The sun. [volume] (New York [N.Y.]) 1833-1916, 1904-09-03
War and Credit.


a loan of 100000 is presently to be
made to Russia by syndicate of German
bankers. 1t will be interesting to learn
on what terms the loan is to be issued,
for the figures will throw light on the
relation of war to credit in modern times,
relation about which some misconcep-
ton exists.
A Latin poet has told us that money
does not smell of its source tpccunid non
oleD, and in our own day the assertion
that money has no sentiment is seldom
challenged. The notion that the RoTHs-
CHILDs or other great financiers in Europe
or the United States might be influenced
in their investments or speculations by
political sympathies would ordinarily
be secuted as preposterous. Yet bank
ers are human beings, and nothing is
more certain than that they are often
prompted by patriotic or friendly mo-
tives to take risks Of which their
Judgment, il unbiased by feeling, would
disapprove. In no other way can we
explain the comparative ease with which
q Government in time Of need can bor-
row money from its own subjects or
citizens, when similar accommodation
from foreigners is scarcely attainable
on endurable terms. Memorable ex-
amples of willingness to let patriotic
considerations outweigh the dictates of
prudence were afforded by the New York
bankers at more than one critical con-
j4noture of our civil war.
Not only patriotism but friendship
sometimes intervenes in finance. There
was much more sentiment than business
in the consent of French manufacturers
to sell on credit arms and ammunition,
and of French bankers to lend part of
their capital, to the United States during
the first twenty months Of the Revolt.
tionary War, when as yet it was very
doubtful whether the Government Of
LOUIS XVI. would enter into formal
alliance with the new born American
republic. No reasonable person will
pretend that during the last few years
Russian borrowers could have extracted
from Frenchmen, normally tight listed,
loan after loan the aggregate of which
is put at OO,O0o,O 600, but for the en-
thusiasm with which patriotic bankers
welcomed a political league which seemed
TO secure to their beloved France national
rehabilitation. Nor is it for moment
disputable that the German financiers
are now, as they long have been, 30
keenly sensible of the expediency Of
helping probable friend of their coun-
try, and of withholding help from a
probable enemy, that their agreement
to lend Russia $3.50 600 900 would be in
conceivable were they not assured that
such a course would meet with their
sovereign's hearty approval.
The announcement that the Berlin
loan to Russia will not be made until
after the fall OF Port Arthur, which is
taken for granted, invites attention to
the interesting fact that the inclination
of bankers to lend to belligerent does
not always rise or sink with his imme-
date success or failure. 1t is true that
during our civil war the credit Of our
Federal Government was with clocklike
regularity diminished or increased ac-
cording as defeat or victory attended
our armies in the field. So, too, in the
last contest between France and Ger
many the price OF French Government
stock was barometer Of the country's
military fortunes. At the outbreak of the
Boer war British consols stood at lis,
and so long as an easy and speedy vic
tory was counted on they did not fall
below par. Yet in the summer and au-
tumn of 1890 they lost some eight points,
and as disaster followed disaster they
continued to sink, until, they touched sS.
Compared with the experience of British
consols, the Russian four per cents
have been steady. In May, 1908, when
as yet there was no apprehension of war
in the Far East at st. Petersburg, or
on any European Stock Exchange, the
Russian four per cents stood at 10l, but
they gradually declined until on Feb. 0,
1904, when Japan announced the sus-
pension OF diplomatic intercourse, they
sank to e3. On the news Of Russis's first
naval reverse they dropped to 90, but
in spite Of repeated discontinue on sea