New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-06-04
DEMAND LOANS
TO GREAT BRITAIN
Treasury Department Is
Using This Method of
Raising Funds Here.

One Of the methods Great Britain and
France have been using TO maintain ex-
change rates, supplemental to ship
ments of gold and the sale Of American
securities in this market, it was learned
yesterday, has been in the form of de-
mand loans While France has Dor
rowed funds here on this basis to a
minor extent, the great bulk of the
borrowing has been done by England,
either by the Treasury Department or
the Bank Of England.
IL was reported in well informed
banking circles yesterday that new
demand loan had been arranged last
Friday at rate Of per cent Other
borrowings have taken place previ-
ously, and when the rate for sight
drafts on London rose TO a point where
they could be paid off through the reg
ular exchange channels this was done.
Some of the maturities have been
met, however, through shipments OF
gold. This accounts, at least in part,
for the current movement of the pre-
cious metal from the Bank of England's
reserve at Ottawa. Another consign-
ment, amounting 10 $500 900, was re-
CtlNtQ Ug y. 4hoI gan a W ytobtlNoJ
and deposited by them at the Assay
Office, bringing the grand total sent to
this firm during the last month up TO
500 ,756, 900.
Considerable surprise was expressed
in some banking circles that arrange
ments had been made TO provide for
Great Britain's purchases in this coun-
try through the medium of demand
loans. Il was evident that a great deal
of secrecy has surrounded the negotia-
lions.
No definite figures were forthcoming
as 10 the amount of money that has
been borrowed from New York bankers
in the form Of callsble loans. IL was
made known, however, that the total
will run UP into very large figures
One estimate placed the amount as
high as $4,000 900. Il was pointed out
that II such were the case il was logi-
cal 20 assume that such a large credit
was not outstanding at the present
time.
The placing Of demand loans by Great
Britain has undoubtedly been result
OF the hardness Of some of the English
holders Of American securities in turn
ing them into the Treasury for the pur-
pose Of steadying the exchange market.
3
H. p, chairman Of the committee re-
spOnsible for the scheme of modelling
American securities held in British
hands. recently said:
although the scheme has been a
success, securities have not recently
come forward at the rate we wish.
Many holders have failed to realize
that we want all American securities to
enable us 20 handle them in bulk. Al
though il is impossible 10 formulate an
estimate of the amount held here, yet
we know thatan enormous quantity is
still held in private ownership. The
effect of the new impost 90 cents ad-
ditional income tax will be 10 force all
into tho possession of the government.
There Is no intention Of dumping
them. They will be offered regularly
and slowly when the market is favor
able. A large portion will not be
bought outright, but accepted on loan
for any further advances which may
be arranged with the United States"
This last statement Of Sir Thomas
makes il apparent that already some Of
these securities are being used as col
lateral for the demand loans.