"Banking Follows Trade"

During the post-War trade boom, one of the favorite sports of business men was organizing foreign banks. The country then enjoyed a tremendous export trade, and the thought was that an extension of American banking facilities abroad would serve to hold open the channels of this foreign buying of our goods and raw materials. The near-panic of 1920 perceptibly cooled the enthusiasm for foreign banks, and subsequent years have seen their gradual disappearance. The recent retirement of the Asia Banking Corporation, whose business has been taken over by the International Banking Corporation, leaves the latter institution as the lone survivor in this field.

The lesson of this general failure of our foreign banks successfully to take root is that banking follows trade rather than trade following banking. The pioneer should naturally be the merchant rather than the banker. Reference to the international banking system built up by the British shows the same fact, that practically always the British trader and merchant preceded the British banker into foreign fields.

Fortunately, the losses entailed by this fad for foreign banks have long since been written off. Only once, when the Mercantile Bank of the Americas threatened to fail, did the experiment cause any critical strain on the country's business.