The New York herald., 1921-10-14
Round the World Drafts.
An Interesting Chapter Of Americas
Foreign Commerce.

To THE NEW YORK HERALD: Kindly
allow me to recall to the memory Of
your contributor ]. F. Zoller an Incl
wonderfully with his letter Of October 8.
In the days when the Berlin and
Milan DEGREES of the first Napoleon and
the orders in council Of England drove
our ships of the Atlantic Ocean we
were too weak to think Of asserting our
rights. So our sailors rounded Cape
Horn into the Pacific Ocean to trade
with China.
But our Industries were rudimentary !;
hence we had nothing which the Chi
nese merchants would take In exchange
for their silks and teas except specie.
and very little Of that. Consequently
our vessels left our shores in ballast,
carrying all kinds Of metallic money
and a supercargo to take care Of and
trade with It. AS a consequence every
time vessel left for the Eastern trade
the whole country was ransacked for
specie to equip her for the voyage.
OF course this was absolutely prohibi-
tory of any sound banking system and
explains many of the queer banking ex-
pedients and suspensions which were
marked feature of the time. But we
grew and In course Of time Whitney's
cotton gin came into use. At once almost
indigo lost it's standing as one Of the
leading products Of the Southern States
and cotton took its place, challenging
even tobacco for frst place on our ex-
port list.
But the large market for both cotton
and tobacco was England, while our Inn
ports continued to come from China and
India. The second United States Bank
under Nicholas Biddle found a way to
finance this difficult problem In interna-
tional exchange.
It opened an international credit and
drew six months sight drafts upon Bar
ing Brothers through the Bank Of Eng
land. These drafts were given to our
supercargoes, who found that the Chi
nese merchants would receive them IN
payment for their silks and teas BY
the Chinese merchants these drafts were
passed on to the Indian merchants IN
payment for opium smuggled across the
border into China. By the Indian mer-
chant they were sent to England in pay
ment for English manufactures and ar
rived in England in time to be iiqui-
dated by the proceeds OF the American
cotton sold in that market.
Thus II will be seen that the second
United States Bank used its credit to
finance our foreign trade, leaving our
specie to act as a gauge for our domes-
tic market and keep prices to a level
with intrinsic and exportable values.
This round Of credits continued until
the civil war IN spite Of the refusal Of
the authorities to renew It's charter and
the subsequent failure OF the second
United States Bank as a State bank,
having obtained a charter from the
State OF Pennsylvania. But tho civil
war annihilated both the cotton and to-
bacco crops and our drafts were In
serious danger OF going TO protest In
London.
Here too we have the explanation OF
the frantic cries of ION to Richmond =
But England found It cheaper and far
more civilized to take our 6 per cent.
bonds payable in United States gold
coin Of standard weight and nneness anc
feed her cotton operatives In soup
Kitchens. Would We be equally con-
sideratef n. s. b., sr.
BRocxLYN, October 70.