The Birmingham age-herald., 1914-02-23
Bankers Recently Had the
Wrong Impression of Ad-
ministratiOn's Policy
S20,000,000 SOON TO
BE SPENT IN CHINA
Department While Deprecating DOL
lar Diplomacy Will do All 1t
Can to Assist Invest
ment Abroad
nv HOLLAND

recent informal communication made to
the department of state at Washington
| there appeared the following paragraph:
while 1t is patent that banks follow
| rather than anticipate development in new
| fields of business and industry. 1t would
| appear that the recent extension of
American interests in South America
would warrant the establishment of
| American countries"
| No one now associated with American
diplomacy knows better than does John
J Bassett Moore, counselor to the state de-
partment that while trade sometimes fol-
lows the flag it usually follows at a
considerable distance, but that trade does
speedily follow loans. as it almost in
stantly follows railroad construction.
! In the 11ls months which have elapsed
| since the new administration at Wash
ington was inaugurated some things of
interest and Importance to the depart
ment of state and recently some things
of great interest and Importance to Amer
| lean bankers and men of capital have
| been learned. Undoubtedly one result of
| the experience gathered both by the
state department and American capital
! is disclosed in the recent cooperation
which has been entered into between the
Standard Oil company and the govern
ment of China. The reasons are strong,
although entirely inferential, for presum-
| ing that the STANDARD Oil company man.
agement did not perfect this agreement of
a sort of partnership cooperation between
! the company and China until after II
had learned. informally at least. what
| the attitude of the state department now
! is toward American investment in loans.
| in public improvements. railway con-
struction or facilities for Increase of trade
| in foreign lands. 1t is such as to give
encouragement to American capital which
! is contemplating investment in other
| lands than our own.
! Some weeks ago one of the larger cor
| porations of the United States learned
of an opportunity to make an investment
| in China involving contracts aggregating
! a little over S20o00,000 The proposition,
| from the business point of view. was re-
garded as very satisfactory. The man.
| ayers of the corporation however, have
| held aloof for the reason that they
shared an impression. which has general
| ly prevailed since last March, that the
department of state would refuse to give
any announcement or any assurance of
| contemplated investment in foreign coun-
| tries.
| These managers were informed that they
were mistaken in this view for the de-
partment of state, while maintaining the
position that it would not in any official
way enter into alliance with American
! capital which contemplating invest
ment elsewhere. would nevertheless glad
| ly encourage so far as reasonably could
be done, investments of this kind. and es
pecially those which had in view the in
crease of trade relations with other lands.
A Satisfactory Report
When these managers heard that this
was the view of the department of state
they sou ght for authoritative confirmation
of it. One who has been for many years
in confidential relations with the state
department was commissioned to go to
Washington and obtain from the depart
ment am authoritative statement of its
attitude toward investment of American
capital in other lands. This man returned
prepared to report that the department
would be glad to encourage anything
that tended to increase American trade,
and would give such moral support as
friendly consideration of propositions of
that kind could make possible.
The result is that this corporation will
probably complete within few weeks
it's negotiations with China and will make
investment of some s20.0O0.Oo0 in certain
developments in that country.
Why There Was Surprise
Excellent authority is given for the
statement that the department of state
has learned regretfully that the bank
ers of the United States, and many of the
men of capital have been persuaded that
this department was not disposed To look
with favor upon outside investment of
| American capital for any purpose. The
| statement was made by state department
| officers that any one who Ia familiar with
the recent financing by which Nicaragua
| is now enabled to place her financial and
Industrial system upon sound basis.
sisted in that effort by the establishment
of an American bank there, knows that
the state department was very kindly
disposed toward the proposition and en-
couraged it In every way it reasonably
could. This impression can be traced to
mistaken views partly due to what is felt
to have been somewhat tastless
nouncement by the department of state
soon after the Inauguration of the pres
ent administration that it would cancel
any understanding entered into by those
who were in President Tafts admins
tration in authority at the department
with the American banking syndicate
since the new administration did not
intend to encourage so-called dollar
diplomacy"
Probably had the state department
waited a few months before taking this
action the withdrawal of the American
banking syndicate from the six-nation
group which had agreed to lend China
5000 900 would not have been made in
the sensational way in which 1t was done.
Bankers all over the United Etates at
that time were persuaded that the depart
ment did not intend to ally itself with
any banking or investing proposition be-
tween American and foreign countries.
This view has led to the practical re-
fusal of American bankers to pay heed
to any proposition of that kind, They did
not feel justified in doing that if the
department of state was hostile to ar
rangements of that kind
But the department had no intention of
anita gonizing American banking or capi-
tai investments elsewhere. 1t was in
fact hopeful that it would be able to en-
courage American relations with foreign
la nds in such way as to lead to increased
trade. The department would now be
very glad if there could be general knowl-
edge of the fact that 1t is in perfect
sympathy with all American efforts to
increase trade relations or such Amer
ican investment in foreign lands as would
tend to increase trade relations as has
been any administration of earlier years.
1t had been presumed at the state de-
partment that the fact that there was
incorporated into the new banking and
currency law provision which will per-
NIT the establishment of American branch
banks in other lands would be sufficient
To assure ha mixing interesta avervwbera