The Birmingham age-herald., 1916-04-24
FRANCE ID UTILIZE FINANCING METHOD BROUGHT ON BY WAR Hard Headed Americans h. sisting on Collateral Put
 Up as Security ARTIFICIAL PLAN
 HAS BEEN EVOLVED Both England and France Have Been Mobilizing Enormous Quantities
 of American Securities
 for Emergencies
By HOLLAND

By HOLLAND
 | New York, April 23.-Did J. P. Morgan when he said-after he returned from I Europe-that it seemed to him that they were handling and would continue to handle securities over there so as not to disturb the money market have in mind | the alleged plan whereby by highly arti- l fcial and very skillful financing France can obtain large loan in the United States without being compelled to pledge something besides her honor and credit as nation as security? That was the question sometimes asked when the some what vague report was made public which told of the working out of plan where- by France could in fact, although not in name borrow from the United States a large amount of money, and in doing that utilize large blocks of foreign securities which she holds. If there were anything in the plan, MT. Morgan probably knew all about it when he returned few weeks ago.
 There were intimations that France did not cordially approve any negotiations which involved the pledging of securities upon which to secure a loan in the United States. Her bankers might have done that and it would be looked upon purely as banking transaction But there IS d delicate-some have thought rather far-fetched-sense of national honor which stands in the way of the making of a loan by nation upon any other basis for security than it's national honor and credit. This was one of the reasons why the negotiations of last autumn between representative of France and of Eng land and some of our international bank CTS were considerably protracted. Our bankers would have preferred to negotiate upon a collateral security basis
 There has been intimation that it was also one of the reasons why the amount which the English and French represen- tatives had in mind when they came to the United States-namely, $1,OO0 900, GOO was firmly declined by the American
 bankers. France and England believed that the joint credit and the joint re- sources of the two nations furnished suf- ficient security for loan of $500. ,OOO
 Had there been securities behind this loan, the total amount granted might have been larger and the terms more 1aVOfdDle 10 EnSldnu anu TTdHCS. <ao it was, Ir.AnS men of capital who were both hard-hes.'eA ,ad clear-headed could not be tampted to invest in the bonds or notes wmcs SepreSented this loan. These men wanted collateral security. This was especially true of New England, and at one time in the late winter the under standing was that very few men of cap- security.
 THE PROPOSED LOAN The French proposition, as it was some
 what vaguely reported a few days ago.
 seemed to some of those who heard it to be reminiscent at least in one or two of it's features. In the early autumn of 1914, when New York city was brought face to face with the peril of protested notes in London-for the city owed large amount of money represented by short-time notes-which had been mar keted in London--some of the leading bankers, numbered among WI nm were several who since have taken art in financing the needs of England and France and, separately. some of those of France. worked out plan by means of which the credit which would be in certain securities of New York city could be made available for securing advances of S1O0, ,OO0,0 900 in gold. The gold was to be sent to Ottawa, Can, where it would be just as available for meeting New York citys obligations abroad as it would be if it were actually deposited in the Bank of England
 Certain technicalities associated with this transaction may possibly have sug- gested the alleged transaction by means of which France may procure large loan in the United States and yet do that with out, in name at least, pledging securities If it should happen that France sent to the United States considerable blocks of foreign securities of which she or her citizens are the owners, with intent to place these securities in the possession of an American corporation followed by an issue of bonds by this corporation be- hind which these securities stand ,and that the corporation should sell these bonds and hold the money at the disposal of France, then upon the face Of 1t the American corporation would lend France the proceeds of the sale of it's own bonds and the honor and justifiable pride of France would in that way be protected A YEAR OLD PREDICTION One of those who have been assoclated in large way with important financing by American bankers of the needs of the belligerent nations predicted just year ago that two at least. and perhaps more, of these nations would be compelled in 1915 and 1916 to seek the American money market for aid. He said that in one way or another-and probably in some way involving very delicate and highly artifi- cial but perfectly honorable financing the nations across the sea- particularly England and France, would find it neces- sary to make use of securities in order to receive the aid they ask for.
 He seemed to have at his fingers ends compendious statistics which told, in part at least, what were the magnitude and the character of the securities England held and also, to some extent, the securi- ties then held in France. He said that | if the war were prolonged another F
 months it was inevitable that France, in directly at least. by the use of some of the securities held in that country, | would seek financial aid in the United States. That was also true of England. although he thought it likely that Eng land would pay some part of her indebt- edness to the United States on trade ac- count by the use of American securities, the ownership of which was in England. Were the war to last, he said Is months longer it was likely that the United States would absorb in the form of se- curities pledged for loans or else through downright sale in the United States of securities of other nations which have ac- |