The Birmingham age-herald., 1915-10-13
Measure Passed Upon Rec. Ommendati0n of Chancel, Tor McKenna Without Much Opposition
CHANCELLOR SAYS
 TERMS OF LOAN ARE
 VERY REASONABLE
Defends Transaction as Nee essary to Maintaining of Foreign Exchange Mar ket at Normal Level

London, october le.-A loan bili to confirm the action of the government in raising a $500 o0Q, 900 loan in tho United States in conjunction with France passed through all stages of the House of Commons tonight Royal assent is expected as soon as tho House of Lords has passed the bill.
 Previous to the passage of the bill, Reginald McISenna, chancellor of the exchequer, explained the reasons fer the loan and it's terms and replied to criticisms as to the rate of interest charged and profits made by the under- writers. These criticisms were made by a few members of the house. A large majority gave the bill their unquali- fled support and it was passed unan- imously.
 It is not believed here that the pass age of the bill will have an immediate effect on the exchange rate. In fact, It is believed the government will have to come into the market and sell ex- change before a pronounced or perma- nent improvement can be attained. To- days news from New York that tha British financial commission was dis cussing the exchange problem and the establishment of a further credit, had a slight hardening effect on the rate.
 Terms Fair and Reasonable
 Chancellor Reginald McKenna de- fined the terms of the loan as fair and reasonable.
 Deducting eccrued interest. tao'' the British 4ss pei cent loan now stands at s6ts. As the American under writers took the loan at 9e, he arr gued, Great Britain was merely pay ing one-half of one per cent more than the market rate.
 "The loan.r said MT McKenna, 'is for the purpose of paying our trade debt and maintaining our exchange in the United States Our imports from North America have laregly increased since the beginning of the war and our exports have diminished. The in- crease in imports for the first six months Of 1915. excluding government supplies not included in the customs returns amounted to f5S,500 900 ($292- 500,000) and the reduction In exports during the same period was f12 2.000. 900. thus making the adverse balance f70,- 900, ,000
 Mckenna Urges Passage
 some relief for this balance against us may be obtained by the sale in America of securities held in this coun- try. Every effort has been made to ob- tain relief from this course but of it. self this will be insufficient"
 We should not be uong our duty continued ATr. McKenna, If we neg lected to take other means of maintain ing the normal level of exchange I am sure the House will desire to express it's thanks to the commission. Its mem bers accomplished their task with skill and success.
 "The American people not ac- customed to large external loans. and believe this is the first of any mag nitude in the whole history of the United States. We must not overlook the fact that there are many cross currents of opinion in that country.
 Although the transaction was pure ly for the purpose of meeting liabilities already incurred. no little opposition was raised by some parties whose sym pathies were not on the side of the allies. I hope the existence of these parties will not be overlooked during the debate and that care be taken to avoid the use of any language that
 
 to its advantage and to the detriment of the allies.
 .rbe loan is trade transaction. it's terms are fair and reasonable, and [ confidently recommend it's acceptance by the House
 High Interest Customary
 Mir. McKenna pointed out that when the fact was considered that higher inc terest was generally paid in America. &l,. I. Is,,t. onerous than could reasonably have been expected When tho country was at war 1t could not hope to borrow in neutral country on as easy terms as at home
 He thought that the argument that the freedom of the loan from the in- come tax was equivalent to paying an additional per cent was fallacious. Putting the sum that Great Britain owes the United States today for trade engagements at f50.00o,000 sterling, he said the amount could only be paid by the export of capital, presumably American securities.
 "But'' he added. i've said to our American creditors, allow us to defer payments. upon such terms as can be arranged. They agreed. and We were thereby enabled to retain $50, 100000 of capital which We must otherwise have exported, and when we retain that cap- ital we get the income tax on the div- idends from it.,
 Replying to criticisms, Mir. McKenna said the house had received the pro- posal more favorably than he had ex- pected. as for the nation to pay q per cent for an Anglo French loan at any time was startling, but when the mem-s hers remembered the circumstances he thought they would agree that thu commission had done extremely we'll.
 Tried to Get More
 It had been said that the Americans got an exceptionally good bargain, he continued. but they were offered dou- ble the bargain and they would not take it. s
 We tried" said Mr McKeuua,. sto get ee0o,oooO0o. then R1eo0OO.0oO. Tho &Csptlnnsa .. Pase na.sl