The Bridgeport evening farmer., 1917-03-22
=. Finance. Real Estate Insurance =.
SECURITY FOR
 ALLIED LOANS

An effort has recently been made
 to befog the minds of investors as to the sprecise meaning and value or the conditions on which the Allied POW
 CTS have raised in America the loans necessary to keep American factorles
 busy with munition orders. It may
 be we'll, therefore, to define once
 more the security on which these
 loans rest. Great Britain has pup licly offered four loans in the United
 States, of which three have been se-
 cured" and one 'unsecured Ihe se-
 cured' loans need no lengthy refer ence. American subscribers thereto
 lave. as collateral security for repay
 ment, bonds, mostly American depos-
 ited with American Trust Companies / which provide, with ample margin,
 for the repayment of the loans ct their date due even if the capital c1-
 ties of every one of the Allies were
 destroyed by thunderbolt. The only unsecured" loan orered publicly by
 Great Britain in the United States ls the issue of Anglo-F'rench Elves, da-
 ted October 15th, 1915-the first
 loan, in fact, to be offered to the American investor by the English government% These bonds are the ijoint and several obligation of the British and French governments, and 1their amount is 5GD million dollars, the annual interest charge being, therefore, recall that the prospectus been suggested that some legal qulb- ible might enable the British and French governments to avoid or post !pone repayment of these bonds when
 they fall due in 1920. One may, t therefore, recall that the prospectus inviting applications for the loan, which was notified all over America, stated that "both principal and inter lest are payable in New York City in
 United States gold coin, without de- iduction for any present or future Bri- stish or French taxes" To this pros .pectus were appended the names of I62 of the leading American Banks i and Trust Companies evidence enough for the plain man that this
 poryision was, in fact, contained in the contract for the loan. This con- tract, as is we'll known, was concluded in New York with the American Ranking Syndicate by the duly ac- credited representatives of the French isnd British governments, and Is, therefore, a contract made under the laws of the United States. Thus any
 precedents of decisions by the Uni-
 ted States courts allowing foreign ,corporations to vary contracts for re- payment are irrevelant to the case of the Anglo-French Elves, which, having been issued under contract
 made in America, are in effect Amer
 ican, not foreign, loans.
 As for the security for this loan of ! 800 million dollars, it can hardly be
 g, matter for question. The French
 government raised from taxation alone during 1915 some 800 million
 dollars, and British revenue from { taxation is, at present, being collect ed at the rate of 2,500 million dollars 9 year, or, together, more than 130
 times the interest required fro the
 .Anglo-French Elves. Statisticians
 (including Dr. Helferrich, subse- lquently German Finance Minister) have agreed in estimating the wealth ! of Britain alone is equal to 75 times the total amount lent by the Ameri-
 can investor to the British govern Tnent- Moreover, practical financiers
 know that a loan obtained abroad Is lin reality a preferential charge on ! the government which has obtained {; the loan. For the circumstances (in- conceivable in the case of Great Bril- tain or F'rance) which would make [ default possible would make the gov ernment all the more eager to ob- tain loans abroad. And if there had once been default abroad, further for eign borrowing would Fbe a hard task Thus 1t seems fair to say that the An ] slo-French Elves, or, indeed, any ''un- : secured" loans issued by the Allies in .-Amerfca, are, in fact, free from the I possibility of legal juggling detrimen-
 tai to due repayment or principal, and
 arc secured over and over again by
 the solid wealth and by the proved
 taxable capacity of the borrowing na-