Branching Out: Banking, Credit, and the Globalizing US Economy, 1900s–1930s

Abstract

27involved access to information. In the process of financing trades, British bankers reviewed paperwork that revealed prices of goods, shipping details, and other information that US manufacturers considered to be "trade secrets." As US manufacturers became increasingly focused on international trade in the early 1900s, trade advocates accused foreign banks of sharing these secrets with their own business communities. 12 Additionally, correspondent banks did not always provide reliable credit information about trading partners overseas. Within the United States, banks frequently exchanged information about merchants' reputations, and they answered inquiries from mercantile agencies seeking credit information. By contrast, British banks did not operate according to the same norms of information sharing. British banks did not customarily "answer inquiries coming from individuals or firms that do not keep an account with the bank," noted a US Commerce Department publication. "Information given out by British banks in regard to firms' standings is usually of a general and noncommittal character." 13 High transactions costs and lack of information access might have impeded US international trade; however, in the early 1900s, the barriers were not so onerous as to motivate lawmakers to change the National Banking Act of 1864. For decades, regulators had interpreted the Act as barring large national banks-which possessed the capital necessary to operate expensive overseas branches-from opening offices abroad. 14 Opposition to branching stemmed primarily from local, state-chartered banks and their concerns about having to compete with the branches of large, national banks. 15 Debates about branching were grounded in domestic US politics; however, the