The Birmingham age-herald., 1916-08-21
NEW BRITISH LOAN TOPAY FOR GOODS MADE IN AMERICA Quarter Billion Dollars Ex- pected to Be Taken Up
 Without Delay LOAN INDICATES BIG EXPENSE OF ENGLAND Collateral Security to Be Furnished Because of Feeling on Part of
 Many Investors in
 America

MdHy investors Tn
 America
 By HOLLAND
 New York, August 21.-(Special)-One
 of those who are of high authority in the field of international finance, and
 especially the new features of that fi-
 nance which have been developed by the
 relations of Europe to the United States
 since the war began, said this morning
 that for the American public there were
 several highly interesting and valuabl
 Influences which will be created by the new loan to Great Britain aggregating $250, 100000. The great bankers of the
 world will be especially interested in the details of this financing the manner in
 which the negotiations were carried on and the part which the American syndi- cate which has undertaken the loan has taken in the negotiations. These, how
 ever, are technical matters of importance only to bankers
 For the American public the prime con-
 sideration associated with this new loan is the fact that, with the exception pos- sibly of a small part of it which may so be utilized as to take up certain obliga- tions about due, this money will go into <AiicIlCdH POChGIS. fOT IL IS the u0Qe1s standing that it is to be used in payment for commodities bought in this country Another peculiar feature of the trans action is to be found in the fact that the ability of the American syndicate to negotiate confidently loan of this kind reflects the abundance of money already brought into the United States in pay
 ment, chiefly by Europe, of commodi- ties bought in this country.
 r,ci5 io, of into +a the American people, this banker said is the probability that only a small DOT tion of this money, if any at all, will be used to pay for great guns, rifles or other implements of war because Eng land has now so perfected the industry that she is no longer compelled to rely upon other countries for munitions of this kind. But she must buy in this
 country great quantities of explosives and other raw materials and undoubtely a great deal of copper and steel. The banker spoke of it as an amazing fact that within a year and a half England had been able so to perfect her muni- ton manufacturing industry that she is no longer compelled to rely upon pur- chases in the United States and else where
 HALF A BILLION IN A YEAR Still another interesting fact for the American people which was mentioned by this banker is the magnitude of Eng
 lands borrowings in the United States in less than a year. For not yet have twelve months passed since England and France jointly borrowed a half billion dollars in the United States. presuma-
 bly, one-half of this amount going to Great Britain. Now, ten months later, Great Britain borrows a quarter of billion, making her two national loans placed in the United States aggregate in less than a year half billion dollars.
 These figures suggest the enormity of
 Great Britains expenditures and they also make it clear that her credit is still high, her resources are ample. so that if six months or 10 months later her finan- ciers should find it expedient again to approach the American market they Will have no difficulty in negotiating a new loan Some of those in the financial dis trict who are familiar with the situation say that 1t would not astonish them if at the close of the European war it were found that England had borrowed in the United States s1.ooo000.o0o.
 A CHANGE OF VIEW
 Another features of this negotiation which will interest the American public
 is to be found in the change Of view or Great Britain respecting the security of this loan. At the time of our civil war, vast amounts of our national bonds were sold in Great Britain. the purchasers not demanding any security, for they were satisfied with the faith and credit of the American government.
 During the negotiat ations for this loan, the English financiers informally and privately admitted that they knew that many American investors looked to se- curity and to security that was visible, marketable and negotiable. England her self did not do that when we sold gov erIment bonds in the southern market in civil war days. A year ago, England's s pride or sense of digniay, as was also the case with France, Justified insistence that the half-billio ion-dollar loan should be made upon the faith, resources and as- sets of the two nations. Now England realizes that this was only a sentimental objection, and that it would be just as
 well directly to deposit securities upon which this loan can stand as to do 1t indirectly, as France recently did when she negotiated her loan of $l0oOO0,ooo.
 Presumably the British government would prefer to market a loan in this country without any other security than the faith and resources of the nation. But
 it is also realized that if there be col steral security behind this loan it will be possible to market it on much better terms than would be the case if no se- curity were offered One of the leading bankers of New England explained the refusal of his institution to particinate in the half-billion loan of October. 1915, by saying that there was no collateral secur- ity behind 1t. That remark reflected an opinion that prevailed in many parts of the United States. Gradually. however, the American people will realize that a national loan made by a nation whose capital wealth is $40 900. GOO needs no other. security than its credit and re- sources.
 Undoubtedly the loan will for a time make its influence felt upon the Amer ican money market, but this will only briefly be exerted. For the expenditure of $250 00o probably within the next six months, for commodities bought in the United States will serve to increase industrial prosperity. This money grad ually but surely will find it's way into the treasury of the corporations, into the envelopes of skilled artisans and ulti- mately back to the banks in the form O ncrea sed deposits.