my own reasoning upon the importance if not necessity of this measure and to show the consensus of opinion among the leading financiers of the United States. I also append the favorable reports on a similar measure by the Committee on Banking and Currency of the Fifty-first and Fifty-second Congresses, together with communications of President Harrison and Secretary Blaine and the report of the committee on banking of the International American Conference.

BY WILLIAM H. T. HUGHes, of hughES & CO., NEw York.

Daily I make it a business to talk with anyone I meet at all interested in business with South America, and I have failed to find one person at all acquainted with the business who does not indorse the project and urge its immediate establishment. The late John B. Woodward, of Brooklyn, with whom I talked at length on the subject only a day or two before his death, urged me to push it. He had been in the South American business for thirty years and lately returned from an extended tour on the east coast of South America. His idea was that it would double our South American trade, owing to the facilities it would give our merchants and manufacturers.

If we are ever to develop our trade with the countries south of us to the extent that it can and should be developed, we must have direct banking facilities. There is an old saying that "trade follows the flag." It is equally true, I think, that "trade follows the banker." All business, or so nearly all that it is hardly worth while to cite the exceptions, now done between the United States and the Republics of Central and South America is carried on by means of credits on London. In this way the London banker virtually collects a tax on all our business and to a great extent controls it. Were the international American bank established, with agencies in all the principal cities of Central and South America, the intervention of the London banker would no longer be necessary and the tax heretofore levied by him would remain here. Competition in trade is making the profits so small that the middleman has gradually to be done away with, and for the merchant to make a living profit he must be able to get his goods as near direct from the manufacturer as it is possible, and there is no reason why an American manufacturer, knowing the standing of a firm in Rio de Janeiro, Buenos Ayres, Valparaiso, or any other South American city, should not sell him goods the same as he would sell to a merchant in San Francisco or New Orleans. The reason he does not sell to the South American merchant is that he has no means of finding out the standing and credit of the merchant as he does the standing and credit of merchants in any city in the United States.

The very essence of successful business operations is a complete knowledge of the financial and moral standing of the persons or firms with whom you have dealings. After opening business relations with his customer, the seller must have, to be able to do a business of any magnitude, the necessary banking facilities, to be able to value on his customer for the cost of the goods shipped. Were the international American bank established, and their agencies opened in all the various Central and South American cities, manufacturers would be in a position to get the information they desire, and a manufacturer in good standing in this country could negotiate his drafts on parties to whom he might sell, through the bank, at a moderate commission. This is done to-day in every large city in Europe, there being several banks in Europe devoted especially to this business.

I have been doing business for the past twenty-seven years with South America, nearly all of which has been done through credits on London, issued by agencies out there on the various London banks, such as the London and River Plate Bank, Limited, and others. And no matter how good my customers are in the cities of South America, it is an impossibility to negotiate a draft on them at any reasonable rate of exchange. Whereas, were my customers established in London, there would be no difficulty in my drawing on them at sixty or ninety days, as might be agreed, and in that way enabling me to do my business with a great deal less capital, and give such credit to my customers as they might fairly be entitled to. One reason why European manufacturers keep American manufacturers out of the South American markets is the credit they are enabled to give them, owing to the banking facilities they have. Give the American manufacturer the same facilities, and I think he will not be the last in the race.

Once the bank is established and has opened its agencies or branch banks at the various commercial centers of South America, it will become as simple a matter for any American manufacturer to deal with a house in South America as it is to-day to deal with a house anywhere in the United States.

The bank will be thoroughly posted as to the standing of the leading houses in all South American cities, and, provided the standing of the manufacturer is good, will be prepared to discount his draft drawn against his shipment.

Again, if a tanner or other manufacturer desires to import goods from South America, no matter how strong he may be financially, he can not write his customer to draw on him for the cost of his order; he must apply to a banker for a credit on London, and pay a tax to the London banker on his raw material. The establishment of the international American bank would facilitate this business also.

BY PRESIDENT Oliver s. CARTER, OF THE NATIONAL BANK OF THE REPUBLIC.

I am in favor of the bill now before Congress to carry into effect the recommendation of the International American Conference by the incorporation of the international American bank. It is what we must come to sooner or later, and the present time is auspicious for the enterprise.

BY COL. JOHN C. MCANERNEY, PRESIDENT OF THE SEVENTH NATIONAL BANK.

I have not considered the question for the international American bank establishment so as to intelligently express an opinion on the subject, but if anything can be done to promote the value of credits and exchange between the United States and the South American countries, it seems to me a patriotic effort based upon the desire to promote American credit.

BY J. EDWARD SIMMONS, President of the fourth NATIONAL BANK.

I am in favor of the plan for an international American bank, and may be quoted freely to that effect.

BY EDWIN LANGDON, PRESIDENT OF THE CENTRAL NATIONAL BANK.

I have given the matter careful consideration, and I think that the project is a very feasible one. The names of the gentlemen mentioned in the bill as incorporators of the bank are a guaranty of stability and careful management, and it is my opinion that the establishment of a bank such as is contemplated by the bill, would tend in time to draw into closer commercial relations the United States and the Central and South American Republics. This will not be achieved in a moment, but will naturally take time. It is greatly to be desired, and the establishment of the American international bank would, in my judgment, go a great way in this direction. The bill itself is apparently based upon the national-bank law and resembles it closely. There can be great ultimate good results from its adoption.

BY ISAAC ROSENWALD, PRESIDENT OF THE SOUTHERN NATIONAL BANK.

I am in favor of the project for the incorporation of the international bank now pending before Congress. I think that with proper people at the head of the concern and careful management it is bound to be a success. I can see that an international bank, with branches in the United States and in the Central and South American Republics, will tend in a great measure to facilitate and doubtless to increase our commerce with those countries. This, of course, is much to be desired, and if the incorporation under the authority of Congress of the bank projected results in such an extension of commerce, it will be a public benefit.

EXTRACT FROM LETTER OF ADOLF LADENBURG (OF LADENBURG, THALMANN & CO., BANKERS, NEW YORK) TO CHARLES R. FLINT.

I return with thanks copy of proposed bill for the international American bank. I sincerely hope you will push it through. The great success, however, of your bank. depends on the establishment of an undoubted gold standard and centralization of our banking system.

FROM A. B. HEPBURN, PRESIDENT of the THIRD NATIONAL BANK.

I understand that one of your men called on me the other day in my absence to get my opinion with reference to the proposed international bank. I have looked upon that enterprise as one of the most desirable that could be inaugurated with a view to extending our commerce with Central and South American countries. The facility of exchange is equally important with facility of transportation. I think the establishment of first-class steamship communication with these countries, coupled with international banking relations, would be a powerful instrumentality in giving the United States a large portion of the trade of those countries-a trade which from contiguity and natural ability to supply belongs to us. The time has come when we

as a nation must break our shell and cease to content ourselves with developing our domestic trade and compete for the trade of the world if we would keep our factories and laborers employed.

BY SENHOR SALVADOR DE MENDONÇA, ENVOY EXTRAORDINARY AND MINISTER PLENIPOTENTIARY OF BRAZIL TO THE UNITED STATES.

The views which, as a member of the committee on banking of the International American Conference, I took occasion to express, on the adoption of the resolution by that body, on the 8th of April, 1890, have been strengthened since that time by further observation of the causes which impede a more rapid development of the commercial relations between this country and my own; and my conviction has been deepened that, unless such causes are wholly or in great part removed, no mere sentimental considerations of international amity will be sufficient to divert the current of trade from the channels in which, from historical and economical reasons, it has so long flowed.

Surprise is often expressed by those who notice the statistics of the trade of Brazil with the United States on the one hand, and Europe on the other, when they observe that, while Brazil exports to the United States about $80,000,000 annually, it imports from that country only about $14,000,000, and that in its trade with Europe almost exactly opposite conditions prevail. In other words, the adverse balance of trade paid by the United States is pocketed by Europe, and principally by Great Britain, in discharge of the balance in her favor and against Brazil.

I have alluded to historical causes for the existing conditions and currents of Brazilian commerce. These go back to 1808, when that country emerged from its colonial dependence on Portugal, and its ports were thrown open to the commerce of the world. The policy of Portugal, like that of the other European nations, had been to restrict the trade of Brazil to the markets of the metropolis, and thus the initial direction was given to that trade, and when the barriers were removed and commerce with other nations begun, it was natural that England, the financial and political patron of Portugal, should obtain the lion's share. At that time, and for some years afterwards, no commerce was safe on the high seas that was not carried on by British ships.

The supremacy then secured has been since maintained by the energies and enterprise that are stimulated by that enormous aggregation of capital whose influence is felt in every market in the world.

It is natural and reasonable that the balance of trade against the United States in its commerce with Brazil, amounting to about $66,000,000 annually, should be settled by bills on London, and that its bankers should receive the legitimate profits on such transaction; but it is equally unreasonable that British capital should absorb the profits on the $28,000,000, which should be settled by direct exchange between the two countries instead of, as now, through London banks.

What is the condition at present, which, as far as banking facilities are concerned, hampers American trade with Brazil, and which would be remedied by the establishment of an international American bank, with branches in New York and Rio de Janeiro? It is well known that in commerce very small margins, very small profits or losses, determine the placing of orders for merchandise, and the difference of a banker's commission has to be taken into consideration in the rivalries and competitions of buyers and sellers.

Suppose a customer in Brazil desires to purchase a lot of coffee or sugar machinery. He has the catalogues of British, French, Belgian, and United States manufacturers, and finds the prices nearly equal; but the good reputation of American machinery would induce him to give the preference to the manufacturer here, even at the slightly higher price he would probably have to pay. He finds, however, that he can, through the English, French, or Belgian banks in Rio, buy a draft directly on London, Paris, or Antwerp, thus paying one banker's commission, whereas if he buys the American machinery he must pay two commissions at least, one on London and another from there on New York. In many cases, it may be imagined, this consideration determines him in favor of the purchase in Europe. This would be the case when the bill is payable at sight or at three days; but when bills are to be drawn at longer maturity, the disadvantages of the present system become still greater.

The European manufacturer or exporter is generally prepared to give the thirty days, or even nine months', credit desired by the Brazilian importer, and every facility is offered for this by the banks in the European commercial centers. The American manufacturer can not always give such credits, but even if he were disposed to do so, he has no banking facilities for that purpose. Suppose, however, the Brazilian purchaser obtains the desired credit from the American exporter or manufacturer through a London bank having a branch in New York. The latter ships his goods directly to Rio, with a nonnegotiable bill of lading, and hands a negotiable copy to the English bank in New York. The bank forwards the same to the bank in London, which, in turn, sends it to its correspondent in Rio. The goods are already in the

custom-house, paying storage charges, and can not be withdrawn until the bill of lading and invoice arrive from London and are handed to the consignee for his indorsement. Vexatious delays are sometimes occasioned from this cause, and it is but natural to suppose that such delays are never shortened from any desire entertained by the English banking interests to expedite the transaction of business between Brazil and the United States.

This state of things can easily be remedied by the establishment of an International American Bank. It is not to be supposed that the creation of such an institution will change the whole course of Brazilian foreign trade, but it will certainly remove some of the embarrassments it has long suffered. It will respond to a need and demand that already exists, and has long existed, and provide for the increase which can not fail to follow a better system of banking facilities. It will find abundant profit for the American capital invested in it in the business that legitimately belongs to the settlement of American and Brazilian trade, as far as they balance, and may reasonably be expected to operate in the direction of reducing the great balance which now exists against the United States to the advantage of European trade.

It appears that Federal legislation is necessary for the establishment of such a bank, and I hope that such legislation may be promptly secured, as no one can be more interested than myself in seeing realized the largest development of the commercial relations between this country and my own, a development in which such a bank, I believe, will be an active and productive agency.

A BILL TO CARRY INTO EFFECT THE RECOMMENDATIONS OF THE INTERNATIONAL AMERICAN CONFERENCE BY THE INCORPORATION OF THE INTERNATIONAL AMERICAN BANK.

On December 4 a bill (S. 303) with the above title was introduced into the Senate by Mr. Gray, of Delaware, and referred to the Committee on Foreign Relations; and on December 9 a similar bill (H. R. 875) was introduced by Mr. Hitt into the House of Representatives and referred to the Committee on Banking and Currency.

The object of these bills is to carry into effect the recommendation unanimously adopted on April 14, 1890, by the International American Conference, held in the city of Washington. This recommendation was indorsed by President Harrison in his message transmitted to Congress, dated May 27, 1890, inclosing a letter from the Hon. James G. Blaine, Secretary of State, dated May 27, 1890, also approving of the recommendation of the Conference.

Bills similar in character to those introduced by Mr. Gray and Mr. Hitt were introduced into the Fifty-first and Fifty-second Congresses.

The Committee on Banking and Currency of the Fifty-first Congress, through Mr. Dorsey, chairman, in report No. 2561, unanimously recommended the passage of the bill; and the same committee, through Mr. Bacon, chairman, in the Fifty-second Congress, in report No. 985, also unanimously recommended the passage of the bill. In neither Congresses, however, was the bill considered by the House, owing to the pressure of public business.

No stronger argument can be adduced in favor of the bill than is contained in the report of Mr. Bacon as submitted April 5, 1892, from the Committee on Banking and Currency.

[House Report No. 2561, Fifty-first Congress, first session.]

INTERNATIONAL AMERICAN BANK.

Mr. Dorsey, from the Committee on Banking and Currency, submitted the following report:

No stronger argument in favor of the passage of the bill herewith presented could be made than that which is contained in the report unanimously adopted by the International American Conference, and transmitted by the President, in his message, accompanied by the report of the Secretary of State, read, and referred on the 27th of May of the present year, and which report is hereinafter incorporated. In view of the state of facts so ably and succinctly presented in said report, there can be no doubt, so far as your committee is advised and believes, of the desirability of the passage of an act to create a corporation with full power to perform the functions, the necessity for the performance of which is so clearly shown in said report. The passage of such an act will, in the opinion of your committee, be of the utmost advantage to international American commerce. Such being the case, the only remaining question is as to the powers which should be granted to such a corporation, and the extent to and manner in which the exercise of such powers should

be guarded and controlled for the purpose of securing its shareholders, depositors, and those doing business with it, and vesting the necessary visitorial powers in the Secretary of the Treasury and Comptroller of the Currency.

With these objects especially in view, the committee now reports a substitute for bill H. R. 10590, as introduced by Mr. Hitt, and which substitute, while preserving all the essential features of the original bill, has been drawn with the object especially in view of maintaining the largest and most thorough control of the corporation without in any manner making the National Government a party to, or responsible for, the business the corporation may do.

The committee, with the cooperation of the Comptroller of the Currency, has incorporated into the substitute bill the very beneficial provisions of the national bank act, requiring regular reports to be filed with the Department of the Treasury, and that general publicity be given periodically through newspaper publication as to the condition of the affairs of the corporation and vesting with the Comptroller of the Currency and the Secretary of the Treasury full power to at any and all times examine into the affairs of the corporation, empowering these officers to at any time compel any impairment of its capital stock to be made good, failing which the corporation may be wound up as by the act provided.

The corporation herein proposed to be erected can in no manner become a competitor of the national banks, but will have, in addition to certain powers now enjoyed by the national banks, the right to issue mercantile and bankers' letters of credit in the same manner as such letters may be issued by any firm of private bankers, and to enter upon such other business as may be necessarily incident to the performance of a general international exchange and banking business, and filling the want so fully described in the report of the International American Conference.

While the act has been so drawn as to give full and ample powers to enable the corporation to meet the purposes for which it is incorporated, the utmost regard has been paid to the following suggestion of the President as contained in his message transmitting the report of the International American Conference, as follows:

"It is not proposed to involve the United States in any financial responsibility, but only to give the proposed bank a corporate franchise, and to promote public confidence by requiring that its condition and transactions shall be submitted to a scrutiny similar to that which is now exercised over the do estic banking system." It should be remembered that the corporation will have no power to issue its notes as a circulating medium.

[House Report No. 985, Fifty-second Congress, first session.]

INTERNATIONAL AMERICAN BANK.

Mr. Bacon, from the Committee on Banking and Currency, submitted the following report:

The Committee on Banking and Currency, having had under consideration House bill 5029, do respectfully report the same back to the House with the recommendation that the said bill do lie upon the table, and that the accompanying bill be substituted therefor, and that the substitute do pass.

The bill offered as a substitute differs from the original measure only in certain formal matters, but as the formal changes are quite numerous your committee report the accompanying bill as a substitute in lieu of the original measure.

The Fiftieth Congress enacted a law by virtue of which the President of the United States in the year 1888 invited the Governments of Mexico, Central and South America, Haiti, and San Domingo to send representatives to meet in the city of Washington and attend an International American Conference. One of the purposes for which this conference was authorized by Congress and called, as expressed in the act and invitation, was as follows: "For considering questions relating to the improvement of business intercourse and means of direct communication between said countries." In accordance with that invitation representatives of the several South American Republics met in the city of Washington in October, 1889. There was appointed by that Conference a committee on banking. That committee reported to the Conference on the 8th of April, 1890, and a discussion followed, in which the representatives of the various Governments took part, and it resulted in the adoption of the following resolution:

"Resolved, That the Conference recommends to the Governments here represented the granting of liberal concessions to facilitate inter-American banking, and especially such as may be necessary for the establishment of an international American bank, with branches or agencies in the several countries represented in this Conference."

It seemed to be the unanimous opinion of the representatives of all the Governments represented at that Conference that the locus of the principal office of the international American bank must be in the United States of America, because that country had the largest commerce of all those represented in that Conference.