The Washington herald., 1917-07-20
HOLLAND LETTER
The Biggest Daily
Financial News Feature of
the Counhy's Best Newspapers.

A. Barton Hepburn. in a recent COM
municatiOn, stated that the United
States has taken back substantially all
Of the securities which, before the
European War began, were placed in
European markets by American rail-
road and Industrial corporations. So
far as Is known this ia ths first ac-
acknowledgement by an authority,
whose word is always accepted as
worthy OF careful consideration, that
at last the nited States has ceased
to be a debtor nation because il has
| taken back in one way or another,
the securities which were formerly
marketed in Great Britain and Europe
This statement is spoken OF as hav-
ing been made with timely signifi-
canoe, in view of the fact that Just
at this time the United States has
marketed. at home. $1,000. .O00, 600 of
bonds. and in addition to that the
people have subscribed a voluntary
offering somewhat in excess of $780,
OC0.C00 for Red Cross purposes, and,
furthermore, New York City has Just
marketed, with apparent ease, a little
over 100000 OF city bonds. receiving
therefore a slight premium.
1t had escaped notice that in all
this great financing there was one
factor which. undoubtedly aided, at
least indirectly. in the success of these
trausa actions. Furthermore. it stands
out by itself and unique with respect
to our international financial relations,
since for the first time in many years.
the United States ceases to be a debt
or nation.
Somewhat musingly, a man Of great
financial experience read the state
ment by Mr.. Hepburn that We have
absorbed substantially all of the secur-
tiles heretofore held abroad. He asked
wonderingly how they had been alb
sorbed. The estimates of the ag-
gregate amount of securities held
abroad have varied somewhat since
1914. Some have put the total as
high as 5000. coo; others have
been inclined to think that since 1914
1t has not been in excess OF s.. 900, ,0O0. =
COO. 1t was billions whether FIVE
or three.
What then has become of these
American securities, which Mr.. Hep
burn is quoted as saying We have
taken back? Have they all been
bought and then distributed among
the American people? That is re-
garded as inconceivable. 1t would be
shifting from debtor to creditor on
too stupendous a scale to be achieved
within two years, or three years at
the outmost.
Presumably no small part of these
American securities are listed with
other securities with which Great Brit
ain, possibly France, have been able to
secure loans, upon a gigantic scale,
In the United States.
A year and a hair ago, Dwight w.
Morrow. Of ]. p. Morgan and Co.
was commenting upon the financial
strength of Great Britain. He spoke
OF the almost inconceivably great
amount Of securities held in Great
Britain, which represented British
loans to various nations, and to yari-
Gus private undertakings in South
America, Asia and Australia, as we'll
as in South Africa.
Six months before Mr.. Morrow thus
spoke, Henry P. Dawson returned
from visit to London, prepared to
say in general terms, that familiar
as he is with some big figures of
finance, he had seen nothing that
compared with the big features which
British authorities permitted him con-
iidentially to read. They satisfied Mr..
Dawson that not by reason of any
financial weakness could England be
defeated in the war; Mr.. Morrow was
inclined to think that as England and
France, from time to time approach
ed the United States, seeking new ad-
vances of cash or its equivalent credit.
they would back their promises to
pay with collateral security which, as
whole. represented their loans be-
fore the European war to other ma
tions and. also to some Of the peoples
OF the earth. who were seeking to
build railroads. develop mines or ex-
pioit various resources. But what
ever the security as a whole might
be. Mr.. Morrow was persuaded that
there would be infused into each
block of bonds a large sprinkling of
American securities.
Some months later there came Of
ncial information which disclosed the
name and amount of certain Ameri-
can securities which Great Britain
had taken over, either by borrowing
from her investing citizens or by some
other convenient form Of trusteeship.
Apparently Great Britain has ex-
hausted. although perhaps not COM
pletely, her resources of this kind.
The man Of high financial authority,
who read musfngly and very thought
fully Mr.. Hepburn's statement, was
at last persuaded that If the great
bulk OF American securities hereto
fore held abroad are now, as Mr..
HepbNn said, absorbed by the United
StateG no small part Of this absorp-