The Washington herald., 1917-08-08
HOLLAND LETTER
The Biggest Daily
Financial News Feature Of
the county's Best Newspapers.

ciosihe oi Tue NeW tork STOCK Ex-
change three years ago. ]. P. Nor
gan. speaking on August for the
syndicate of which he was the man
ager, announced that the loan of
500, 10000 which the Dominion of
Canada sought in the New York mar
ket had been absorbed SO that there
was nothing left for the syndicate to
carry. The incident, trifing as $780,
100000 seem in comparison with some
other financing since August, 1914,
served, nevertheless, to demonstrate
the amazing change which has taken
place in the relation of the United
States with other nations from the
financing point of view.
In fact, while there have been many
interesting articles published since
the first of August that told in brief
the story of the three years war, new
ertheless there has been trifling or
merely incidental allusion to the part
the American bankers have taken in
aiding the allies and In bringing the
United states within three years TO
the acknowledged position of suprem-
acy in the financial markets of the
world, for the time being at least.
Three years ago, at a meeting in
Mr.. Morgan's office, 1t was decided
to recommend to the governors of the
stock Exchange that they order the
doors Of the Exchange to be closed.
The United States. and especially
New York, were at that time in a
Mighty dangerous chaotic condition.
Exchange had mounted to such a fig
ure as to make it practically impos-
sible for those who owed money
abroad to secure the exchange
through which to make payments.
The first imperative necessity was
that due to the situation in which
New York City found itself. For the
city owed large amounts of money
to the citizens abroad who had mr.
chased New York bonds, but II was
impossible for the city to secure ex-
cepting at a ruinous cost, exchange
with which to meet these obligations,
Mr. Morgan thereupon, Immediately
after the Stock Exchange was closed
accepted a new responsibility OF tbe
Kind which, had his father been living
he with his customary courage would
have assumed. The call upon I p
Morgan, who had succeeded his father
only three years earlier. for leader
snip in a highly difficult piece of
financing was the first visible demon
stration that the great authorities in
finance and banking recognized him
as fully qualified to serve in a time
or dangerous crisis as his father in
other years had done.
Under Mr.. Morgan's leadership. one
hundred millions in gold was speedily
secured from the banks and the bank
ers of New York City and its vicinity
and this was so utilized as Immediate
ly to put an end to the grave danger
OF protest of New York City obliga-
tions, and thereby ruin of its credit.
All Of this gold has come back.
That achievement was Immediately
followed by another under Mr. Nor
gan's leadership. Merchants and i'm
porters of the United States were in
debt for goods bought in Europe or
for credits established in London to
an amount estimated to be as high
as two hundred million dollars. These
merchants and importers possessed re-
sources vastly in excess of two hun
dred million dollars but they were
unable to obtain the exchange with
which they could make payment of
their obligations to London and to
other places across the sea.
Mr.. Morgan thereupon undertook TO
American bankers with intent to Sc
cure in that way a hundred million
In gold to be shipped to Ottawa, Can
ada, where 1t would be under the con-
troll of the Bank of England. The
American banks responded speedily
to this apeal. The gold was secured.
1t was placed in proper hands In OF
tawa. 1t provided the American mer-
chants and importers with the means
whereby they could obtain the ex-
change so that within a short time
these obligations were fully met All
of this gold has also come back.
By the first of November the only
Indebtedness the United States owed
to London and Europe was that rep
resented by American securities, of
| which an amount estimated to be
| as high as 5000, 100000 was held
by foreign industries.
These two transactions were
really of swift and complete influ-
ence in establishing confidence in
the United States and were the first
steps along the path which led to
| accommodations to Europe or al
least to the allies which have risen
now up into the billions.
The statement has been made that
the recent floating of the 500, ,OOO,-
600 Dominion of Canada loan in the
United States was the first made by
American bankers to a foreign gov
ernment. But those who have made
this assertion forget that so speed
lily had the United States recovered
its equilibrium, so clearly was II
demonstrated that our Federal re-
| serve system and our resources were
equal to any emergency that Great
Britain and France Jointly ap-
preached the United States hoping
to secure here a loan perhaps for
as much as $1,000, ,000, 900, certainly
for as much as $500,000,000. The
preliminary negotiations followed q
visit to London by Henry P. Davi-
son, of ]. P. Morgan & Co., and by
Mr.. Morgan himself later.
Five hundred millions was the
amount finally determined upon and
again Mr.. Morgan was appealed to for
assistance in placing this loan in the
United States. The task assigned 10
him was especially difficult because
England and France did not offer any
other security for the loan than the
good faith of the nations, backed by
their resources. Americans were ac-
customed, excepting in the case of
government or State and municipal Sc
curities, to demand that behind any
offering for loan there should be
placed collateral security. Mr.. Nor
gan in a brief address assured the
bankers that there could be no better
security than the good faith and honor
Of England and France behind which
stood untold resources. The entire
amount was subscribed for and for the
first time in our history American
bankers made a loan aggregating
many millions, not merely to one but
to two foreign governments who act
ed jointly in the transaction.
The achievements of the American
bankers were not lost to the view of