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REMARKS OF H. P . WILLIS, At Boston, J a n u a r y l b , 1*317* Mr* Chairman, and Members of t h e Boston Chapter cf t h e American I n s t i t u t e of Banking: I have been t h e g u e s t of t h e I n s t i t u t e of Banking a t many of i t s c h a p t e r s E a s t and West i n t h e U n i t e d S t a t e s . , b u t n e v e r , I t h i n k , i n Boston. My e x p e r i e n c e a t t h e s e m e e t i n g s has been so happy, t h a t t o add a n o t h e r t o t h e l i s t of c h a p t e r s I have known., i s always a t e m p t a tion d i f f i c u l t to r e s i s t . I n t h i a c a s e yout* i n v i t a t i o n has found me i n a r e c e p t i v e mood because you have asked me t o t e l l you what I t h i n k about some m a t t e r s which have long been a f a v o r i t e s u b j e c t of s t u d y w i t h me, and i n which I have l a t e l y had some d i r e c t e x p e r i e n c e . In- t e r e s t i n g as t h e P h i l i p p i n e N a t i o n a l Bank and t h e whole q u e s t i o n of P h i l i p p i n e t r a d e i s i n and of i t s e l f , i t s l a r g e s t i n t e r e s t i s found i n t h i s - t h a t i t i s but one phase of a g r e a t problem by which t h e U n i t e d S t a t e s i s c o n f r o n t e d today* I s h a l l r e f e r to the Philippine National Bank and i t s e x p e r i e n c e t h e r e f o r e merely t o a f f o r d p r a c t i c a l i l l u s t r a t i o n of my g e n e r a l t h o u g h t on t h e b r o a d e r q u e s t i o n . For many y e a r s p a s t American m e r c h a n t s and m a n u f a c t u r e r s have been t a l k i n g of e x p o r t t r a d e . A s s o c i a t i o n s have been formed , m e e t i n g s f r e q u e n t l y h e l d , and v a l u a b l e i d e a s e x p r e s s e d . Government b u r e a u s have d i l a t e d a t l e n g t h upon r e a s o n s why American m a n u f a c t u r e r s n e v e r s e c u r e d s a t i s f a c t o r y c o n t r o l of f o r e i g n m a r k e t s , and Government a g e n t s I B S ? - 2 976, - have t r a v e l e d a l l over t h e world i n q u i r i n g i n t o t h e r e a s o n s why we d i d n o t s e l l more of o u r goods t o t h e n a t i v e s of d i s t a n t r e g i o n s * There had been v e r y l i t t l e r e s u l t from a l l t h i s d i s c u s s i o n and i n v e s t i g a t i o n u n t i l t h e "breaking out of t h e European war, when many consumers t h r o u g h out t h e world who had p r e v i o u s l y gone f o r t h e i r s u p p l i e s t o p r o d u c e r s who s t u d i e d t h e i r needs and u n d e r t o o k t o s u p p l y them, t u r n e d t o t h e U n i t e d S t a t e s , n o t because t h e y wanted t o do s o , b u t b e c a u s e t h e r e was no c h o i c e . • Now we have b u i l t up a g r e a t f o r e i g n t r a d e , amounting f o r t h e y e a r which has j u s t ended t o n o t l e s s t h a n $ 5 , 4 0 0 , 0 0 0 , 0 0 0 i n e x p o r t s , and more t h a n $ 2 , 3 0 0 , 0 3 0 , 0 0 0 i n i m p o r t s , a n e t b a l a n c e many t i m e s t h a t e v e r r e a l i z e d i n any p r e c e d i n g y e a r . This immense e x p o r t t r a d e c o n - s i s t e d t o t h e e x t e n t of ^0% of o m a n u f a c t u r o i . g o o d s , and w h i l e t h e r e has been some c o m p l a i n t of t h e q u a l i t y of what we have t u r n e d o u t , I think i t i s s a f e t o say t h a t xhe goods have g i v e n g e n e r a l s a t i s f a c t i o n , n o t w i t h s t a n d i n g t h a t t h e y have o f t e n been r e g a r d e d a s h i g h — p r i c e d . Our t r a d e w i t h t h e P h i l i p p i n e s and t h e F a r E a s t f u r n i s h e s an example of what has o c c u r r e d t h a t i s v e r y i n t e r e s t i n g , t h e mora so b e c a u s e of t h e f a c t t h a t we have a s p e c i a l r e l a t i o n t o t h e P h i l i p p i n e I s l a n d s . a r e b o t h a f o r e i g n c o u n t r y and a p a r t of o u r t e r r i t o r y . not p a r t i c u l a r l y i n t e r e s t e d in the P h i l i p p i n e I s l a n d s . P e r h a p s you a r e You have been h e a r i n g of them f o r a l o n g t i m e from t h e p o l i t i c a l s t a n d p o i n t « a s e r i o u s and i m p o r t a n t n a t i o n a l problem i n t h a t c o n n e c t i o n . h e r e t o d e a l w i t h them i n any s u c h a s p e c t . They They a r e I a# n o t What I w i s h t o c a l l t o y o u r a t t e n t i o n i s t h e i r t r a d e and t h e i r r e l a t i o n t o our b u s i n e s s . The P h i l i p - p i n e I s l a n d s have t o d a y a b o u t 9 , 0 0 0 , 0 0 0 p e o p l e , and t h e i r t o t a l t r a d e w i t h o t h e r c o u n t r i e s c o n s i s t e d d u r i n g t h e y e a r 1915 of a b o u t $ 1 0 3 , 0 0 0 , 0 0 0 1.928 976. - 3 - of which $ 5 4 , 0 0 0 , 0 0 0 was e x p o r t e d , w h i l e t h e s e imports about $ 4 9 , 0 0 0 , 0 0 0 was i m p o r t e d . Of came from t h e U n i t e d S t a t e s , w h i l e 44$ of t h e e x p o r t s were s e n t t o t h e U n i t e d S t a t e s . Ten y e a r s p r e v i o u s l y > i n 19^5/ t h e t o t a l t r a d e of t h e I s l a n d s was l e s s thari t w o - t h i r d s what i t i s today , t h e e x p o r t s t o a l l c o u n t r i e s amounting t o $ 3 3 , 0 0 0 , 0 0 0 , w h i l e t h e i m p o r t s from a l l c o u n t r i e s were $30.,000,000, a p p r o x i m a t e l y * Of t h e $ 3 3 ; 0 0 0 , 0 0 0 of e x p o r t s a t t h a t t i m e , j i l i t t l e more t h a n 40$ was s h i p p e d t o t h e U n i t e d S t a t e s , w h i l e of t h e i m p o r t s i n t o t h e P h i l i p p i n e I s l a n d s , o n l y a b o u t 18$ came from t h e U n i t e d S t a t e s • During t h e y e a r 1916 t h e t o t a l v a l u e of s h i p m e n t s of d o m e s t i c m e r c h a n d i s e t o t h e P h i l i p p i n e s from t h i s c o u n t r y will, it i s e s t i m a t e d , aggregate about $22,000,000, while our imports from t h e I s l a n d s may be e s t i m a t e d a t $ 3 4 , 0 0 0 ^ 0 0 0 . It i s worthwhile t o s t u d y w i t h some c a r e and 4 s t a i l t h e c o n d i t i o n s u n d e r which t h i s t r a d e h a s been d e v e l o p e d - F u l l j u s t i c e ought t o be done t o t h e e f f o r t s of m a n u f a c t u r e r s and s h i p p e r s i n m e e t i n g t h e n e e d s of t h e n a t i v e p o p u l a t i o n , p a r t i c u l a r l y a s t h e problem of i n s u l a r t r a d e i s i n p r i n c i p l e t h e same a s t h e problem of f o r e i g n t r a d e e l s e w h e r e * T h i s problem i n c l u d e s the following p r i n c i p a l elements: D e s i r e on t h e p a r t of American m a n u f a c t u r e r s t o s u p p l y goods a c c e p t a b l e t o b u y e r s , and t h e making of t r a n s p o r t a t i o n of o t h e r a r r a n g e ments n e e d f u l t o t h e cheap and s a t i s f a c t o r y d e l i v e r y of t h e i r g o o d s . Development of b u y i n g power and demand f o r American goods among f o r e i g n consumers. E s t a b l i s h m e n t of p r o f i t a b l e and m u t u a l t r a d e r e l a t i o n s so t h a t e x p o r t s go from t h e U n i t e d S t a t e s "by way of payment f o r i m p o r t s . 976. 1929 - 4- C r e a t i o n of e c o n o m i c a l banking connections. For many y e a r s t h e s e e l e m e n t s i n t h e problem have b e e n n e g l e c t e d i n t h e d i s c u s s i o n of A m e r i c a n - P h i l i p p i n e t r a d e , b u t t o d a y some of them a r e a c c e p t e d , and e x p o r t and i m p o r t b u s i n e s s i s s t e a d i l y improving. A g r e a t o b s t a c l e t o t h e f u l l development of b u s i n e s s h a s b e e n found i n t h e t r a n s p o r t a t i o n s i t u a t i o n , w h i c h , of c o u r s e , has b e e n bad a l l t h r o u g h t h e European w a r . I n s p i t e of t h i s h a n d i c a p , t r a d e i s g e n e r a l l y a d m i t t e d t o be i n a very p r o m i s i n g and s a t i s f a c t o r y s t a t e * The s u g a r . i n d u s t r y a t p r e s e n t i s h i g h l y p r o f i t a b l e w h e r e v e r modern m a c h i n e r y h a s been i n s t a l l e d , a s i t has a t a number of p o i n t s i n t h e I s l a n d s . Sub- s t a n t i a l i n t e r e s t i n t h e s u g a r b u s i n e s s i s b e i n g shown by o u t s i d e i n v e s t o r s , and t h e r e i s r e a s o n t o e x p e c t t h a t i n t h e n e a r f u t u r e t h e r e w i l l be a c o n s i d e r a b l e development of modern s u g a r m i l l s e q u i p p e d w i t h p r o p e r m a c h i n e r y and a b l e t o p r o d u c e good c e n t r i f u g a l s u g a r f o r e x p o r t . The cocoanut o i l i n d u s t r y i s a l s o showing marked d e v e l o p m e n t , t h e b u s i « . n e s s of e x t r a c t i n g o i l on t h e s p o t h a v i n g been r e c e n t l y i n t r o d u c e d i n p l a c e of t h e o l d e r method of s h i p p i n g t h e c o p r a a b r o a d f o r e x t r a c t i o n of t h e o i l . The c i g a r b u s i n e s s h a s b e e n g r e a t l y s t i m u l a t e d by t h e h i g h p r i c e s of t o b a c c o i n Europe and t h e U n i t e d S t a t e s . p r i c e a n d , as u s u a l , i s i n s t r o n g demand. Hemp i s h i g h i n In consequence of t h e good p r i c e s r e a l i z e d f o r t h e i r p r o d u c t s t h e n a t i v e s have become b e t t e r c u s t o m e r s t h a n i n t h e p a s t , and t h e i r d e s i r e f o r American goods of a l l k i n d s makes t h e I s l a n d s a d e s i r a b l e m a r k e t f o r t e x t i l e s , automobiles, sewing m a c h i n e s , i r o n and s t e e l p r o d u c t s of &11 k i n d s , v a r i o u s forms of w e a r i n g a p p a r e l ( p a r t i c u l a r l y s h o e s ) , c a n n e d g o o d s , a n d a g r e a t v a r i e t y pf m a n u f a c t u r e s , e s p e c i a l l y t h o s e which have a R e l a t i v e l y l a r g e v a l u e i n s m a l l b u l k , and hence a r e a b l e t o b e a r c o m p a r a t i v e l y h i g h r a t e s of f r e i g h t . IbLt Americana i n t r a d i n g w i t h t h e P h i l i p p i n e s have committed t h e e r r o r of s u p p o s i n g t h a t a l a r g e p a r t of t h e i r m a r k e t would d e pend upon t h e growth o i an American colony i n t h e I s l a n d s . They a r e now f i n d i n g i t more p r o f i t a b l e t o a d a p t t h e m s e l v e s t o t h e n a t i v e demands Our e x p o r t e r s a r e t h u s a t l a s t s e e m i n g l y w o r k i n g a l o n g somewhat t h e r i g h t l i n e s > a l t h o u g h t h e y a r e t r e a t i n g t h e s u b j e c t r a t h e r too narrowly, f a i l i n g t o r e a l i z e t h a t t h e same k i n d of e n e r g y and e n t e r p r i s e needed t o e x t e n d t h e i r s a l e s i n t h e United S t a t e s , i s needed in t h e P h i l i p p i n e I s l a n d s ; while they t o o o f t e n n e g l e c t t h e f a c t t h a t t h e y must do a l l t h e y Can t o s t i m u l a t e i m p o r t a t i o n s from t h e I s l a n d s in o r d e r t o e n l a r g e t h e b u y i n g power of t h e n a t i v e s , and t h e r e b y improve t r a d e w i t h t h e U n i t e d States. But t h i s p r o g r e s s may o r may n o t be s t a b l e i n t h e P h i l i p - pine Islands, j u s t a s i n t h e case of o t h e r f o r e i g n c o u n t r i e s . There i s p r o b a b l y more r e a s o n t o b e l i e v e i n i t s s t a b l i l i t y b e c a u s e of t h e s t e a d y growth of t h e t r a d e w i t h t h e P h i l i p p i n e s b e f o r e t h e w a r , and b e c a u s e of t h e p o l i t i c a l r e l a t i o n s between t h e United S t a t e s and t h e I s l a n d s . Nevertheless, i n t h i s c a s e , as i n so many o t h e r s , t h e i n c r e a s e i n b u s i n e s s w i t h t h e United S t a t e s h a s been p a r t l y t h e r e s u l t pf n e c e s s i t i e s growing o u t of t h e d i s t u r b a n c e of w o r l d trade, ers, and i s n o t s o l e l y due t o e f f o r t s on t h e p a r t of m a n u f a c t u r T h i s t r a d e , m o r e o v e r , h a s been c a r r i e d on u n d e r e x t r e m e l y d i f f i c u l t conditions in banking, Financial r e l a t i o n s with the 976 - 6 - P h i l i p p i n e s have b e e n r u d i m e n t a r y and u n s a t i s f a c t o r y , and t h e I s l a n d s have had t o depend v e r y l a r g e l y upon t h e a i d of f o r e i g n banking c a p i t a l . What i s g o i n g t o 'become of our f o r e i g n t r a d e a f t e r t h e war i s o v e r , n o t m e r e l y w i t h t h e P h i l i p p i n e I s l a n d s , b u t w i t h other countries? This i s a u n i v e r s a l s u b j e c t of d i s c u s s i o n azld inquiry a t the present time. Some b e l i e v e t h e o u t l o o k w i l l be b r i g h t e r and b e t t e r f o r our f o r e i g n b u s i n e s s t h e n t h a n i t i s nowj o t h e r s seem t o e x p e c t a g e n e r a l r e a c t i o n , w h i l e s t i l l o t h e r s who want t o be s a f e , p r e d i c t a p e r i o d of " t a p e r i n g o f f , " d u r i n g which t r a d e w i l l g r a d u a l l y decline to something l i k e i t s old l e v e l . I do n o t b e l o n g t o any of t h e s e s c h o o l s of t h o u g h t , b u t am e m p h a t i c a l l y a . b e l i e v e r i n t h e d o c t r i n e t h a t t h e d i r e c t i o n and amount of b u s i n e s s a f t e r t h e w a r i s o v e r w i l l depend v e r y l a r g e l y upon ourselves. If we want t h e b u s i n e s s , we can have i t ; and we can h a v e i t i n l a r g e measure b e c a u s e of t h e immense demand t h a t w i l l e x i s t f o r o u r goods d u r i n g t h e g r e a t p e r i o d of r e c o n s t r u c t i o n t h a t w i l l s e t i n when t h e war i s o v e r . Moreover, we can, i f we w i l l , preempt many u n d e v e l o p e d f i e l d s of f o r e i g n b u s i n e s s w h i c h , a t t h e p r e s e n t t i m e , a r e c o m p a r a t i v e l y f r e e from c o m p e t i t i o n , and w h i c h , a f t e r t h e w a r , w i l l n o t be e x p l o i t e d even to t h e e x t e n t t h e y have been i n t h e p a s t , b e c a u s e e x p o r t e r s and m a n u f a c t u r e r s i n f o r e i g n c o u n t r i e s w i l l be u n a b l e t o r e g a i n t h e i r h o l d i m m e d i a t e l y , and w i l l o n l y a f t e r c o n s i d e r a b l e t i m e , be i n p o s i t i o n t o d e v o t e 19 976 -7- t o t h e c u l t i v a t i o n of t h e s e f o r e i g n f i e l d s t h e same e n e r g y t h e y gave them b e f o r e t h e i n t e r n a t i o n a l c o n v u l s i o n which began i n August, 1914. l 7hat i s t h e d u t y of t h e American b a n k i n g and b u s i n e s s community i n t h e s e c i r c u m s t a n c e s ? I do n o t w i s h i n t h e l e a s t t o u n d e r e s t i m a t e what h a s b e e n done by some e n t e r p r i s i n g and a b l e b u s i n e s s c o n c e r n s i n p r e p a r i n g t h e m s e l v e s f o r t h e c o n t i n u e d development of t h e i r f o r e i g n markets. The e f f e c t of t h e g r e a t f o r e i g n t r a d e t h a t h a s b e e n t h r o w n , one m i g h t s a y f o r c e d , i n t o o u r hands d u r i n g t h e p a s t two y e a r s , has been t o e d u c a t e many e l e m e n t s of o u r b u s i n e s s p u b l i c o u t of t h e p a r o c h i a l , a l m o s t i n s u l a r a t t i t u d e on t h i s s u b j e c t t h e y had e n t e r t a i n e d i n t h e p a s t . They now r e c o g n i z e t h e i m p o r t a n c e of f o r e i g n b u s i n e s s as a b a l a n c e w h e e l and r e g u l a t o r of a l l b u s i n e s s , as a d i v e r s i f i e r of p r o d u c t i o n , as a means of e q u . l i z i n g and stabilizing prices, and l a s t , b u t n o t l e a s t , a s a s o u r c e of v a l - u a b l e a d d i t i o n a l p r o f i t , i r r e s p e c t i v e of t h e s t r e n g t h of home d e mands. But i t must a l s o be a d m i t t e d t h a t t h e r e a r e l a r g e s e c t i o n s of t h e b u s i n e s s community which a r e i n d i f f e r e n t t o t h i s p o i n t of View, and which a r e a p p a r e n t l y s i m p l y w a i t i n g f o r s o m e t h i n g t o t u r n u p , l e a v i n g i t t o P r o v i d e n c e o r some p o l i t i c a l p a r t y t o t a k e c a r e of t h e i r f u t u r e b u s i n e s s a b r o a d , t r u s t i n g t h a t when t h e war i s o v e r b u s i n e s s may c o n t i n u e p r e t t y good f o r a t i m e a t l e a s t , as Mr. K i p l i n g h a s e x p r e s s e d i t , some s a v i n g s i g n . " " w a i t i n g some or, a s y wonder, h o p i n g For t h e s e , should they continue t h e i r p r e s e n t 1 9 3 3 976 a t t i t u d e , t h e r e i s b u t l i t t l e p r o s p e c t of s u c c e s s , and. t h e y must e x p e c t t o s e e t h e i r umronted and. u n e x p e c t e d teusiness disappear i n some c a s e s a l m o s t as q u i c k l y as i t came t o them, u n l e s s t h e r e many i s d e f i n i t e and f a r s e e i n g a c t i o n on t h e i r p a r t . There a r e / l i n e s of work i n t h e way of t h e development of commercial p r e p a r e d n e s s , and which must be u n d e r t a k e n i n t h e n e a r f u t u r e ; b u t of a l l t h e s e t h e r e i s b u t one t h a t i s germane t o t h e p u r p o s e of t h i s m e e t i n g - t h e development of a b e t t e r c o n t r o l 'of i n t e r n a t i o n a l b a n k i n g by o u r own b a n k e r s and f i n a n c i e r s . I t i s t h i s m a t t e r on which I w i s h t o s p e a k t o you s a r i o u s l y . For many y e a r s p a s t t h e r e has been an a l m o s t u n l i m i t e d amount of t a l k a b o u t f o r e i g n b a n k i n g , and y e t t h e number of b a n k i n g e n t e r p r i s e s a c t u a l l y e s t a b l i s h e d abroad by American b a n k e r s p r i o r t o t h e p a s s a g e of t h e F e d e r a l p e s e r v e A c t , c o u l d be counted on t h e f i n g e r s of one h a n d . The F e d e r a l R e s e r v e A c t , a s you know, p r o v i d e s f o r t h e e s t a b l i s h m e n t of b r a n c h b a n k s , by p r o p e r l y qualified institutions, i n f o r e i g n c o u n t r i e s , and i t a l s o a u t h o r - i z e s t h e F e d e r a l r e s e r v e banks t o e s t a b l i s h a g e n c i e s i n s u c h c o u n tries. Only two n a t i o n a l b a n k s , so f a r as I am a w a r e , have t a k e n a d v a n t a g e of t h i s p e r m i s s i o n , and of t h e s e b u t o n e , an e m i n e n t and a b l y managed i n s t i t u t i o n of g r e a t r e s o u r c e s and f a r - r e a c h i n g v i s i o n , h a s e n t e r e d t h e f i e l d on a l a r g e s c a l e . A few months ago t h e r e was an o u t c r y among b u s i n e s s m e n ' s a s s o c i a t i o n s f o r an amendment t o t h e F e d e r a l R e s e r v e Act t h a t would p e r m i t b a n k e r s t o j o i n t o g e t h e r f o r . 1984 976 —Q«-» t h e p u r p o s e of o r g a n i z i n g s u c h "branch i n s t i t u t i o n s . The demand was h e e d e d , and on September 7, 1916, C o n g r e s s , a t t h e r e q u e s t of t h e F e d e r a l R e s e r v e Board, so amended t h e F e d e r a l R e s e r v e Act as t o p e r m i t such j o i n t l y owned banks t o be o r g a n i z e d . Thus f a r no such banks have b e e n e s t a b l i s h e d , and I am n o t aware of any p r o p o s a l s t o c r e a t e them t h a t a r e l i k e l y t o come t o a head i n the near f u t u r e . P e r h a p s t h e r e a r e some of which I am not a w a r e , b u t c e r t a i n l y t h e movement has n o t gone f a r , been s t a r t e d * if i n d e e d i t has e v e r We must c o n c l u d e , t h e r e f o r e , t h a t t h e banks of t h e c o u n t r y have n o t gone a c t i v e l y i n t o t h e t a s k of p r e p a r i n g t h e m s e l v e s f o r t h e s t r u g g l e t'o r e t a i n our f o r e i g n t r a d e a f t e r t h e change of c o n d i t i o n s which a l l admit must come when European c o n d i t i o n s materially alter, and when c o m p e t i t i o n i s r e s t o r e d t o s o m e t h i n g l i k e i t s former i n t e n s i t y . The F e d e r a l r e s e r v e s y s t e m has made a b e g i n n i n g by u n d e r t a k i n g p r e l i m i n a r y a r r a n g e m e n t s l o o k i n g t o t h e d e s i g n a t i o n of f o r e i g n a g e n c i e s i n t e n d e d t o a s s i s t i n f u l f i l l i n g t h e p u r p o s e s of t h e s y s t e m i n so f a r as t h e s e r e l a t e t o f o r e i g n operations. I need n o t , however, i n s i s t upon t h e f a c t t h a t t h e F e d e r a l r e s e r v e s y s t e m has a p u r p o s e which i s e s s e n t i a l l y d i f f e r e n t from t h a t of o r d i n a r y commercial b a n k s , and t h a t w h a t e v e r i t may do i n p r o m o t i n g our r e l a t i o n s w i t h f o r e i g n c o u n t r i e s and in a i d i n g i n t h e g e n e r a l p l a n t o promote t h e w e l f a r e of t h e American discount market, i t can n o t p e r f o r m t h e t a s k which o n l y s t r o n g com- m e r c i a l l y o r g a n i z e d i n s t i t u t i o n s can f u l f i l l - t h a t of e x p l o i t i n g and d e v e l o p i n g t h e f o r e i g n m a r k e t i n t h e i n t e r e s t of our own b u s i n e s s community. I t i s t o be f e a r e d t h a t some of our b a n k e r s look a t t h i s q u e s t i o n as if i t were a q u e s t i o n of immediate p r o f i t s o l e l y . They a r e i n c l i n e d t o i n q u i r e i n t o t h e p o s s i b l e p r o f i t s t o be g a i n e d by t h e e s t a b l i s h m e n t of b r a n c h e s and c o n n e c t i o n s a b r o a d , a s if and t h e w e l f a r e of t h e i r i n s t i t u t i o n s . i t a f f e c t e d only them The q u e s t i o n i s , however, a good d e a l b r o a d e r t h a n t h i s , s i n c e , as I have j u s t shown, i t i n v o l v e s t h e whole m a t t e r of r e t a i n i n g o u r t r a d e and d e v e l o p i n g i t i n m a r k e t s o t h e r t h a n our own d o m e s t i c f i e l d s . The b u s i n e s s man w i l l n o t be a b l e u n d e r e x i s t i n g c o n d i t i o n s i n t r a d e and i n d u s t r y , t o c a r r y on t h e campaign alone. He must have t h a t p o w e r f u l a s s i s t a n c e which only t h e banker c a n a f f o r d , and t h i s c a n n o t be r e n d e r e d w i t h o u t s p e c i a l o r g a n i z a t i o n and c o o p e r a t i o n f o r f o r e i g n t r a d e i n t h e way t h a t I have spoken o f . There a r e two methods by which<such e f f e c t i v e c o o p e r a t i o n c a n be a c c o m p l i s h e d ; one, t h e a c t u a l e s t a b l i s h m e n t of b r a n c h e s a b r o a d , t h e o t h e r t h e e s t a b l i s h m e n t of c o n n e c t i o n s w i t h some i n s t i t u t i o n which w i l l f a i t h f u l l y and e a r n e s t l y r e p r e s e n t t h e i n t e r e s t s of o u r own b a n k e r s and b u s i n e s s men i n t h o s e f o r e i g n c o u n t r i e s . And j u s t h e r e l e t me s p e a k t o you b r i e f l y of t h e P h i l i p p i n e N a t i o n a l Bank i n i t s r e l a t i o n t o American t r a d e and b u s i n e s s . I have a l r e a d y e x p l a i n e d t h a t o u r t r a d e development i n t h e P h i l i p p i n e I s l a n d s t h u s f a r has b e e n p a r t l y t h e r e s u l t of f o r t u i t o u s c o n d i t i o n s , a n d p a r t l y t h e r e s u l t of a g r a d u a l c o m p r e h e n s i o n of t h e n e e d s and c h a r a c t e r i s t i c s of O r i e n t a l b u y e r s . I have a l s o b r i e f l y s u g g e s t e d 1936 - 976. 11 - t h a t t h i s development has o c c u r r e d u n d e r v e r y d i f f i c u l t b a n k i n g c o n d i t i o n s » In China and J a p a n t h e r e a r e a number of n o t a b l e f i n a n c i a l i n s t i t u t i o n s of l a r g e c a p i t a l i z a t i o n , sound management and b r o a d c o n n e c t i o n s . Some of t h e s e i n s t i t u t i o n s have b r a n c h e s i n M a n i l a , and i n t h e p a s t have do as a l a r g e p a r t of t h e b a n k i n g b u s i n e s s t h e r e . There has been no p a r - t i c u l a r r e a s o n why t h e y s h o u l d s e e k t o d e v e l o p t h e r e s o u r c e s of t h e P h i l i p p i n e s , and t h e y have v e r y A a t u r a l l y c o n f i n e d t h e m s e l v e s q u i t e g e n e r a l l y t o exchange o p e r a t i o n s and a l i m i t e d c l a s s of commercial b u s i n e s s in the Islands. The P h i l i p p i n e Government h a s been o b l i g e d a t t i m e s t o s u p p l e m e n t l o c a l b a n k i n g a c t i v i t i e s by making a d v a n c e s , sometimes t h r o u g h l o c a l b a n k s , t o a g r i c u l t u r a l and o t h e r e n t e r p r i s e s i n t h e P h i l i p p i n e s . As i s w e l l known, i t has a l s o e x e r c i s e d t h r o u g h i t s T r e a s u r y Department t h e f u n c t i o n of m a i n t a i n i n g t h e c u r r e n c y of t h e c o u n t r y a t a p a r i t y with gold. I t h a s been f e l t f o r a good w h i l e t h a t s o m e t h i n g more was n e e d e d , and t h i s w i t h o u t i n t h e s l i g h t e s t d e g r e e r e f l e c t i n g upozl t h e s e r v i c e a l r e a d y r e n d e r e d by b a n k e r s o r o u t s i d e i n s t i t u t i o n s which have e s t a b l i s h e d t h e m s e l v e s i n t h e P h i l i p p i n e s , o r by t h e e f f o r t s of s u c h l o c a l c a p i t a l as i s i n v e s t e d i n the banking b u s i n e s s t h e r e . The p u r p o s e t o be a c c o m p l i s h e d was t h a t of f u r t h e r i n g and d e v e l o p i n g l o c a l b u s i n e s s , of c o n n e c t i n g i t w i t h t h e t r a d e and b a h k i n g o r g a n i s a t i o n s of t h e U n i t e d S t a t e s , and of i n j u r i n g a f t e r t h e t e r m i n a t i o n of t h e p r e s e n t s p e c i a l and p e c u l i a r c o n d i t i o n s , a c o n t i n u a n c e and improvement of t h e t r a d e p r o g r e s s c h a r a c t e r i s t i c of t h e r e c e n t p a s t . The P h i l i p p i n e ; N a t i o n a l Bank i s t h u s a n a t u r a l o u t g r o w t h of c o n d i t i o n s , and a f f o r d s a s u g g e s t i o n of one way i n which d i s t i n c t and o r g a n i z e d e f f o r t must be made. l o o k i n g t o t h e r e t e n t i o n and improvement of f o r e i g n t r a d e . The Bank h&s t a k e n over most of t h e b a n k i n g f u n c t i o n s h e r e t o f o r e e x e r c i s e d by t h e Government, and i s s u p p l e m e n t i n g e x i s t i n g b a n k i n g i n s t i t u t i o n s by u n d e r t a k i n g o p e r a t i o n s which t h e y have n o t c a r e d t o go i n t o , or e l s e were n o i f i t t e d t o t a k e u p . I t i s t o some e x t e n t u n a v o i d a b l y o c c u p y i n g t h e same f i e l d a s t h e s e o t h e r i n s t i t u t i o n s , but i t i n no wise s e e k s t o l i m i t t h e i r b u s i n e s s , but f a t h e r t o f u i ' t h d r i t . Since i t s o r g a n i z a t i o n i t has s t o o d ready a t a l l t i m e s t o r e d i s c o u n t any p a p e r t h a t might be p r e s e n t e d t o i t l o c a l l y » As t i m e goes on, i t may be e x - p e c t e d t o e s t a b l i s h b r a n c h e s e l s e w h e r e i n t h e O r i e n t , and p a r t i c u l a r l y i n t h e P h i l i p p i n e s , and t h u s t o become a g e n e r a l O r i e n t a l i n s t i t u t i o n , n o t c confining itself e x c l u s i v e l y t o the P h i l i p p i n e s , but endeavoring t o de- v e l o p t r a d e between t h e P h i l i p p i n e s and o t h e r p a r t s of t h e E a s t . p r e s e n t i t s work i s n a t u r a l l y c o n f i n e d t o t h e I s l a n d s t h e m s e l v e s . For t h e I t has a l r e a d y e s t a b l i s h e d t w e n t y - s e v e n a g e n c i e s i n as many p r o v i n c i a l c a p i t a l s , •• where."deposits a r e r e c e i v e d and exchange s o l d , and a t which a p p l i c a t i o n s f o r l o a n s may be f i l e d f o r t r a n s m i s s i o n t o M a n i l a . A r e g u l a r l y organized branch a t I l o i l o h a s been opened, and a b r a n c h f u l l y equipped f o r b u s i n e s s in i s s h o r t l y t o b e / o p e r a t i o n i n New Y o r k . The Bank has e s t a b l i s h e d r e l a t i o n s w i t h c o r r e s p o n d e n t s i n J a p a n and on t h e China C o a s t , and i s s e l l i n g and buying exchange upon E a s t e r n p o i n t s g e n e r a l l y . The i n t e r e s t of American b u s i n e s s men i n t h e new i n s t i t u t i o n s h o u l d be g e n u i n e i f t h e y a r e a t a l l concerned i n E a s t e r n t r a d e . Inasmuch as t h e P h i l i p p i n e N a t i o n a l Bank i s e n d e a v o r i n g t o do a s u b s t a n t i a l l o c a l 1 9 3 8 - 13- b u s i n e s s , d i s c o u n t i n g p a p e r and a s s i s t i n g t h e development of P h i l i p p i n e e n t e r p r i s e s , i t i s i n a p o s i t i o n t o h e l p i n t h e e x p a n s i o n of i n s u l a r business to a very m a t e r i a l e x t e n t • One of t h e o b j e c t s of i t s c r e a t i o n has been t h a t of c a r r y i n g f u r t h e r and r e n d e r i n g more e f f e c t i v e t h e wor£ of t h e f o r m e r A g r i c u l t u r a l Bank7 which had a l r e a d y r e n d e r e d good s e r v i c e i n h e l p i n g t h e g r o w er s of s u g a r , hemp, t o b a c c o , and o t h e r a g r i c u l t u r a l At t h e o p e n i n g of t h e Bank 1 s b u s i n e s s , i t , of c o u r s e , u n d e r - products. t o o k t h e duty of making a g r i c u l t u r a l l o a n s » These a r e c a r e f u l l y l i m i t e d by law t o o n e - h a l f of i t s c a p i t a l and s u r p l u s , p l u s s u c h sums a s may be r e c e i v e d t h r o u g h t h e s a l e of a g r i c u l t u r a l bonds b a s e d on i t s mortgage loans. The new Bank has c a r r i e d t h u s d u r i n g t h e p r e s e n t s e a s o n , l a r g e l o a n s t o s u g a r g r o w e r s , and has made c o n s i d e r a b l e a d v a n c e s i n c o n n e c t i o n w i t h t h e m i l l i n g of s u g a r , development American b u s i n e s s men who a r e l o o k i n g t o t h e of a market i n t h e P h i l i p p i n e I s l a n d s a r e b e i n g accommodated t h r o u g h t h e u s u a l methods of o p e n i n g c r e d i t s and f i n a n c i n g i m p o r t a t i o n s ; w h i l e , as already seen, l o c a l e x p o r t e r s are being aided in b r i n g i n g t h e i r p r o d u c t s t o m a r k e t , a s w e l l as i n m e r e l y a i d i n g t h e shipment of them abroad. The Bank has opened c r e d i t s i n t h e U n i t e d S t a t e s f o r some of t h e p r i n c i p a l i m p o r t e r s i n t h e P h i l i p p i n e I s l a n d s , and h a s a l s o begun f i n a n c i n g o p e r a t i o n s between M a n i l a and t h e a d j a c e n t c o a s t of China* a l l t h i s t h e new Bank w i l l be an i m p o r t a n t f a c t o r i n s t i m u l a t i n g and developing our t r a d e with the P h i l i p p i n e s , The Bank had an a u t h o r i z e d c a p i t a l of 2 0 , 0 0 0 , 0 0 0 p e s o s , or $10,000,000 scribed by g o l d , of the which 10,100,000 Government of p e s o s has the been sub - Philippine In 976 -14Islands. The r e m a i n d e r of t h e s t o c k i s o f f e r e d t o p u b l i c s u b s c r i p - t i o n , and i s b e i n g g r a d u a l l y s o l d and t a k e n u p . As t h e d e p o s i t i n g of i n s u l a r , p r o v i n c i a l and m u n i c i p a l f u n d s t h r o u g h o u t ; t h e i s l a n d s w i t h t h e bank i s made m a n d a t o r y , e x c e p t i n c a s e s where p u b l i c w e l l b e i n g may demand t h e u s e of o t h e r b a n k s , t h e i n s t i t u t i o n a l r e a d y ;; has c o n t r o l of a l a r g e volume of p u b l i c f u n d s . proximate I t s resourties a p - ' 6 6 , 0 0 0 , 0 0 0 p e s o s , o r a b o u t $ 3 3 , 0 0 0 , 0 0 0 i n American c u r - rency. The p r e s i d e n t and v i c e p r e s i d e n t a r e a p p o i n t e d by t h e G o v e r n o r of t h e P h i l i p p i n e I s l a n d s ; and s i n c e t h e Government con- 1 t r o l s a m a j o r i t y of s h a r e s , i t w i l l always c o n t r o l a m a j o r i t y of t h e b o a r d of d i r e c t o r s . The t r a n s a c t i o n of g e n e r a l Government b u s i n e s s , t h e r e c e i p t of c u r r e n t d e p o s i t s , payment of Government c h e c k s , making of r e m i t t a n c e s t o f o r e i g n c o u n t r i e s , and t h e l i k e , a r e now i n t h e hands of t h e P h i l i p p i n e N a t i o n a l Bank, so t h a t i t s d u t i e s a r e d i s t i n c t l y of a p u b l i c c h a r a c t e r from many s t a n d p o i n t s . P e r h a p s t h e r e a r e some of you who a r e i n c l i n e d t o s u g g e s t t h a t t h e o r g a n i z a t i o n of t h e P h i l i p p i n e N a t i o n a l Bank t r a n s g r e s s e s v i e w s which you h a v e formed a b o u t t h e i n t e r f e r e n c e of t h e Government with p r i v a t e e n t e r p r i s e in banking. And y e t , i n one aspect the i d e a of t h e P h i l i p p i n e N a t i o n a l Bank i n t h a t r e g a r d i s v e r y s i m i l a r t o t h e b a s i c c o n c e p t i o n of t h e F e d e r a l r e s e r v e s y s t e m . I t is not b a s e d upon t h e i d e a of Government i n t e r f e r e n c e w i t h b a n k i n g , b u t r a t h e r of Government c o o p e r a t i o n w i t h t h e community i n r e n d e r i n g b a n k i n g more e f f e c t i v e . The F e d e r a l R e s e r v e Act was f r a m e d upon t h e 1940 976 -15t h e o r y t h a t by t h e use of t h e b a n k i n g energy of t h e c o u n t r y i n a combined and u n i t e d form, s u p p o r t e d and s u s t a i n e d by t h e power of t h e Government, g r e a t b e n e f i t could be r e n d e r e d t o e v e r y element i n t h e coraxunify, b o t h a g r i c u l t u r a l , commercial and i n d u s t r i a l . The c o n c e p t i o n upon which t h e P h i l i p p i n e N a t i o n a l Bank i s founded i s t h e same, and t h e i d e a s u n d e r l y i n g i t a r e i d e n t i c a l w i t h t h o s e u n d e r l y i n g t h e F e d e r a l Reserve A c t . I t p r o c e e d s upon t h e t h e o r y t h a t p u b l i c o v e r s i g h t and p u b l i c management i n b a n k i n g a r e d e s i r a b l e , t h a t t h e p u b l i c i s e n t i t l e d t o r e a l i z e l e g i t i m a t e p r o f i t s upon t h e f u n d s which i t p l a c e s in a bank, and t h a t p r i v a t e i n i t i a t i v e and p r i v a t e management i n t h e o p e r a t i o n of b a n k i n g c o n c e r n s a r e l i k e l y » • e t o b e ' m o r e s u c c e s s f u l and e f f i c i e n t t h a n t h e work of p u b l i c o f f i c e r s , however f a i t h f u l and devoted t h e s e may b e . The P h i l i p p i n e N a t i o n - a l Bank, e s t a b l i s h e d u n d e r d i f f e r e n t a u s p i c e s and m e e t i n g v e r y d i f f e r e n t l o c a l c o n d i t i o n s , i s t h u s a s p e c i a l a p p l i c a t i o n of t h e c o n c e p t i o n of t h e F e d e r a l Reserve Act t o t h e b u s i n e s s a f f a i r s of a f a r d i s t a n t p e o p l e whose development i s a t p r e s e n t much b e h i n d t h a t of t h e United S t a t e s . That t h e bank has j u s t i f i e d i t s e l f may be more f u l l y u n d e r s t o o d when I speak of i t s growth i n r e s o u r c e s from about 9 , 0 0 0 , 0 0 0 p e s o s e a r l y i n May l a s t , t o about 6 6 , 0 0 0 , 0 0 0 a t t h e c l o s e of t h e y e a r . A p a r t of t h i s growth i s , of c o u r s e , due t o t h e g r a d u a l t a k i n g over of p u b l i c d e p o s i t s and p u b l i c b u s i n e s s , b u t a v e r y l a r g e p a r t of i t i s due a l s o t o t h e i n c r e a s i n g c o n f i d e n c e of t h e b u s i n e s s community tution, and to the rapid growth of the in the deposit instiand l o a n a c - 1941 976 -16- c o u n t s of t h e b u s i n e s s p u b l i c w h i c h had d e a l i n g s w i t h i t . The P h i l i p p i n e N a t i o n a l Bank i s d o i n g i t s p a r t t o a t t a i n t h e end w h i c h m i g h t from a n o t h e r a n g l e h a v e been a p p r o a c h e d by o u r own banks had t h e y chosen t o u n d e r t a k e t h e e s t a b l i s h m e n t of b a n k i n g o r g a n i z a t i o n s i n t h e P h i l i p p i n e s f o r t h e p u r p o s e of o b t a i n i n g and d e f i n i t e l y h o l d i n g t h e t r a d e of t h e I s l a n d s , o r e n c o u r a g i n g t h e improvement of a g r i c u l t u r a l and p r o d u c t i v e c o n d i t i o n s , and of a s s i s t i n g i n t h e advancement of m a n u f a c t u r i n g e n t e r p r i s e s there. D o u b t l e s s i t would n d t be f e a s i b l e f o r American i n s t i t u t i o n s to go so fa 1 " in. t h e d e v o t i o n of r e s o u r c e s t o t h e d e v e l o p ment of b u s i n e s s i n f o r e i g n c o u n t r i e s as t h e y would be j u s t i f i e d i n d o i n g i n t h e P h i l i p p i n e s , o r as t h e P h i l i p p i n e N a t i o n a l Bank i s u n d e r t a k i n g to do. And y e t t h e e x p e r i e n c e of t h i s bank i s i n l i n e w i t h t h a t of b a n k i n g i n s t i t u t i o n s o r g a n i z e d by f o r e i g n c o u n t r i e s f o r t h e p u r p o s e of o p e r a t i n g a b r o a d and p o i n t s o u t t h e o n l y t r u e way i n which t o f o s t e r and r e t a i n f o r e i g n t r a d e * This i s t h r o u g h t h e e x t e n s i o n of accommodation u n d e r w i s e and c o n s e r v a tive conditions, t o t h o s e b u s i n e s s i n t e r e s t s i n o t h e r c o u n t r i e s which r e q u i r e t h a t k i n d , of a s s i s t a n c e , and which i n r e t u r n f o r i t , o r as a c o n d i t i o n of g e t t i n g i t , w i l l be w i l l i n g and r e a d y t o t u r n t h e i r p u r c h a s i n g power toward t h e U n i t e d S t a t e s • We h a v e l o n g known t h a t E n g l a n d ' s p o w e r f u l h o l d upon t h e t r a d e of S o u t h America and t h e Far E a s t was n o t due t o any i n n a t e f o n d n e s s on t h e p a r t of t h e p e o p l e of *»- >* 'A?'." •%</,< •* RW ' V R« • 576 1 9 4 2 -17t h o s e r e g i o n s f o r G r e a t B r i t a i n o r h e r a s s i s t a n c e , b u t was due t o t h e f a c t t h a t B r i t i s h banking i n s t i t u t i o n s stood ready t o f a c i l i t a t e the stood movement of goods t o t h o s e c o u n t r i e s > w h i l e t h e y a l s o s t o o d r e a d y within, r e a s o n a b l e l i m i t s t o a s s i s t i n t h e d e v e l - opment of t h e r e s o u r c e s oi t h o s e c o u n t r i e s , and i n t h e e x p o r t a t i o n of t h e i r p r o d u c t s t o G r e a t B r i t a i n . The p r o g r e s s w h i c h h a s b e e n made i n r e c e n t y e a r s by German b a n k e r s and b u s i n e s s men i n competing w i t h G r e a t B r i t a i n and h e r r e p r e s e n t a t i v e s , has been due t o Germany's r e c o g n i t i o n of t h e e s s e n t i a l b a s i s f o r B r i t i s h t r a d e , ana h e r a d o p t i o n of s i m i l a r modes of g e t t i n g and c o n t r o l l i n g b u s i n e s s . t i o n i n t h e whole m a t t e r i s : The r e a l q u e s - Do we want t o c o n t i n u e o u r p r e s e n t c o n - t r o l of f o r e i g n t r a d e , o r a r e we c o n t e n t t o r e t u r n t o t h e f o r e i g n t r a d e s i t u a t i o n which e x i s t e d b e f o r e t h e E u r o p e a n w a r ? If we do i n f a c t b e l i e v e t h a t b e n e f i t comes t o t h e c o u n t r y f r o m t h e m a i n t e n a n c e of a s t r o n g and w e l l — d i v e r s i f i e d f o r e i g n t r a d e , i t w i l l be n e c e s s a r y f o r u s as a n a t i o n t o adopt t h o s e m e a s u r e s and methods which e x p e r i e n c e has shown t o be r e q u i s i t e . As I have a l r e a d y i n t i m a t e d , I do n o t b e l i e v e s t r o n g l y i n t h e e f f e c t of a r t i f i c i a l l e g i s l a t i o n i n s u s t a i n i n g and e x t e n d i n g out* business. In o r d e r t o d e a l w i t h f o r e i g n c o u n t r i e s s u c c e s s f u l l y we must n o t o n l y s e l l b u t b u y , We must do more t h a n t h i s . We must h o l d o u t t h e h e l p n e c e s s a r y t o e n a b l e o u r own. b u s i n e s s men t o p l a c e t h e i r goods on f o r e i g n m a r k e t s w i t h s u c c e s s and a t r e a s o n a b l e c o s t , and we must e n a b l e s h i p p e r s i n t h i s c o u n t r y t o e x p o r t w i t h o u t u n r e a s o n able s a c r i f i c e . Indeed we m u s t , i f we w i s h t o c r e a t e a p e r m a n e n t and * 1943 971, — 18 — growing f o r e i g n t r a d e , a i d p r o d u c e r s and s h i p p e r s a b r o a d "by e v e r y l e g i t i mate means i n our power, t o i n c r e a s e t h e i r o u t p u t , and t o m a r k e t i t u n d e r favorable conditions* The i d a a t h a t t h i s c a n n o t be done, o r t h a t some s p e c i a l d i f f i c u l t i e s s t a n d i n t h e way, o r t h a t t h e problem i s b e i n g p r e m a t u r e l y p r e s e n t e d , o r t h a t f o r some r e a s o n we c a n e s c a p e immediate a c t i o n upon i t , has been d i s p e l l e d by t h e e v e n t s of t h e p a s t two y e a r s . I t must be e v i d e n t t o a l l t h a t t h e p r e s e n t moment i s one which c a l l s f o r t h e e x e r c i s e of c o n s t r u c t i v e b u s i n e s s a b i l i t y and t h e d i s p l a y of e n t e r p r i s e and i n i t i a t i v e by our p e o p l e a l o n g e v e r y l i n e t h a t e x p e r i e n c e shows t o be r e q u i r e d i n f a c i l i t a t i n g t h e g r o w t h of b u s i n e s s . Our r e l a t i o n s w i t h t h e P h i l i p p i n e s a f f o r d merely an i n t i m a t i o n of what c a n be and i s b e i n g done i n t u r n i n g t r a d e t o w a r d t h e U n i t e d S t a t e s , i n f i n a n c i n g i t , in e c o n o m i z i n g t h e e x p e n s e s n e c e s s a r i l y i n c u r r e d i n c o n n e c t i o n w i t h i t , and g e n e r a l l y i n b r i n g i n g t h e f o r e i g n p r o d u c e r and b u y e r c l o s e r t o t h e home p r o d u c e r and b u y e r . What I have s a i d t h u s f a r has been e x p r e s s e d i n p u r e l y g e n e r a l un t e r m s ; and I a m / w i l l i n g t o l e a v e t h e s u b j e c t t h i s e v e n i n g w i t h o u t p l a c i n g b e f o r e you a d e f i n i t e problem* F i r s t of a l l , I b e l i e v e i t t o be n e c e s s a r y t h a t o u r b a n k e r s s h o u l d t o a much g r e a t e r e x t e n t t h a t a t p r e s e n t , make a c t u a l , p r a c t i c a l connections abroad. ment of through branches the This s h o u l d be done e i t h e r t h r o u g h t h e e s t a b l i s h m e n t of t h e i r perfecting of own at strategic points, agency relations or with other 976 1944 *-i9" banks which c a n b e r e l i e d upon t o promote t h e i n t e r e s t s of t h e U n i t e d S t a t e s and i t s b u s i n e s s men. In a c o n s i d e r a b l e number of i n s t a n c e s t h e f o r e i g n c o n n e c t i o n s I s p e a k of must be e f f e c t e d by t h e a c t u a l and d i r e c t e s t a b l i s h m e n t of branches., r a t h e r t h a n t h r o u g h the agency method. S e c o n d l y , o u r b a n k e r s g e n e r a l l y must e n d e a v o r , s o f a r as t h e y can, t o promote t h e p r o g r e s s and a i d i n t h e development of t h e f o r e i g n b u s i n e s s of banks c h a r t e r e d u n d e r American c o n t r o l , and d i r e c t l y c o n c e r n e d t o promote American i n t e r e s t s . Our b u s i n e s s men must c o o p e r a t e i n t h i s r e g a r d by p l a c i n g t h e i r b u s i n e s s w h e r e v e r p o s s i b l e w i t h such b a n k s . This i s n o t a c o u n s e l of o p p o s i t i o n o r h o s - t i l i t y t o any f o r e i g n b a n k i n g i n s t i t u t i o n ; i t i s merely a suggestion t h a t so f a r as p r a c t i c a b l e , we u n i t e as a b u s i n e s s community i n f o r w a r d i n g by a l l l e g i t i m a t e means o u r own i n t e r e s t s a b r o a d . Third, t h e Federal r e s e r v e system should, and w i l l , a s c o n - d i t i o n s p e r m i t , e s t a b l i s h a b r o a d agency c o n n e c t i o n s which w i l l e n a b l e t h e F e d e r a l r e s e r v e banks t o a s s i s t i n t h e f o r e i g n o p e r a t i o n of s u c h o t h e r banks a s a r e formed t o promote t r a d e i n o t h e r c o u n t r i e s , and w i l l a t t h e same t i m e u n d e r t a k e t h o s e o p e r a t i o n s d e s i g n e d t o m a i n t a i n t h e s t a b i l i t y of m o n e t a r y and e x c h a n g e r e l a t i o n s h i p s between o u r s e l v e s and o t h e r c o u n t r i e s which a r e c a l l e d f o r by t h e Government banks elsewhere. F o u r t h l y , o u r b u s i n e s s p u b l i c must u n d e r t a k e t o f u r n i s h a d i r e c t , p r a c t i c a l s u p p o r t t o t h e s e e f f o r t s on t h e p a r t of our b a n k s ; looking and at the recognizing matter that from while the they long may range have standpoint, to submit to 1945 976 —20™ some d i f f i c u l t i e s o r even i n c o n v e n i e n c e w h i l e we a r e e x t e n d i n g our banking r e l a t i o n s h i p s abroad, t h e s e a r e incurred merely f o r t h e s a k e of d e v e l o p i n g a s y s t e m which i n i t s t u r n w i l l s a f e g u a r d t h e i n t e r e s t s of t h e b u s i n e s s p u b l i c when t h e i n t e n s i t y of compet i t i o n i s r e s t o r e d , and when t h e e f f o r t of European c o u n t r i e s t o o b t a i n a s h a r e of f o r e i g n m a r k e t s a g a i n becomes a c t i v e . T h i s i s a l a r g e program, b u t t h e same may be s a i d of e v e r y t h i n g t h a t i s d e s t i n e d t o e x e r t a f a r - r e a c h i n g and p e r m a n e n t effect. A g r e a t d e a l of such s u c c e s s as may be a t t a i n e d w i l l b e s e c u r e d t h r o u g h t h e a c t i v e i n t e r e s t and e n t e r p r i s e of t h e y o u n g e r b a n k e r s of t h e c o u n t r y ; upon them w i l l f a l l t h e a c t u a l work of u n d e r t a k i n g t h e t a s k s i n v o l v e d i n t h e e x t e n s i o n of. o u r b a n k i n g c o n n e c t i o n s , and t o them u n d o u b t e d l y w i l l b e a s s i g n e d most of t h e c o n s t r u c t i v e d u t i e s i n v o l v e d i n t h e i n v e s t i g a t i o n and a n a l y s i s of foreign conditions. New c o n d i t i o n s must be met, and o l d ones must be a d a p t e d t o them. The work i s one which c a l l s f o r v i s i o n and i m a g i n a t i o n , as w e l l a s f o r t h e t e c h n i c a l knowledge of e x p e r i e n c e d men who have a d e f i n i t e p u r p o s e t o a c c o m p l i s h , and who a r e a b l e t o s e p a r a t e what i s p o s s i b l e from what i s v i s i o n a r y and u n a t t a i n a b l e . This i s why I have b r o u g h t t h e s u b j e c t t o y o u r a t t e n t i o n a s one who h a s had a s m a l l s h a r e i n t h e w o r k i n g o u t of one p h a s e of t h e p r o b l e m , who s e e s t h e f i e l d t h a t i s open, and who r e c o g n i z e s t h a t a l t h o u g h t h e h a r v e s t i s r i p e , t h e r e a p e r s a r e v e r y few i n d e e d , If T navs a t a l l c o n t r i b u t e d t o making o u r f o r e i g n p r o b l e m more v i v i d i n y o u r minds and i n p e r s u a d i n g you t o a more p o i n t e d r e c o g n i t i o n of. t h e n e e d f o r immediate a c t i o n I s h a l l f e e l t h a t a f u r t h e r s t e p has b e e n taken towards i t s d e f i n i t e s o l u t i o n .
@FedFRASER