The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-09-02
Borrowing Abroad.

America has probably never been as
heavy borrower abroad as this year. 1t
has made enormous drafts on it's credit in
London and the various European centers
and has largely anticipated the years
payments for our products-grain, cotton
provisions and manufactured wares. Ev-
cry source through which money could be
borrowed has been used. More than that,
unusual efforts have been made to place
our stocks and bonds with foreign inves-
tors This latter expedient has not been
successful of late, excepting in two or
three bulk lots; in fact, the drift has been
the other way, foreigners having resold
a good many American securities and
turned them back upon the New York
market. 1t Is very evident, however, that
our credit abroad Is very far from being
exhausted. There is an immense reser-
voir of gold available should the emer-
gency require its shipment to this side of
the Atlantic. Two or three times lately
start has been made to bring foreign
gold into New York. but only once did
the movement amount to much The New
York banking combinations have it in
their power to import any amount they
may need and they are likely to make
an impressive demonstration any moment
should the exlgencies require it.
At the beginning of the bull campaign
the Wall street combinations had great
mass OF unulReSteu DOnQS ana STOCKS.
Being unable to sell the bonds they were
obliged to make market for the stocks
and that necessity was the impelling mo-
tive behind the current sweeping maNpu-
lation for rise. The banks made ii plain
that they could not provide funds to car
ry both stocks and bonds for the combina-
lions designated the powers" These
powers in ordinary times control the
policy of the banks and trust companies.
/ tIa FMS nj Int
these institutions owe a larger duty to the
public which they are careful to observe
in periods of stress, and those in official
charge sounds notes of warning whenever
the occasion really arises for an important
stand looking to a maintenance of position
and credit. The powers" when given
| warning adopt such measures as may be
required for their own protection and for
the protection of the banks and trust COM
panies upon which they lean and to which
they must look for their ultimate sup
port
When the powers get rid of their sur
plus stocks and land" the public with
them, the banks and trust companies will
still be under $700,000,000 to $1,000 900, 900
worth of undigested bonds. For months
there has been almost no market for
bonds, except at decided concessions, and
| this mountain of stuff has become an OPP
pressive and dangerous burden.
Nominally underwriters are carrying
| the load but in reality, 1t is the banks and
| trust companies, the rich men who did
| the underwriting having transferred the
bulk of the responsibility upon the institu-
lions where they have borrowing stand
| Ing They deposit these bonds as collat-
| eral for loans and there the mass rests.
An experienced bond dealer gives me as
his opinion, that the enforced liquidation
of the mountain of unsold bonds now
hanging over the New York market. would
result in a loss of 900 or 900.
For the most part these bonds are abso-
lutely unstable at any where near the
prices that are asked for them. Fortunate
", the underwriters and banks have not
as yet been compelled to unload, and
should the fall and winter months pass
without calamity they may successfully
navigate the raft into a market where
they can dispose of the water-logged car
GO In any event they will avoid jettison-
Ing as long as possible, and in the mean |
time the stock market will be kept moving