The most serious cause retarding the development of an open discount market for the country is as heretofore mentioned the call loan system. Most of the larger banks, because of the higher yield from this class of loan, are tempted to continue to carry their reserves in this way, instead of in prime commercial paper of the class of bankers' and trade acceptances. The country banks, too, find it more profitable to transmit their funds to the larger cities to be loaned out at call money rates. Since call money rates have on the average been high, banks have clung to this form of investment.

The development of a wide discount market in bank and trade acceptances will not only supply a means of investment to the banks of the country for their resources, but will tend to put buyer and seller of funds together, because of the investment advantages, and so make demands meet supply.

No better basis for a discount market could be selected than the acceptance, representing as it does, paper of the highest class, and carrying evidence upon its face of a commercial transaction which gave it birth.

But to this plan, the cooperation of the banker, the business man, and the investor is necessary. Realizing their advantages, encouragement in the use of acceptances should always be forthcoming by the commercial and financial interests of the country.

The New Edge Act For Foreign Financing

Of very great importance to the clarification and strengthening of the position of these acceptance corporations, it is hoped will be the so-called Edge Act, passed December 24, 1919, the principles of which, together with the text of the law, are given in Part V of the present work. On the whole, it is the opinion that these acceptance corporations will grow to be among the most powerful institutions which the country has and will materially assist in strengthening our position in international as well as domestic finance and trade.