New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-09-18
LOAN TO ALLIES
HINGES ON USAGE
FOR MUNITIONS
Western Bankers Insist
Money Shall Not Go to
Buy War Supplies.
CAUSE OF SHRINKAGE
TO HALF BILLION
Agreement Near on Character of
Deal-Actual Terms Not
Yet Considered.

An agreement between the Anglo
French financial mission and the
Americay bankers relative to the es-
tablishment of huge credit here for
the Allies is a possibility within forty
eight hours. This was learned au-
thoritatively yesterday, though because
of the many complications involved in
the transaction both sides are extreme
ly reticent.
If the agreement is made. ii will not
be on the actual terms Of the loan but
on the broader question of its char
acter. There have been no formal nego-
tiations as yet, according 10 a banker
who is thoroughly acquainted with
everything that is going on. Instead,
there have been what are known in the
language of diplomacy as "conversa-
tions."
The stumbling block is the question of
whether the proposed loan shall cover
the purchase of munitions. Until the
Western bankers were brought into the
discussion and the pro-German factor
loomed large in opposition TO any loan
Whatever to the Allies. it was more or
less taken for granted by both sides
that the munitions difficulty would not
obtrude itself. But now, it was learned
in the financial district yesterday. il
has become a matter of great i'm
portance.
The foreign commissioners, there is
reason to believe, are insistent that
some way shall be found TO finance the
Allies munitions purchases here, with
out resort to further gold shipments.
The Eastern bankers were generally
disposed to meet their views until it
became apparent that the support of
the West would be refused unless the
credit covered purely commercial pur-
chases and excluded munitions. The
promise of cooperation from what
have been called pro-German bankers
hung upon the same condition.
Opposition Was Underestimated.
In the beginning the active pro-Ger-
man opposition and the need of CO.
operation from bankers whose senti-
ments or whose clientele precluded
their support of any loan that should
cover munition purchases were greatly
underestimated. With the coming to
New York of such influential Western
fnGnciers as James ]. Hill, James B.
Forgan, of Chicago. and Festus j.
Wade, of St. Louis, the big Eastern
bankers were compelled to see light.
That is why the proposal to lend a
billion dollars to the Allies shrank to
half billion almost overnight.
With conditions changing daily and
even hourly the size of the loan cannot
be stated with defniteness. Even with
cut the inclusion of munition payments,
however, i is practically certain 70
exceed S500.000.000 Bankers were con-
fldent about that yesterday, though
what the excess would ultimately be
was matter of various conjectures,
$3.50 100000 being the general maxi
mum.
About the only point that has been
unchanged through the series OF inter.
v,ews between individual members OF
the foreign mission and American
bankers in the course OF the week Is
the rate at which the loan Will be OIL
fered to investors. That remains
straight 3 per cent.
Bankers Insist on a Profit.
The plan to have all purchasers OF
the bonds fare alike, on the theory that
tho loan is a patriotic undertaking,
where there should be no syndicate
rrofits. has been received without en-
tbusiasm in many quarters. A number
of important bankers insist that there
shall be a bankers advantage OF at
least u Of | per cent to cover the cost
Of distributing the bonds 70 ultimate
investors and TO yield them proht be-
sides.
One Of the best known financiers IN
tho country, whose institution Will be
big participant in the loan, declared
positively Yesterday that the bonds
Irould he offered TO all-bankers as well
ne investors-on a Hat per cent IN
come basis; that the banks would NOT
he underwriters in the loan. in the
sense that they would guarantee ITS
success and receive compensation
therefor. but subscribers; and tnat me
only allowance that would De mace "
these primary subscribers the 1ahks'
nv the foreign governments would be
"a. sum. distributed pro rata. IN ac-
cordance with their subscriptions, 10
cover the actual expenses OF vending
,be securities. He likened the sale to
an Offering of United States govern
-, o. or New York City bonds.
Talf an hour later another banker OF
81 nrominence told inquirers with
the same positiveness that the cost TO
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