REPLIES TO CARD AND SCHEDULE INQUIRIES. 425

The European banks, notably the British and German banks and bankers,
furnish the money. They do so to the merchant, not so much because of his
financial responsibility, but because he knows his business abroad and is a
judge of credits himself. As long as our banks take hardly any interest in
sxport trade and loan money almost only on stock-exchange collateral, we will
not be able to increase our export business materially in fields where the
foreign-credit system is established. Prior to the present’ European war the
majority of our export business was financed by banks in Europe and the
foreign-exchange bankers bought our paper. The war has stopped this, for no
Ruropean nation is now in a position to extend credits to merchants abroad.
If our Government can help in the establishment of purely commercial banks
for the development of overseas trade, it will have solved nine-tenths of the
problem.
Producers’ capital must be divided into three parts—An exporter
who has been engaged in foreign trade for 50 years replies that—

Our bankers and our manufacturers must remember that in most all of
the Spanish-American countries an importing merchant needs to have three
capitals to handle his business. One for the payment of his accounts when
they become due; another one for the payment of duties, which invariably are
in cash and usually about 100 per cent of the cost of the goods; and another one
to trust his customers. The average merchant has to sell to the consumers, i. e,,
the planters, and give them time, for the simple reason that they have very
little available cash and usually pay with the proceeds of their crops.
Comparison of credit terms between Europe and America—A
partner of an exporting firm shipping goods to South America says
that—

Our greatest need is to have our banks establish agencies and connections
In foreign countries, so that they can ascertain if a certain customer deserves
credit, and by discounting shipping documents, assist the exporter to offer
eredit.
This is the system followed by the European.
Our banks should establish such agencies and then assist the exporter to give
credit on all legitimate business. .
What chance has America, when our exporters demand cash against shipping
documents at dock in this country, when Europe offers goods at same or better
prices and, in addition, is willing to allow 90 days’ credit, and often much
longer?
In South America they are willing to pay 2 per cent, 8 per cent, or even 5 per
cent more, if they can get 60 to 90 days’ credit. This should be good business
for the banks if they organize to handle it.
Also, the foreign exporter knows his country will stand back of him in all
legitimate claims. There are few Americans who feel this safeguard.
Credit information could be furnished by consuls—A southern
exporting firm of 15 years’ experience replies:
We think the American Consular Service should be encouraged to give credit
information and, if necessary, to charge for it. The greatest obstacle to the
development of our commerce is the difficulty of estimating the foreigner’s
responsibility. He frequently wishes our goods but can not buy for all cash
in advance, yet he may be entirely reputable and, if we knew it, would be an
excellent prospect for us.
How branch banks should operate.—The president of an exporting
house who has been engaged in foreign trade for 40 years is of the
opinion that—
The way to encourage foreign trade is to create American banking facilities
at all the principal world’s ports, pass laws regulating the banks, and, in
a just way, force them to buy foreign bills on a fair basis. Some system
should be adopted as soon as possible to place the responsibility of the credit
on the banker, so that Americar. exporters and merchants could sell their bills
on foreign buyers without recourse on the seller. Bankers say this is not
feasible because they wish no risk, but if exporters can buy such bills to the