The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-08
PLAN StOO,OOO,OOO
EDGE LAW CONCERN
Meeting to Organize Foreign
Trade Financing Corpora
ton in Chicago Dec. 10.
WILL GIVE LONG CREDITS
American Exporters Require
Loans of $4,000, 100000,
Says John McHugh.
WILL GIVE LONG CREDITS

meeting OF bankers. producers and
importers to organize the new 100000
900 Foreign Trade Financing Corpora
ton fostered by committee of the
American Bankers Association which
was appointed to investigate the pro-
project has been called for December
10 and II in Chicago The new COM
pany will be large and important
piece of financial machinery to finance
foreign trade and maintain 1t at salts
factory figures under the Edge law.
The present time loan requirements
in connection with foreign trade Of
American exporters are estimated by
rohn McHugh. chairman Of the COM
nittee of the American Bankers Asso-
iation, as approximately $4.000,000 900.
a great deal of which is carried by the
banks of the country in short time form.
Under the corporations plan those
redits can be converted into longer
mes through an investment corporation,
rhich will relieve the strain on banks.
There are twelve Federal Reserve
anks." Mr. McHugh said. operated In
he interest of the commercial business
f this country under the supervision
and direction of a central body known
rs the Federal Reserve Board. These
banks have an aggregate capital OF
approximately 100000, 900. That CAPT.
tai has been supplied under compulsion
of law, known as the Federal Reserve
act, by the national banks Of the coun-
try and such State banks as elected to
conform to the Federal Reserve law
requirements In order to become MEM
bers Of the system.
Foreign trade of this country has
expanded to such an extent that q con-
traction to pre-war conditions would
have most depressing effect, and it has
come to be recognized that another large
riece of equally important financial ma
>hinery Is needed to finance tina: foreign
trade and maintain 1t at such figures as
will keep our people at work and our
avenues Of production adequately en-
ioyed. This can likewise be done under
he Federal Reserve law. owing to the
fact that q recent amendment to that
'aw, known as the Edge act, makes 1t
possible but not compulsory for the
hanks of the country to furris the
needed capital therefor.
1T Is to be seen whether the banks
Vt this country. required as they were
by the Federal Reserve law to furnish
the capital for the present Federal Re-
serve Bank system will, without COM
pulsion of law and Of their own free will
end accord rise to the occasion and
portant and potential piece of financial
machinery.
ut is estimated that at the present
time loans or credits in connection with
the foreign trade of American importers
aggregate approximately $4,000, 900, 600,
End 1t is a we'll known fact that great
deal of this is directly or Indirectly car
ried by the banks of the country in short
{ me form But as much of 1t must be
renewed from time to time, 1t, in fact,
represents long time credits. Long time
credits are undesirable from the stand
| point of prudent commercial bank man
| agement and are not in harmony with
the spirit of the Federal Reserve act
n so far as It applies to commercial
| i.ank business Such long time credits
should be handled by an investment cor
poration Of wide and extensive dis
trlbuting ability. and If they are SO
handled there would be a marked i'm
provement in the banking situation"