New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-07-03
HUGE WAR LOAN
FOR ENGLAND
PLANNED HERE
Short Term Issue May
Reach 100000, OOO-To
Bear 5 Per Cent.
BANKERS DEMAND
TAX EXEMPTION
Bonds Must Be Direct Govern
ment Obligation-Davison
May Be NegotiatOr.

A large war loan to Great Britain by
American bankers Is being negotiated.
While il may be several weeks before
definite arrangements have been COM
pleted. il was learned yesterday from
trustworthy sources that the amount
under discussion is between 100000
600 and $500 900, 900, to bear an interest
rate of 5 per cent. This rate is one
half of 1 per cent higher than the
$4,000, 100000 war loan now being Of
fered TO English investors carries.
Among the details yet to be decided
is the date of maturity. American bank
ers who have agreed to participate IN
the loan have announced that they do
not wish to tie up their funds IN
long-term bond issue. II has been
tentatively agreed that the loan shall
not run longer than ten years, while
the minimum period has been placed at
three years.
The American bankers have stipu-
lated that the loan shall be free from
the British income tax, and that any
subsequent British offerings II this
country shall not bear higher dis
count rate. Il is understood that the
greater part of the loan will be taken
by institutions, and that the amount to
be offered TO the American public, II
any, will be small.
In contrast to the recently completed
arrangements by J. 2. Morgan Go.
with the Rothschilds, of Paris, for
French credit here, the initial amount
of which is understood to be about $780,
900. with securities of American Ugh
grade railroad bonds as collateral, the
new British loan will be direct obi
CATION of that government.
That English bankers have not adopt
ed measures to sell bonds in this coun-
try before has been due to the higher
interest rate, which, up TO the present,
the government has been unwilling 10
nav. II is understood that strong eff
forts were made 70 sell a part of the
new war loan TO American investors.
These attempts apparently have not
met with much success, in view Of the
fact that 80 many domestic securities
can be obtained on q higher income
basis.
The course of the foreign exchange
market in the face If heavy shipments
of gold to this centre has made it i'm
p rative that Great Britain sooner or
later take steps to check the growing
weakness. This week sight drafts on
London sold at s4.75 for 81, the lowest
price in the memory of foreign eX-
change bankers. Normally gold SOW
ereign is worth S4s6ta.
Gold imports for the month of June
from Canada amounted to $4,000 900.
There has also been heavy liquidation
Of American securities held abroad,
particularly railroad bonds, but these
factors have not been important enough
to keep up with the purchases of am
munItion and food supplies, shipments
of which are now going forward in
large amounts. The Bethlehem Steel
Corporation is among the big ammuni-
ton producers now exporting orders in
very large quantities.
A concrete illustration of The ex-
tent of these shipments from all
sources was given by the recent state
ment of the country's $1,000, 100000
excess of exports over imports for the
fiscal year ended Ju1e 30. This will
be further augmented within the next
few months after this years crops
have been harvested.
The projected British loan is the
first that this government will have
placed publicly in this country to
finance purchases for the Allies. It's
financial advisers have reached the
conclusion that the S5,O00,000, 900 war
loan, recognized everywhere as mas
ter stroke Of finance, IN view Of the
governments offer TO refund the eX
isting 212 per cent consols at Sc %
and the former 3l2 per cent war loan
at 50, must be further supplemented
from outside sources.
Financing the needs of the belliger-
ent European nations by American
bankers, not including the extension
of private credits in large amounts,
in addition TO the recent credits TO
the French government. limited only
by the amount of American securities
deposited as collateral, has included 3
$4,000, 900 loan to France last October
by a syndicate headed by the National
City Bank, S50,000000 to France in
the form Of per cent treasury bonds,
and S25oO0,O00 to Russia, which was
backed Dy Russian bills Endorsed by
a syndicate headed by J. ?. Iorgan
& Co.
Other foreign loans Of minor char
acter have been placed in this market
since the outbreak OF the war anu
lend force to the argument that New
York now stands above London in
financial importance. These loans are
100000 to Argentina. S3,OO0.COO 70
Panama, $4,000 600 TO Norway, $4,000
600 to Sweden, S6,000000 to the city
OF Montreal and Sl2.500000 20 the
Canadian Pacific Railroad.
The National City Bank, in is June
oircuIor oaue TINT tbs of for
eign credits that may be placed here
may run as high as 81 GOO, 100000 with
out endaugering the country's gold
reserve. Completion of arrangements
for the loan to Great Britain now
under negotiation is understood 20 be
in the hands Of Henry P. Dawson,
who Is now in London conferrlng with
English bankers.