achieve double re-
suit First, they will be able to com
pete with European selling organiza
tions in Latin America, the Far East
and other outside markets. Second
they will be able to oppose a uniteo
front to all attempts of European
: buying combinations to depres.
American export prices through
!. playing one American concerr
againSt another"
Is 0A ornnonn%~Earn,e MI;Ii