The Richmond Virginian. (Richmond, Va.) 1910-1920, 1915-08-18
AMERICA BUYING
BACK ITS SECURITIES
FRANCS GETS BIG sum IN CASH

On Other Hand, katIroAn, ny Reason
OF Large Discount ON Exchange.
VIII Make Abom 10 Per Cent by
Taking Up Bonds Now.
New York, Aug iT.--One of the
strongest demonstrations Of the
strength and position Of this country
in international finance is about TO be
given In the negotiatiosns which IL was
learned are now going on for the pay
ing of of over half of the $4,000, Gee
French loan recently made by Amer
ican bankers to De Reihschild Freres,
of PRRs. This part Of the loan is TO
be paid off, If negotiations are con-
cluded, through financial arrangements
which will result In the exchange
of the Pennsylvania company frane
bonds. which underlie this part of the
loan into dollar bonds, to be issued by
the company and TO he sold In the
United states.
1t is believed that Kuhn Loeb &
Co, which hoated the original Penn
svlvania company loan of 25o,oo0.0Oo
francs in Paris in 1905. will finance
the exchange operation of the franc
bonds that will he released from the
Rothschild loan into the new dollar
bonds which. it IL believed. the Penn
ENIFania company VIII ISSUE.
From high banking interests closely
In touch with the negotiation Of the
Rothschild loan based ON American
securities, which was concluded on
June 20, the report that the Penn
sylvanIa bonds underlying the loan
were TO he withdrs wn and that part
Of the loan secured by these bonds
paid off was confirmed tonight Kuhn.
Loeb d Go. refused 70 discuss the mat
ter.
The amount Of Pennsylvania COM
rany guaranteed 8 ga per cent
French loan bonds Of 1905. which un-
deriie the Roihschiid loan. Is about
10000 eco francs. the face value of
which at a normal rate Of exchange
would he over SCI, 900. 900. The ball
Ance Of the American securities under
lying the loan is made up Of per
cent franc dehentare bonds Of the Chi
raeo, Milwaukee and St Paul Railway
of 1910, which are secured by general
and refunding mortgage bonds Of the
company It could not be learned to-
night whether a similar arrangement
for the purchase of these ST. Paul
bonds through an issue of dollar bonds
by the company to take their place
was being negotiated.
BANKERS ANXIOUS TO
BUY BACK SECURITIES
The broad significance of the arr
ranrement for the Pennsylvania bonds
zr~ scflv.ae rhe French loan Is that the
of thf@ country are in a 20
mition not only TO buy back from
ait utser European countries
aH she high grade securities bankers
OF those nations can mobilize. but that
American bankers are SO anxious to
get these securities al present prices
and exchange rates that they are will
ing TO assist these other countries In
making marketable here the Ameri-
can securities they hold, which could
csaerwise only be sold in their own
markets
At the beginning Of the year, when
American bankers feared the unset
thing effect Of heavy European liqui'
dation Of American securities that wa
locked for IL was held out that tht
issuance of huge amounts of railroad
lords in the currency of European
countries, particularly France. would
act as protection to this market
from very heavy selling from abroad
1t was recognized that these bonds
paya bic principal and interest in other
currency than dollars could not bt
sold here.
FINANCIAL POSITION
COMPLETE.IiY REN ERsED
The turn Of the tide of financial
balance that has since taken place IN
the relations of this country with Eu-
rope has completely reversed this po-
sition This country is no longer fear
ing European liquidation, but striving
to make 1t as easy as POSSIBLE for ED
rome to convert her American securl-
sies into such shape that they can he
absorbed here. The demand from the
American public for the high grade
bonds that were sold to Europe III
former years is much greater than the
supply of these securities available OF
in sight
The Arrangement for the purchase 81
these Pennsylvania bonds from the
French, to replace their present status
simply as collateral for a loan, is OF
large advantage 10 both sides. The
French government and BANKERS gair
an important benefit through being
able Ia get cash for the full value 81
ths American bonds instead Of merely
;h4ir loan value. II is believed thai
the American securities under the loar
arrangement produced probably not
more than so per cent of the market
value OF the bonds. Under the sale
which IL being negotiated, the French
wifi get In cash the full market value
4 of the bonds. 1t lis understood tina
the French government In buying th'
Pennsylvania bonds from private hold
ers in order to make the loan, pait
about ~ for them
Another important advantage 10 th'
French that viii accrue from the sal
Of the Pennsylvania bonds instead D
their pledge as collateral loan security
.s that they viii be relieved of tbs
necessity Of meeting an obligation tina
sill come due July !. 1915
AMERICAN COMPANY
WILL GREATLY BENEFIT
The benefits to the Pennsylvania
company that viii result from the ex
shanae are decidedly great The com
pany will reap the large advantage
Of the favorable franc exchange rate
naw prevailing French exchange hal
dropped 10 a point where the franc
cells at a discount of nearly is pei
cent. which Will be the proft to those
concerned in the operation, chiefly tbs
Pennsylvania company. on the approx
Jmately s27 GOO coo Of securities Thil
profit. of course, may he lessened b.
the higher rate OF interest than tn
present 3 "a per cent. which the com
pany win probably have 10 pay on tn,
new issue of bonds TO replace tn
French Issue 20 be sought The las
issue OF Pennsylvania bonds carried
. q per cent interest Wall Street con