tion' in New York, as trustee, under a trust agreement to secure $94,500,000 of the Company's three year, 5% gold notes, dated August 1, 1916 and payable August 1, 1919, which notes the Company publicly offered for general sale in July, 1916 at 98 and interest. Throughout the war, these notes maintained a high value, and on August 1, 1919 they were paid in full. Meanwhile, the Company paid dividends averaging more than eight per cent. per annum upon its $10,000,000 of capital stock.

"Instead of individually organizing subsidiary companies like the electrical equipment manufacturers above described, or of leaving this work to be done by their banks, upon the analogy of the American Foreign Securities Company above described, American manufacturers in the same line of business may, in some instances, best finance their sales to foreign customers by collectively and cooperatively organizing and operating their own investment and financial corporation for that purpose. Such an institution, with a capitalization of upwards of one hundred million dollars, is already under consideration, according to newspaper reports, by a group of American manufacturers of railway equipment who, it is stated, will themselves take the leadership in the institution, and will depend for expert financial and banking assistance and for the marketing of their securities when issued upon their affiliated banking connections and upon security-issuing houses associated with them in the enterprise.

"European bankers, somewhat more than American bankers, have more or less permanently invested their own funds in long-time credits, and have thus assimilated the standpoints of both the manufacturer and the banker which, excepting possibly in the public utility field and the electrical equipment field, and more recently in a few instances in the foreign field, have not often been combined in the United States. Danger is always possible, of course, in any departure from the banker's strict standards of credit. Inertia, however, is no less possible in the inelastic application to longtime credits of standards to which bankers are accustomed in the short-time credits which constitute their business. In the future financing of the American export trade, neither the banker's standpoint nor the manufacturer's standpoint can be disregarded. The most fortunate results, it is believed, will be obtained by a policy which fairly reflects both points of view.

"How successful may be investment in financial institutions which have attained this golden mean appears from the history of some of the English, Scotch and Swiss 'investment trusts.' These are institutions for the acquisition, disposition and rehypothecation of securities particularly in foreign trade and are operated substantially upon the plan of the electrical equipment subsidiaries above described, and began to be formed in Great Britain during the third quarter of the last century. Like our own American life and fire insurance

companies, these investment trusts have pursued the policy of selecting their securities in various lines of trade and from all parts of the world. The Investment Trust Corporation, Ltd., of London, for example, in its statement for 1917, shows 315 kinds of investments; the Second Edinburgh Investment Trust, Ltd., of Edinburgh, Scotland, for the same year, showed 235, and the Metropolitan Trust Company, of London, showed 220. These investments included foreign government issues, municipal loans, mortgage bonds, preferred and common shares in railroads, public utilities, banking, commercial and industrial corporations. The Investment Trust Company, Ltd., of London, is capitalized for $10,000,000 and has outstanding $10,000,000 in 4 per cent. bonds, and during the ten years expiring in 1917 paid dividends averaging about 12 per cent. per annum upon its common stock. The Second Edinburgh Investment Trust, Ltd., of Edinburgh, Scotland, is capitalized for $2,250,000 and has outstanding $1,950,000 in 4 per cent. bonds and during the nine years expiring 1916 paid dividends averaging 12 per cent. per annum upon its common stock. The Metropolitan Trust Company, Ltd., of London, is capitalized for $4,000,000 in 4 per cent. bonds and during the ten years expiring 1918 paid an average of 12 per cent. per annum upon its common stock. The Bank for Electrical Securities of Zurich, Switzerland, which specializes in the securities of public utility companies, and the FrancoSwiss Company of Geneva, Switzerland, which special

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broad powers, under the statutes of the several States. Among these institutions may be mentioned the Asia Banking Corporation, the Mercantile Bank of the Americas, Inc., the Foreign Discount Corporation, etc. Some of these corporations are now partially under the control of the Federal Reserve Board where national banks contribute to their capital, since they are required to restrict their operations and conduct their business in such ranner and under such limitations as the Federal Reserve Board may prescribe. It was felt, however, that control through agreement is not as satisfactory as that exercised through incorporation under a Federal act.

The enactment of the Edge Act should prove of especial value to corporations that have combined under the Webb-Pomerene Act for the purpose of carrying on an export business, since in effect, it affords a practical method under Federal supervision, whereby industrial or producing combinations may extend large credits abroad. A group of manufacturers, for instance, who have formed a combination under the WebbPomerene Act to sell their products abroad may now combine to finance such sales and thus, in the language of Senator Edge, "will be able to keep all the reins in their own hands."

Mr. W. P. G. Harding, Governor of the Federal Reserve Board, in urging the passage of the measure, made the following statement: "The Board knows no one way in which the present European credit situation may be more effectively dealt with than by the incorporation of institutions of the kinds provided for in this bill, and anything that betters that situation assists not merely in the gigantic task of reconstruction in Europe, but also in providing a market for our own exports and in developing our foreign commerce in a most effective and satisfactory way."