New-York tribune., 1913-11-17
RothSChiIdS and Big Banking
Houses Consulted by Ministers
Before Announcing Plan.
OTHER LOANS IN PROSPECT
Three Per Cent Stamp Duty
Does Not Deter Borrowing
States from Applying
to Paris Market.
tBy Cable TO The Tribune. ]

fesSional dealings. The S2bO,UUO,VOV
loan met with favorable appreciation,
the only opposition being expressed by
groups of smaller financiers who ad-
vocate a loan which shall be "amortis-
sable. e., redeemable at fixed rates
and in fixed amounts.
The Minister of Finance before the
announcement Of the loan had con-
suited the leading lights of the financial
world. including the Rothschilds and
the big credit establishments, such as
the Credit Lyonnais, the Societe Ge-
nerale and the Compton d'Escompte,
which have always been thorough sup
porters of national French finance.
The government meanwhile has prac-
tically vetoed foreign and especially
| Balkans loans pending the issue of the
big French loan. The gratifying recep-
| ton of the governments loan proposals
| is expected to release funds at present
tied up and thus restore confidence and
activity.
After the loan has been finally foated
| il is certain that the period Of financial
activity thus opened will continue for
many months, for, with the exception
Of a few nations in the north, every
country in Europe is about TO apply
for credit. The French money market,
| too, is becoming ever more the chief
treasury at the disposal of borrowers
able TO offer acceptable terms, and
therefore all conditions likely either 10
facilitate or embarrass loan issues are
subject to keen discussions here.
1t will preoccupy financial circles for
some time to come. and will also at
tract the attention Of ordinary capi-
| talists
! 1t must be borne in mind that no is
sue Of foreign state funds can be ef-
fected on the French market until the
state issuing the stock has first paid
into the hands of the French fiscal au-
thorities a cash payment in the shape
Of stamp duty, which has gradually In
creased from l per cent TO 112 and ?
per cent Within the last few months
the amount has grown to per cent Of
the nominal total value Of the loans. 1t
is practically an import tax, paid by
the debtor. II is so at least in princi-
pie, because il is not quite clear in
fact that a part of the duty does not
fall on the capitalist.
This duty is, as a fact, an increase in
the rate Of interest. payable by the
borrowing state. If the stamp duty
French market the tax would be of lit
tie consequence. Conditions being
equal, the states anxious TO conclude a
loan would make their offers TO the
market willing TO grant the biggest
loans. This is not the case however.
for the stamp impost is higher in
France than elsewhere. In England
the rate stands at l per cent and IN
Germany a little more than one-half Of
] per cent
At first sight this would place French
banks in an inferior position, for the
duty would appear to be prohibitive,
but the flotation of foreign government
loans has always been more frequent
and important here. Thus It would
seem that the high stamp duty levied
by the French fsc does not detract
from advantages not found on other
markets.
The favorable conditions offered by
the French money market are several.
Perhaps the principal gain Of the
French over foreign markets is the
large stock OF bullion held ready for
immediate use, while other countries
are often in the throes Of monetary
difficulties. This is. the case at the
present time, for most European coun-
tries. even including England, are feel
ling the effects of the monetary crisis,
but France alone has preserved her
huge reserves in money ready for en-
ployment.
Foreign markets are unable to salts
fy the needs of borrowers and British
| bankers nave utCIutu ilOl " lSouo any
foreign state funds until further or
ders. The Hungarian government was
only able to conclude a small loan Of
$50 100000 by offering to subscribers
quite exceptional rate of interest.
moderate Rumanian loan, declined
by the French banks on political
grounds, meets with the greatest diff
culties in Germany, Notwithstanding
the sound financial and economic SIT
uation in Rumania.
The rate Of interest on capital In
France is lower than elsewhere as
direct consequence of this vast reserve
of available cash. Argentine per
cents are quoted at a higher price IN
Paris than in London, and Chinese .
per cent loans stand almost at par IN
the French capital. Brazilian per
cent funds are from four to six points
in favor Of Paris.
The cheapness Of loans in France
compensates to a certain extent for
the import duty Of per cent on foreign
government stock. The possession OF
this boarded wealth ready to be drawn
upon by solvent states in want of
.ao d,y YnoDav ie of fpact inn ble Nalup.