and state banks, together with our loan and trust companies, represent a capital and surplus of $3,401,822,606, a domestic banking wealth equal to that of all other countries combined. Thus it will be seen that our oversea banking capital, $6,507,000, is to our domestic as one to 500, or one-fifth of one per cent.

As the wonderful foreign trade of Great Britain developed, British banks established branches and agencies all over the world. British foreign trade banks do business, for example, not only all over South America, the Orient, the East Indies, and all along the coast of Africa, but far inland as well. There are branches of British banks 300 miles up the Niger, 800 miles up the Zambezi, and 1,000 miles up the Nile. When Germany began her "drive” for foreign trade she established her own banks in South America, Africa, the Orient, and the Levant.

Much is heard of the necessity of extending long credits, and the trade which German merchants have captured from others by according more liberal terms of payment has been cited as a compelling argument. Many American manufacturers have required cash against documents at New York, or other shipping ports, but this does not mean that credit has not entered into the transaction. The credit may not have been extended by the manufacturer, but the export merchant or the importer in the country of destination has supplied it, and it has been paid for

and the cost of the credit has been included in the ultimate price.

Manufacturers cannot be expected to extend long credits on their own capital, for industrial success largely depends upon rapid turnover of capital. It must therefore be extended by banks. Excessive credits have often permitted commercial disaster. The safe rule for American exporters is to extend credit only for such periods as will permit the purchaser to realize upon the goods bought. These would range from three months, in the case of seasonal merchandise, to a year or more in the case of machinery for which the purchaser or those to whom he in turn has sold cannot pay until a crop has been harvested, or toll taken from the natural resources of the country. Sound and complete credit information is, of course, the essential basis of sagacious credit extension. The degree to which American bankers located abroad can helpfully determine the credit responsibility of an importer of American products, passing judgment not only upon visible assets, but upon character and enterprise, will go far to determine our success in export trade.

To establish foreign branch banks and agencies, to place at the disposal of our exporters American financial facilities instead of compelling them to depend on those of the British, German, and French, to give the necessary information of foreign credits, and to assist our exporters and importers to finance their transactions-all this is the province of the

American banker. That is his part in the organization of American business so as to hold and extend our foreign trade. It is not merely a duty. It is an opportunity. It means more business and more profits for our banks, and American banks in foreign countries logically are units in that American solidarity which is needed to hold our own in the world's trade.

The German banks identify themselves directly with corporations organized under their protection and retain an interest in them by insisting upon representation on directorates to safeguard their stockholders and depositors. This policy of the banks is a part of the coöperation which is the outstanding feature of German industrialism.

British banks also recognize the importance of financially assisting industrial enterprises, domestic or foreign, but they have handled this business rather through affiliated financial institutions supported by them when necessary. Although the banks frequently support new companies by offering their securities to the public, they do not identify themselves directly with them.

The British Companies Act of 1862, with the consolidation of its amendments in 1908, changed England from a nation of shopkeepers to one of stockholders. Unsparing and authentic publicity accompanies every step of British corporate formation, and after investment the individual stockholder is accorded further rights tending to protect him. The

promoter is the fiduciary representative of the company he promotes, is estopped from gathering profits not disclosed in the prospectus, and compelled under heavy penalty to reveal and particularize all material facts which prospective stockholders ought to know. Thus the banks automatically are protected in the performance of their share of launching new enterprises, foreign or domestic, under a national law governing the formation of corporations.

If American capital turns toward foreign investments, particularly in railroads and industrial enterprises, a flood of new securities will flow into the country and every issue should be safeguarded by complete and compulsory publicity. It should be unnecessary to point out that a fiasco or scandal in the marketing of foreign securities would seriously retard the development of the investing public's taste for and confidence in oversea issues.

CHAPTER XII

COOPERATION IN AMERICAN EXPORT TRADE

OWHERE is coöperation among business men and between them and the government

NOT

more essential than in the development of our export trade. Throughout the world, American producers, individually, are obliged to cope with combinations of their foreign rivals who are not only permitted but encouraged by their governments to combine against American competition; and, individually, American producers are often obliged to sell to combinations of foreign buyers, equipped to depress the prices of their products.

Even in normal times our nation's business, if it is to continue to prosper, requires foreign markets for its surplus products. Other nations, however, have realized the value and the necessity of a foreign business and have organized to capture and hold it. They have learned that it is a bad policy for their citizens to compete with each other in foreign markets. Necessity has produced the foreign selling syndicate; has coördinated manufacturing, merchandising, banking, and transportation interests; and has led governments to support their citizens in efforts to further export trade. We are confronted with this condition.