THE EDGE LAW.

Taranaki Herald, Volume LXVIII, Issue 16677, 26 February 1920, Page 5

THE EDGE LAW.

AMERICA’S FOREIGN TRADE CAMPAIGN. The latest information received at the American Consulate in Sydney gives details of the efforts being made by the United States to extend foreign trade. The new Edge "law gives -the Department of Commerce enormous power, and its influence is sure to be felt, both indirectly and directly, by the merchants and manufacturers of Australia. The Sherman law prevents tho working of trusts and trade combinations within any of the States in the Union, but tho Edge law became effective last month for the special purpose of enabling trusts to work in foreign markets. The Edge law is really an amendment of the Federal Reserve Act, which was originally passed to furnish banking facilities for American exporters. It gave permission to American national banks (as distinct from private banking institutions), -which had a capital' and surplus of at least £200,000, to establish branches in foreign countries, but only a few of tho largest banks took advantage of this provision. The act was amended on September 7, 1916, to enable banks with this reserve to cooperate in the establishment of foreign banking institutions. Eight international banking institutions were established under, this amendment, and are now doing a large amount of business.

Two classes of institution are to be incorporated under the Edge law, although there may not always be a distinct line of demarcation between them. One class is engaged in what may be regarded as a legitimate banking business Tlie other is doing principally an investment business, taking longtime paper, including bonds and mortgages, and issuing their own debentures against them. American financiers and business men believe that Federal charters and supervision being thus scoured the investors will have greater confidence in these institutions, and that their usefulness will be correspondingly enhanced. Under the Edge law, American corporations, as explained in a report to the United States House of 'Representatives, will be able to buy with goods European securities, so “that America shall become a creditor nation, having purchased securities that will bring us ar continued income witli a part of our surplus of commodities.” .

Corporations working Under the Edge law have wide ramifications of power and can give assistance to United States nationals under any class of security,, provided that at no time the corporation has “liabilities outstanding exceeding ten times its capital and surplus.” Such a corporation may receive as security any class of deposit outside tho United States, and, subject to the sanction of the Federal Reserve Board may increase the working capital from a minimum of £400,000 to a practically unlimited amount, provided a “majority of such shares are held by citizens of the United States.”

Mr. Alexander, Secretary of the Department of Commerce, proposes to utilise the Edge law for the. extension of trade in Europe by long-term credits and substantial loans, and he has asked the United States Shipping Board to continue operating the ships it has built ™ ' d ® velo P Rus trade, and he hopes thereby to open new trade routes as well as maintain the old ones.