El Paso herald. (El Paso, Tex.) 1901-1931, 1920-06-21

LNDER new law known as the Edge law special banks
y be organized finance foreign trade ezelu-
sveIy Il Is novel idea in American banking, and the
business world vii watch the experiment with interest
Today the first bank organized under the law opens its
doors IN New York. It is known as the First Federal For
egn Banking association, has capital Of S22o5O0o, and
organized By group Of II banks with the cooperation
CT OUTSIDE msnuiaelaIets ana manners ~
egn trade The stock VIII be more widely distributed as
the business expands
The interesting feature Of the system to E.
Pasoans and the people Of the southwest IS the plan by
which the bank is capitalized It cooperative many
banks ard business joining to develop special branch
Of business and banking which, by reason Of its nature, IS
not within the province Of the regular banks through
the cooperation which must be made wide possible
to insure the greatest success not only is the service Of
the bank made more widely useful but and ready
market IS OF ought TO be developed Tor the credit insTu
ments the paper securities Arising out Of the operation
Of the bank
In the southwest banks habituaIy retain among their
assets the notes payable that by their customers
Tie extension Of the federal bank system opened
market for redscount which being taken advantage
Of to considerable extent; but there has been compare
lively little Development Of an open market for notes pay
able, such exists n the larger financial eenters
We have nothing corresponding the "note brokers'
Of St. Louis and other big money centers houses Of old
standing and large who make business Of trad
ing in credits and who sell notes to investors and banks
If they ordinary commodities of commerce Euro
pesa banking has always been flexible IN the Of
discounts and redscounts than American banking Amer
can bankers are learning some Of the European methods
but they developing and applying them in American
way and adapting them to American needs
In handling foreign trade Europe has worked out
much practical system than any have had here
tofore IN America It is question Of long term credits
Foreign trade cannot be handled developed cash
basis on 80, 60 and 90 day credits such rule in
American banking practice Six months credit IN foreign
trade may be regarded minimum, while zine months
and year Ordinary banks cannot possibly
handle this sort Of paper Their assets must be kept liquid
AID experience has proved that 90 days about the limit
Of liquid banking credits under ordinary American cond
tons Of commerce
The Edge law may be applied in e. Psso to great ad
vantage IN financing trade with Mexico At present most
Of this trade cash very short term basis owing
to the long unsettled conditions But with return TO
peaceabe and normal conditions, FL Paso and the south
west VIII enter Mexican trade IN big way. Then II VIII
be necessary 10 study the field, adapt banking
mercal methods to the demands Of the field, II to
command share Of the trade
Long credits VIII be the rule In Mexico everywhere
else outside Of the United States ElsPaso vii have to
find way to finance this trade long credit basis The
Edge law points the way It is not too early begin
planning to meet the requirements Of TIE future
FL Paso and other southwestern banks take the lead
and invite the cooperation OF southwestern manufacturers
and jobbers N establishing such bank specializing for
egu trade and limiting its dealing almost entirely to trade
with Mexico
While foreign trade credits long interest rates are
usually higher than the domestic Average The commercial