An Early History of U.S. Banks in the Developing World
The correspondent relationships included some partnerships with banks in the developing world. Chemical Bank, for example, established a correspondent relationship with Banco de Colombia in 1898. Both state-chartered and nationally chartered United States (US) banks financed foreign trade largely through correspondent banking relationships. Banks and developing nations have so far avoided the massive defaults that plagued the 1930s, but they have suffered most of the same consequences. The financing carried out by the whole range of US banks in the early 1900s paled in comparison with that conducted by their European counterparts. British banks financed most of the world’s foreign trade, maintaining more than 2,000 overseas branches. US banks began to move overseas, particularly into Latin America. The US government also encouraged banks to move overseas, reasoning that overseas branches would facilitate foreign trade immensely. Many Latin American countries took additional steps to reassure the banks of the viability of their economies.