The Washington herald., 1921-02-13
N@ Foreign Trade Financing Stimulate American
Coa..a ~, E..Is+;no Eurona,n R,na.
Useful Weapon
In Preserving
Trade Balance
U. S. Now Rules Supreme
AS Worlds Greatest
Creditor Nation.

The United States for a brief pc
riod has been atop of the world.
We are the worlds greatest credi-
tor nation. Our foreign debts have
been largely paid off and we are
owed some $4,000, 100000. The for
eign trade of this country has grown
to be greater than that of any other
nation in history. For the year just
ended, our exports were valued at
more than $4,000. .OOO. 900, while i'm
ports were valued at more than So
900 900. 900. There was A trade bal
ance in our favor, according to the
usual expression, OF about $1,000
600. 900.
There is only one reason why this
supremacy. thrust upon US by the
war. not gained by a normal build
inG-up and expansion of our finan-
ciaI and commercial interests, should
not be retained. That reason, para
doxical as it may seem. lies in the
supremacy itself. Because we are
creditor nation, with resources in
raw materials and vast industrial
! equipment which other nations now
slack. the dollar has taken wings. 1t
Is so far above the normal rate OF
exchange in the currency of other
nations of the world as to make it
very difficult, in many cases impos-
sible. for terms of payment to be
arranged by foreign seekers after
our raw materials and manufactured
! goods.
Issue Holds Great Interest.
This situation has been engross-
! ing the attention of some of our
] Fo
over two years. A year ago Con-
gress provided a way for solution
by means of legislatiOn-the Edge
act for the formation of corporations
to extend long-term credits to for
eign purchasers of American goods.
The working out of that legislation.
in practical effect. is this: Since we
are the richest nation in the world.
both in money and in goods. we
must loan our money to the citizens
of other nations who need our
goods, under such conditions as they
can meet. in order to enable them
to buy our produce.
There is nothing revolutionary or
unprecedented in this. 1t is what
has been done, and done profitably,
for many years by Great Britain, as
the greatest trading nation in the
world. What is new to US is not the
principle, but the open practice.
The Edge Act.
The Edge act, an amendment tc
the Federal Reserve act, signed by
the President on December "a, 1918
provides that corporations may be
organized for the purpose of engag-
ing in International or foreign finan-
Cial operations involving Iong-term
credits. Such corporations are un-
der the regulation OF the Fedora
Reserve Board Their liabilities
must not exceed ten times their cap
ital stock and surplus. They car
receive only such deposits within
the United States as are incidental
to carrying out transactions in for
eign countries or in American de-
tendencies. The majority of theil
stock must be American and
their capital must not be less than
lS2, 100000.
An Edge act corporation may. un-
der the law, extend long and short
term credits, invest in securities
purchase bills of exchange. engagt
in foreign banking, and in every
lawful way aid in financing foreign
trade. With the approval of tn,
| Federal Reserve Board, such a cor.
| pOratiOn may issue and sell to thu
investing public its own notes ant
debentures up to ten times it's paid
up capital and surplus. 1t may no
/ engage in a general business 0
/ buying or selling goods in. th,
/ United States, nor engage in do
mestic banking except as may b,
| incidental to its international o
/ foreign business.
Many Corporations Formed.
During the past year a numbe
| of corporations have been organ
| ized under this amendment with tn
| object of financing our foreIgr
| trade These institutions hav
| served useful purpose, but the,
| have not had sufficient resources t
| enable them to take care Of tn
| enormous demands for credit unde
| present world conditions.
New Idea Submitted.
| At its annual meeting in Wash
ington last October the American
| Bankers Association passed
unanimous resolution declaring tina