Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1921-01-04
CAPITAL OF FINANCE
New York Has the Money Bu: London
Has the Machinery.

| 'loS tHc
, Washington Herald.
A prominent business man Of New
York recently remarked to the write
that one, Of the corporations Of which
/ he is 4 director had seriously consider
| ed the advisabiity of moving thei
} head office from New York to London
The corporation in question doc:
several million dollars worth Of busi
ness year, very large portion o.
it with private firms in foreign cou1
tries. Since the corporation is con
cerned with American products il
would seem strange that they should
find an advantage in being located ir
London.
The point in the whole matter is the
case with which foreign financing CIR
be handled in London compared with
New York. He illustrated this by IN
example of Il sale made to q firm in
Australia. An acceptance drawn
against this firm could be sold in an
hours time in as many as q score
Of different London banks and the pro-
cccGs could be used at once in the
firms business. The same instrument
taken to a New York bank would be
refused unless perhaps by chance it
was drawn on q firm with which this
particular bank had had dealings re-
Gently. Instead the New York bank
would state that they would take the
matter up through their Australian
correspondent and If the report were
favorable they would buy the accept
ance. Such procedure requires weeks
| OF delay.
In the meantime the American bank
very gladly offers to loan the corpora
ton any sum they may wish, taking
their individual security and exacting
the current rate OF discount. The cor
poratun is thus forced TO carry its per-
fectly good acceptance and in addition
must borrow money at q high rate of
interest.
There can be no doubt that the cash
discount system is more profitable to
the bank, but it Is forcing an undue
burden on the manufacturer and the
exporter. Our present cash discount
arose as a by-product Of the civil war,
because Of the great Reorganization OF
credit throughout the country during
the reconstruclion period. If this coun-
try expects to grasp and ho.d the op-
pogtunity for foreign trade now before
it, it will be necessary to revise its
banking customs in accordance with
The more finely developed systems in
;Isc in European countries.
That foreign trade is absolutely cs-
toned by NJ. one who has given the
matter ans thought. AL the present
time the great decline in the price Of
cotton is almost wholly due to the in
abiiity of foreign countries TO purchase
their usual amounts. Last year we cX-
ported more than sS.U0D,0OO.0 900 worth
Of material. European countries arc
fast recovering and are making de-
by eXportation. AS an instance Of the
rapidity Of this recovery the exports
from France in the first nine months Of
this year were nearly three times her
exports in the same months OF last
year. In another year or two there
will be the kcenest kind Of competition
for the worlds markets. Unless Amer
lean firms have the advantage Of the
best financial assistance they will fall
behind.
There is an. amazing lack Of under
standing and appreciation in this coun-
try OF the advantages Of acceptance
usage. This is true not only Of busi-
ness men but of bankers. Considera-
bile confusion also arises because Of a
duplication of terms. Thare are two
main classes Of instruments under the
term acceptance which should be care
fully distinguished. One is the trade
acceutancc which is used wholly for
the settlement Of domestic tranSac-
tions 1t is used in place of the old
omen book account and is always
drawn by the seller Of goods against
the buyer. 1t is always evidence of Il
completed transaction in which the
buyer desires credit for from thirty to
ninety days. If the seller is in need
uf funds he can always discount such
a trade acceptance ut his bank and
! thus avoid the necessity OF loan.
The other form Of acceptance lH the
bank acceptance in which bank
agrees To loan lis credit to either the
buyer or seller Of goods. TO illustrate
n simple acceptance transaction and 10
show It's advantages over The caSll
discount system. We may take the case
of an American firm who receives ar
! o.rlrl for goods from 4 Responsible
company in Argentina. PreSumihs
! that American banks were really hand
ling acceptance, il would he possible
for the American manufacturer 10 80
TO lis bank armed with his firm order
and sell t. the bank an acceptance
rayablc say in ninety days w'tfilh
which period the good" are to br
shirupd. The manufacturer has tiI'-
us.. Of this money to purchase the r;tW