New-York tribune., 1917-07-18
Tuesday, July II, 1917.

When the United States assumed
an active part in the great war and
the Liberty Loan was announced
this market was automatically closed
to Canadian financing. In as much as
the United States Government has
made no advances to the Dominion
probably because the needs Of the
European Allies were more pressing
our Northern neighbor faces a
rather serious problem in finance.
Canada, in certain respects, has
been in a position somewhat similar
to that of the United States, notably
in that she is a seller Of supplies to
the Allies, and thereby is favored
with a large export balance in her
trade with Europe. But she has
had to finance a considerable por-
ticn of that balance, besides pro-
viding for her own military ex-
penditures by the fotation of in
ternal war loans, amounting in the
aggregate to more in proportion to
her population than the first war
loan of the United States. More
over, the London market, upon which
Canadian municipalities and corpor-
ations had always relied for funds,
was closed to them when tho war be-
gan. Until the bars were put up here
that caused little inconvenience, be,
cause there was a ready market for
good Canadian bonds, as is evidenced
by the fact that in 1915 and 1916 ap-
proximately seventy-fve different is-
sues, aggregating more than $780,
100000, were successfully foated in
New York.
When we entered the war num-
ber of issues were under negotia-
ton, but in every case the negotia-
tions were abandoned forthwith, and
borrowers had recourse only to the
domestic market. That, however,
lad been pretty well dried up, the
war loans having absorbed about all
the funds available for investment.
Consequently few borrowers have
been able to get what they required,
and those only at price which or
dinarily would have been considered
prohibitive. Recently the City Of
Montreal offered an issue of bonds,
and received no bids at all. 1t was
able to meet necessary expenditures
only by securing a temporary loan
from the Bank of Montreal. An is
sue of Winnipeg Water District
bonds met with a similar fate, but
later they were placed with invest
rent houses at price to yield about
6A per cent. Not so long ago SIM
liar bonds were placed in the United
States on a basis, it is understood,
nearly l per cent below the price
which they fetched in the Canadian
market.
One of the immediate problems
which the Canadian Government has
to face is the payment of an issue
of S2O,OO0,000 short term notes
placed here about two years ago and
maturing next month. No doubt ex-
lists, of course, that way will be
found of repaying or renewing this
loan. But is is not at all likely
that Canadian municipalities will be
able to float their securities in the
United States during the war period.
/ The investment. market will have all
it can do to provide funds for the
government and for American muni-
cipalities and corporations.
The major problem, however, lies
in the financing Of the balance in
trade between Canada and the
United States. This is running in
our favor at the rate Of about $780,
100000 a month, or S600,000,000 a
year, according to the latest official
figures. Obviously, it will be i'm
possible for the Dominion to meet
such balance as that, and she must
either curtail purchases from the
United States, which can hardly be
done to an important extent, or we
must provide the funds to finance a
large share, if not all, of the bal
ance. Seemingly. the only way in
which that can be done is through
direct advances by the United tSates
Government. 1t was TO urge the
necessity of such action that Sir
Thomas White, the Canadian Fin
ance Minister, conferred with Secre-
tary McAdoo at Washington during