New-York tribune., 1918-02-20
Revolving Credit
To Finance the
Cuban Sugar Crop
Bankers Use New Mechan-
ism to Raise Fund of
$100,0O0,OOO

Financing of the 19l7-'1S Cuban
sugar crop will be accomplished by
means of n $l00,Oo0,000 revolving cx-
port credit. This will be handled by
one or more export corporations, to
which advances will be made Ly
nationwide syndicate. The money ad-
vanccd, according to an announcement
here yesterday by the committee Of
New York bankers, which, with the
international Sugar Committee, has
worked out the details of the plan, will
run for ninety days, but the loans,
under special ruling Of the Federal
Reserve Board, may be renewed after
this period and still carry the reds-
count privileges possessed by ordinary
three months trade acceptance. Each
loan made by an export corporation is
to be secured by documents evidencing
tho pledge of raw sugar on the basis
of three cents pound. The cost of
insurance and warchousing is to be
borne by the borrowers. The drafts
to be drawn and the notes to be issued
may not run later than December /
1918
Mechanism of Plan
The committee of New York bankers
which has evolved the details of the
financing was made up of Charles H.
Sabin, president of the Guaranty Trust
Company; William A. Simonson, ex-
ecutive manager of the National City
Bank, and E. V. r. Thayer, president
Of the Chase National Bank. The
mechanism of the plan is explained as
follows:
The export corporation making the
loan Will either issue it's notes to or
draw It's bills upon members of the
syndicate, with maturtics not exceed
ing ninety days in any case. In con-
nection with the payment of calls on
them by the syndicate managers, the
members will have the option of dis
counting such notes or accepting such
drafts. The export corporation will
endeavor to find a purchaser for each
acceptance other than the acceptor of
same, but in case this cannot be ar
ranged, the acccptors will agree 20 find
purchasers for or, failing that, to pur-
Of l per cent in excess Of the pre-
vailing effective basic rate to be es-
tablished from time to time by the
New York Federal Reserve Bank for
rediscount of indorsed bank accept
ances issued under this credit; the rate
at which notes will be discounted by
syndicate members will be 1 per cent
in excess Of the basic rate above re-
ferred to. In addition, the syndicate
members will receive commission
equivalent to three-quarters Of l per
cent for each ninety days on the
amount of drafts accepted or notes dis
counted by them, respectively, from
time to time"
Syndicate Services Gratuitous
The committee stated that the syndi-
cate managers will make no charge for
its services. but the borrowers will paw
all expenses incurred in connection
with the formation of the syndicate
and the carrying out of the credit plan.
A fund to meet these expenses and any
losses Will be provided by withholding
out OF the amount borrowed a sum not
to exceed l y per cent Of the maximum
principal Of the loans. Any surplus re-
naming at the close Of the syndi Gates
transactions is to be divided among the
borrowers pro rata.
Assurance has been received by the
bankers committee from Edward n
Hurley. chairman OF the United States
Shipping Board, that enough tonnage
| will be made available to move ap-
proximately 100000 tons a month from
/ February for period of three
months. Mn Hurley further stated it
to be his belief that ships will be sup
piled to transport 100000 tons by De-
cember ]. next.
Bankers Go to Cuba
In order to install the operation Of
the credits L. A. Potter, president of
the Finance and Trading Corporation
and Robert l. Barr, ice-president of
the Chase Securities Company, will 20
to Havana in the near future. There
they will work with committee of
Cuban bankers consisting of w. H.
Merchant. president of the National
Bank of Cuba; P. Franco, manager of
the National City Banks branch in
Havana; +. j. Beatty, manager of the
branch of the Royal Bank of Canada;
n. Gelats, of N. Gelats & Co., bankers;
A. Goday, of the Spanish Bank; O. A.
Hornsby, vicepres of the Trust
Company of Cuba; Juan Arguellos, of
Hijos de Hijos.
Through the International Sugar
Committee, of which George M. Rolph