The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-06-19
M. L. SCHIFF DOUBTS
WAR LOANS VALUE
Banker Points Out T. s. Has
Not Yet Become Market
Of World.
CAPITAL NEEDED HERE

Mortimer T.. Schiff Of Kuhn, tooh
Co. in an address delivered before IN.
Pan-American financial Conference 4,
Washington recently. pointed ou, tn tbs
delegates from the South and Contra,
American countries that it must mo, n.
assumed because n number Of fore,v,
loans Ind recently been placed in IN,
country that the United States had sud.
denly become n world market for securi.
ties and hat this country was In n co,.
dition to take the place OF the Europe,r
markets. Mr.. Schlr said tina, tho a..
eign loans placed here had been IN ,
certain extent forced by the war and
were possible owing to the great al.
though probably temporary-abundanc.
OF money. lie thought that n consider.
tho foreign loans had been created nv
the high interest rates at which ,hsv
were offered.
1T must he borne In mind from N.
start that we ourselves are NO, ii. Co,
under normal conditions a lending ma.
ton" said Mr.. Schin. I'VE stil roed
larg" amounts Of capital for our own
purposes and a very considerable nor.
ton OF our own securities are srill hs,d
abroad. for which we must be prepared
eventually to make payment. either h,
repurchasing them or ny meeting them
when they mature. In addition our in.
vesting public is still in large measure
timid about investing money in foreign
countries and prefers American securl.
ties to such nj extent as ut times 10
make the difference of return he,vee,
foreign and domestic securities OF aim.
lar quality offered in our markc, ren
almost absurd. The banker is of cours.
dependent on his clients. the ultimate
investors. and while he can do much
10y a proper presentation of facts 70
educate them, he Is forced to adopt their
view and can successfully offer and
place only securities which meet with
their unqualified approval
Divided Into Three CInsses.
Mr.. Schin said that nterns,ionsr
W NV bdllhfl y S1dflnO.nf
might be roughly divided into three
classes Of investments or advance o.
credit as follows First, Gcvc-nuen,
loans, including those Of States and mn.
inequalities second, obligations and
shares OF transportation, industrial Ard
public service corporations third. CON.
inercial credits. and generally the fran.
ang of purchases and sales Of goods
and commodities. He then pointed gu,
fnlf avery rtUt "a. h.l Ia. .
Of doing business and that the methods
of the United states differed greatly m
some particulars from those of England
france and Germany. As a result
security which might find a ready mar.
ket IN Europe might not meet With ~
satisfactory a reception here. Aho,,
all, In making Government loans. Nj
semi sad, II was of the greatest IN.
portance that the Investor should 90,
that the borrowing country w.,
economically administered tina In It's
annual budget income and EXPENSES ba'
ancei and that the proceeds OF the loi,
wanted were for productive purposes. -
from the point OF view Of the investor.
dr~eadnoughts and rifles are not A good
security. Mr.. Schiff believed that a cour.
try should provide out of It's own hudgcr
for all that mlgh be called It's .o,.
productive expenditures and that
'''hA' l'EAlN'N = lplttel eNll'tN .tE~ vi.
such works as might he s~elf-supportu s
lie then said
~ would venture to sugges, tina, i
financing produ tive enterprises Dr. p
countries the most aCcoptth,, fr4r
OF security is a bond having "a q >
lien upon the enterprise itself and gu t-
intecd 10y Endorsement by the Go,,--
meut. rather than a direct Governne~'
Obligation. Where, however. II $ p
feasible 10 issu" sue a guaranteed O..
gt'Ion, ana consequently a direct Oh
CATION Of "A Government is for one rr.-
son or another the type Of bond s'le 't'i
a definite pledge for the service %. -
of all or a portion of some d.a.
form Of governmental ven W
prove OF advantage. This M Ut
he necessary, but with Cuu'tr'
still in curse of development and
pendent on foreign financial aSss' a.,
the investor seems To feel thai he has
right 10 expect that some detu,;'
curly be given