Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1921-10-07
Urges Need of
Foreign Trade
Finance CORPORATION

organizing a Foreign Trade Einanc-
ing Corporation was stressed in re-
port made to the American Banker1b
Association today by John McHugh.
president of the Discount Corporation
of New York and chairman of the
Commerce and Marine Commission Of
the Bankers Association.
Mr.. McHugh reviewed the steps
which have been taken by the COM
mission since 1918 when the American
Bankers Association went on record
as to the absolute necessity of acquir-
ing foreign markets for American
products and pledged the association
to provide, as rapidly as possible,
adequate facilities for financing ex-
port operations.
He said the commission had deyel-
oped a plan for the formation of
foreign trade financing corporation
under the Edge Law amendment of the
Federal Reserve Act. committee
on organization to put this plan into
effect had been formed at a Chicago
conference of bankers. An education
al campaign had been conducted and
the need of providing adequate credit
facilities to maintain and develop
foreign trade had become widely
recognized.
Various state bankers associations
have pledged their support to the
mittees to cooperate with the organi
cation committee of the corporation"
said Mr.. McHugh. He added that,
approval given by manufacturing
and commercial bodies throughout the
country has been noteworthy" The
committee on organization of the for
eign trade financing corporation and
the Commerce and Marine Commission
of the American Bankers Associa-
tion had worked together to form the
corporation but, Mr.. McHugh said,
unforeseen difficulties had been en-
countered. Nevertheless, a very con-
siderable amount, running into many
millions, had been subscribed.
1t had been found necessary to sat
isfy the Blue-Sky Laws in 81 states
and this had been done with the ex
ception of one. Continuing, Mr.. NJ
Hugh said:
1T was found that in % states
the banking laws did not permit
state-chartered banking institutions
to invest in stock of corporations such
as the Foreign Trade Financing Cor
poration. In the majority of these
states enabling legislation now has
been passed or legal tecnicalities
have been overcome"
The Federal Reserve Act had been
amended so that payments on sub
scriptions to the capital stock OF
Edge Law corporations could be made
at the call of the boards of directors
of such corporations, with the consen.
of the Federal Reserve Board. This
legislation. said Mr.. McHugh. gave
added assurance that funds would be
called only as required and as they
could be safely and profitably en-
ployed in sustaining foreign trade.
Mr. McHugh declared that the re-
establishment of the War Finance
Corporation with authority to extend
credits to facilitate agricultural ex-
ports served to emphasize the neces-
sity for providing. through private
enterprise, permanent financial ma
chnery for financing foreign trade.
He added:
IF such financial machinery be not
developed and made ready to function
in accordance with the dictates of
business-like vision and prudence, it
may be expected that insistent de-
. mand win recur for governmental
handling of such matters. with I'M
avoidable appeal to class interests
and accompanying expense to the gen
oral taxpayer"
The speaker said that the policy Of
giving governmental help TO foreign
| trade had been by the use of public
funds and that the danger of this
policy becoming permanent was OBJ
vious.
He declared that the prosperity Of
the country is dependent upon cxpan-
sion of foreign trade markets for its
surplus products 1t had been esti-
mated that Americas productive
capacity was 25 per cent in excess Of
its capacity for consumption The
August exports were 5000, 06e.o less
in value than those of August 1920.
The total exports of the United States
were 43 per cent less than those Of
the corresponding period Of 1920
The needed export of our surplus,
together with the liquidat ton of AT
least part of the debts now owed us
abroad. cannot be accomplished with
out import of approved foreign securi-
| ties, under the plan contemplated by
the Foreign Trade Financing corpo-
ration" affirmed Mr.. McHugh. 1t is
apparent that no more effective way
exists of buttrossing American trade
abroad than by the extension of
American investment, properly safe
guarded in other countries
ITO delay overlong in the setting
up of necessary foreign trade fnanc-
ing machinery to function in such
parts of the world as may be deemed
safe will be to miss opportunity and
Americas foreign trade will thereby
be at a marked disadvantage. This
disadvantage will be emphasized as
other nations occupy markets abroad
ADEQUATE financial machinery to
provide, on q sound basis, long-term
credits to enhance permanently our
foreign trade can be established when
a sufficient number of bankers, bust
ness men. producers and investors
appreciate these facts to the point Of
acting practically on them. and when
and only when the American public
come to a full realization of the very