New-York tribune., 1915-03-27
MORGAN In LONDON
TO ARRANGE CREDIT
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Continued from page
with no certificates Of indebtedness ex-
listing. In effect it is a bookkeeping
entry, and is to all intents and pur-
poses on-transferable. It earns a
larger rate OF interest than a funded
debt or loan.
When the war broke out one imme-
diate effect was a determined effort Of
Europe TO get and hold all the gold it
could. AS was pointed out in The Trib-
une AT the time hostilities seemed
certain, il was clear the war would be
fought more with gold than with bull
lets of lead. Lloyd George, Chancellor
Of the EXchequer, expressed the same
opinion, when he told the House OF Com
mons that the last few millions might
easily determine the outcome of the
war.
This made New York the one free
gold centre in the financial world. The
immediate result was a drain from
Europe that for a time threatened a
gold panic. As long as gold could be
shipped to Europe in safety 1t went in
record breaking lots. Then millions
went to Ottawa for the account Of the
Bank Of England. Hundreds of mill
ions more, II was feared, would go If
the New York Stock Exchange were al
lowed TO remain open and Europe per
mitted to dump more Of the S5,OOO,OOO,-
600 Of American securities II held on
this market.
Gradually this condition was re-
leyed by exports and the big loans Of
credit made to the Allies by New York
bankers, mainly through the house Of
Morgan, until the balance of trade IN
the United States's favor reversed the
situation. and exchange fell TO the low
est point in history. Under normal
conditions gold would flow here in i'm
mense volumes. but EnGland's gold re
serves are diminishing, and she
naturally wishes to retain as much as
possible.
Nor does New York want gold. The
stock of gold in this country is now
estimated az S1,8OO,O00,000, an eXces-
sive amount in the opinion Of experts
and in a way a menace, as continued
excess. especially an increasing one, IS
an invitation to imitation, never de-
sirable thing.
Tends to Restrict Trade.
This condition, as the National City
Bank points out in its March clrcular'
leading as it does to increasing the
value Of the dollar as measured by the
pound sterling, tends to restrict trade
by making American goods cost more
TO those who must pay for them IN
sterling. II is, as the bank points out,
the equivalent of tax on commerce
and an obstruction 10 business. AS yet
this is not serious, but should eX-
change be allowed to drop much tur-
ther. the natural consequence OF an
enormous excess of exports over I'M
ports, il will be serious unless some
means are found to check It.
Further selling Of American securl-
ties by Europe is therefore desirable
from The American standpoint. Europe
cannot pay ir goods, and the CONDITION
bore is .uch that the American market
would readily digest much larger
volume of securities than IS now com
in over How this can be arranged is
one of the things that Will undoubtedly
figure in the discussions Of MT. Mor
gan and the financlers OF England
France and Russia. .,.
Credits extended 70 the Allies are
estimated 70 date to amount to at least
5000 600 900. Most Of this mas Oee;'
placed through the Morgan mouse
There seems, however, TO be no llnilI
70 the demand for credits from Eu-
rome. and as the amount grows larger
the rate OF interest naturally tehds "
mount. Without some distinct uh0eI
standing as to the amount thaJ ma!
he placed and the rate OF interest
+boreon the tendency is toward the
oat;nn If confusion that would serl-
ouslv interfere with American DUST
ness. ,,;.L
Hence the desire for the establish
mont Of 8 limit. Later. of course, TINS
limit NAV, and probably will, be raised
As the representative Of The Amer
an banking world, Mr.. Morgan IS IN
rosition to say just how much credlt
tho bankers are prepared TO lend III
his time consistent with the best IN
toroets Of American business. II Is
n,,f.able business from the standpoint
pf tho bankers. and makes treer mar
ket for American products.
No Lack of Subsc iptions.
When arranged and this may be a q
matter of weeks the larger lenders o.
money. such as the trust ana IN
surance companies, Will De aSheu ~
subscriptions. As the rate VIII pe No. t-n
hfe,ber than funds command here, theTG
Iii no no dearth of subscriptions. Al!
the banking interests VIII nave
chance TO participate. 81, .,o
From these subscriptions VIII come
the money necessary. to pay merGhants IlI.
ana manufacturers for the EoodS Eu-
rope will need. .;..h,,rso
later Europe will have to reimburse
40 horkcrs and others who extend thls
credit through the sale OF sccur l'lcS'
,Tt;a rocessarilv is far in the iutuFe'
bnt the general situation includlnE un's
U,;l undoubtedly be canvassed WIN
Wr Morgan while he is abroad ana lhJ
ovtent to which America VIII De "sAeu
TO contribute Indicated ~. VI. ,,.;lr
In This the position OF New iorh WIZ
10 tbat Of tbe favored lender hrS'' De
- - has the money, and, second
because in all probability therG VIZ Ha,, Dv
at least a tacit UNDERSTANDING nc
/ Work. in return for what II Is no" 10
( inc. will be given the hTst ch""oe ~
make big profits: ood yesterday
- bebaif of the syndicate OF oanKlhg
/ ;msti,mtions =; in New York and the west
tbot its offer for the purchas' OF SIV,-
/ o01 600 nine months 3 per cent German
/ Imperial Treasury notes hau IT,
crnted bv the German RovernLeh{I', ne :e
I notes are to be offered 10 inc pGCi,C oan dn
+ denominations Of $3.50, S3oO ana 9I'VvO
AZ $685.. and the proceeds are 70 ,;,s De
ue.d 10 establish commercI"I oI'u.
Sore 70 buy clothing, shoes etc" Iot
nv %meIo 'D;l;an nonulation. III this loan