The Birmingham age-herald., 1915-08-19
PROPOSED FOREIGN LOAN PROBABLY
 WILL BE REDUCED
Bankers Still Working on Exchange Rate Problem, But Have Decided Upon
 No Definite Course


 the proposed foreign loan to be floated here from the half billion dollars first suggested to s1o0.Ooo. 00o or sf5o. GOO. 900 seemed probable tonight as the result of all-day conferences of international financiers here. and by cable between New York and London.
 It was believed this amount would be inadequate to meet the volume of bills coming due rapidly against foreign buy CTS of American supplies but it was felt it would right the foreign ex- change markets temporarily at least. and restore to normal value foreign moneys
 The chief reason for the contemplated reduction in the size of the loan was understood to be the belief that too big a loan could not be placed readily here,
 Wires to England vibrated all day with questions and answers. proposals and suggestions. At the close of the day negotiations had not assumed con crete form.
 According to reports. collateral for the proposed loan was to consist partly of American securities, partly of British external notes and partly other col lateral of a character not yet deter mined.
 Reasons for Reduction
 Reasons for the radical reduction caused much speculation Wall street heard that a canvass had been made b / the syndicate concerning the loan and the result of the canvass showed that there was not now widespread de mand for foreign securities of this char acter. Besides it was thought that in ternational bankers who propose to fi- nance the loan would not hazard it's failure by making the amount too large but would prefer to have a smaller loan subscribed than see a large one fail
 As to rumors that large amount of gold would be sent to the United States to help pay off foreign indebtedness ii nanciers asserted today they would de plore the arrival of a great quantity of gold. The present supply, they said, Is unprecedented; in fact more than sufficient to meet any emergency in the domestic financial situation. To draw more gold from foreign countries, 1t was said, would serve no good purpose here. but would tend to wreak injury abroad by weakening foreign reserves already low. In addition super abundance of gold here. it was said, would cause tendency to cause infla~ tion
 Whether the Washington administra tion would disapprove the underwriting by American bankers of a large loan to Great Britain or to her allies a first occasloned some speculation Careful study of the situation, however led to the belief that inasmuch as the entire loan would be used to pay for supplies purchased in America there would be no opposition.
 May Tax Securities
 In connection w4h American collateral which might form a considerable part of British loan it was intimated that the government might impose d heavy tax on all such securities which might be withheld by their British owners from participation in the loan
 It was learned that J. F. Morgan & Co. had virtually concluded arrangements for the sale of the 135, ,00O,000 francs of Pennsylvania railroad 3% per cent bonds, which formed the major part of the s43,- O0o,0OG loan recently made by the French government through the Paris house of Rothschflds. It is proposed to sell these bonds to the railroad through their repre- sentatives, Kuhn, Loeb & Co.,, and the difference between the amount loaned on these bonds and the sum obtained will be paid to the French government. which Will liquidate the amount of that obli- gation by payment to Morgan X Co.
 There were indications however, that negotiations now pending between Mor- gal, X Co. and Paris would result in an- other loan, probably of larger amount than this one. As the French government will have very heavy payments to make in this Country before the end of Sep tember. the amount involved ip any new undertaking with American bankers will depend largely upon such relief as Paris may be able to secure through London
 Slight Improvement
 Notwithstanding the unsettled situation there was no further weakness in ex- change markets today. On the contrary there was a slight improvement. Rates on London and Paris, particularly the latter, hardened materially, although much of the improvement in remittances to London was forfeited late in the day on renewed offerings of bills. The course Af exchange on London again demonstrated that much of the re- cen. decline in sterling resulted from rather than legitimate busi- ness In the parlance of the street, there has been much short selling of exchange on London for many weeks and covering of contracts has followed. Some inter- ests. 1t was commonly reported had waited too long to do this to their sor- row
 Sterling opened 1dl12e above yester- days low record, went 1c higher still or thereabouts at midday, but held off at the close of the market and lost great part of it's gain Francs were quoted at |o 9S, 7c better than yesterdays low. Lires and other continental exchange were rel