The Idaho Republican. [volume] (Blackfoot, Idaho) 1904-1932, 1921-03-14

ing In Europe and the StOrehOuSeS o
America are bursting with the thing
that would save. The highways o
trade are clogged, and there is M
adequate machinery to remove tn,
obstruction. No group of financiers
no matter how powerful or resource
fu1, can accomplish the task. Bank
i ers alone cannot do it. It is a jo!
for the whole nation to tackle ant
the need for prompt action is i'm
perative. The Edge act offers the
remedy and the foreign trade financ
ing corporation would provide the
machinery.
| Provisions of Edge Law
The Edge law which Is an amend
ment to the federal reserve act per.
mits a corporation organized under
its provisions to purchase approved
foreign securities, issue the corpora.
tons own debentures against these
securities and offer them for sale tC
American investors. The law pro.
WOES that such corporation shall be
under federal supervision and that
the federal reserve board shall have
the right to scrutinize and pass upon
the adequacy of it's securities before
it's debentures issued against these
securities are offered to the invest
ing public National banks may sub
scribe to the extent of 10 per cent of
their capital and surplus to the
capital stock of the corporation.
Capital Needs are Heavy
The final report of the commerce
and marine commission which was
adopted at the foreign trade confer
ence in Chicago December 10 and / i,
provides for the organization of one
large foreign trade corporation under
the Edge law with a capital stock of
one hundred million dollars and a
surplus of five million dollars. The
Edge law provides that such cor
poration may deal in securities and
issue its notes and debentures against
these securities to ten times it's cap
ital and surplus. This will give the
| foreign trade corporation an operat-
ing power of more than one billion
| dollars. A regional plan of organ
izatiOn will be effected similar to the
federal reserve banks and a central
office of the corporation located in
| each of the ten or twelve regions
Each region will participate in the
| corporations purchasing power in
! proportion to its subscription to tho
corporations capital and surplus. As
an illustration Of its operating, sup
pose the four Pacific states, Cali
fornia. Oregon, Washington and
Idaho should purchase five million Of
the corporations capital. That
would make available, thru the sale
of it's debentures in the Pacific states,
fifty million dollars for the purchase
of the exportable products of the four
states and the sale of these products
wool, lumber, fruit, grain etc.,
sought by foreign markets could be
financed on cash basis. A very apt
illustration of one angle of the cor
poration's usefulness to the American
exporter was given recently by. Mr..
Henry S. Mckee, vice president tof
the Merchants National Bank sof
Los Angeles. In speaking before the
National Association of Credit Men
on the operation of Edge law cor
porations, he said: Something like
this should happen. A foreign manu-
facturer would apply to an American
merchant. for a supply of wool on
credit. Complete investigations
would show him to have character,
judgment, experience, equipment and
successful and honorable business
history, otherwise the business would
be declined He would get the wool
in exchange for his paper, payable
sometime in the future, to the
American merchant in American dol
lars. The American merchant would
at once endorse and sell the paper to
foreign trade corporation formed
for the very purpose of buying Just
such paper. In the same way the
Edge law corporation might acquire
foreign securities from American pro-
ducers and dealers in cotton, railway
equipment, machines, tools, harvest
ing machinery or anything else, pro-
vfded It lies at the foundation of |
European industrial life. This Edge |
law corporation would thus have
bought highly desirable line of
carefully selected European paper,
endorsed by strong American pro-
ducers or exporters. This paper would
be placed in the hands of some trust
company as security against which
the corporation would issue it's own
paper in the form of notes or de-
bentures, which in turn would be
sold to American investors. They
would be good beyond cavil. They
would afford a high interest return.
They would be the direct obligation
II an American corporation under
federal laws with large capital of its
own. They would be secured by the
paid in capital and
surplus and by the obligations, given
Tor value, of European industrial
establishments found by investiga-
ion to be fully worthy of confidence.
They would have passed the security
If the federal reserve board and the
American investment dealers who
would be called on to distribute them
o the investing public" The fol
owing illustration suggests another
way in which the corporation will
JUNCTION in American foreign trade.
group of gentlemen living in the
|evasted district of France engaged
the manufacture of cotton fabrics