New-York tribune., 1919-08-16
New Credit Plan
lo Aid Europe Is
Under Discussion
Wall Street Suggestion Is
That Government Take
Leading Part Through
War Finance Corporation

Europe's credit needs ara sncb +ha+ :.
may not be feasible for the tfn;ted init Il
states government promptly to with-
oraw from the banking business. accord =
ing to suggestion made in Wall Street
yesterday. '''' ''iee'
Having reached an impasse in their
efforts to work out comprehens;va
nation-wlde programme for financ-
ing Europe's purchases in this coun-
try by pooling Americas lendino
resources. bankers here are beginning
70 rcexamlne the fundamentals of their
major proposals.
turned from Europe some three montba
age with suggestions for Organizing
America to assist Europe to emerge
from ITS financial troubles, it was IN
sisted that private initiative, with the
approval of the government. should
carry the burden Of the load. The view
was generally expressed that the time
mad come for the government to oct
out OF banking, so far as new com
mltments are concerned The banking
and industrial groups, together with the
investing public, were to assume the
risks, and the government lend merely
moral support.
Various factors have prevented the
programme, and the associated bankers
were released from their tacit agree
ment not to undertake European financ
ing until the broad scheme was mapped
out. A seeming slowness on the part
OF lndustrlal groups to respond to the
neweidea and skepticism as to whether
the investing public would absorb a
large block of European securities are
generally believed to have been among
the causes of delay.
-, The view was expressed yesterday
that IL was mistake to leave the gov
ernment out, because of the magnitude
OF the task. The contention was made
that in the corporation or organization
OF Whatever nature which is devised to
coordinate loans to Europe, the govern
ment must take a substantial equity.
1T was proposed that the government
act through the War Finance Cornora-
ton, placing an additional equity of
perhaps $5O0,000,000 in that CORPORA
ton and authorizing it to spend that
money Tor the creation of a new cor
poration which would be permitted to
make loans to individuals and corpora
tlons IN Europe in support Of Americas
export loans. Such advances should be
secured. it was argued, by three name
paper-that of the borrower, his bank
and also a guarantee by the govern
ment in which he lives. Moreover. it
was suggested that a committee will
be formed in Europe to allocate the
amount of credit each country is to re-
ceive
The proposed foreign finance cor
poration,. created by the War Finance
Corporation, according to the advo~
Gates of this technique, should be per-
mltted to discount it's paper with the
war Finance Corporation, which should
finance its new needs by the issue of it's
own bonds to the public. The part of
the Investment public would be to buy
War Finance Corporation bonds, and
that of the bankers chiefly to function,
as they do in the sale of farm loan
bonds, as sellers to the public of War
Finance Corporation bonds Moreover,
1t was suggested that the bankers might
be offered the opportunity to buy an
equity IN the new foreign finance cor
poration. Advocates Of this programme
argued that in the long run the govern
ment would make money, although some
OF the weaker credit countries might
fail to meet all their obligations at
maturity.
It was said that the proposed plan
differed radically from the present ar
rangement, under which the War
Finance Corporation is authorized to
lend s1,00O,000 to American exporters.
The suggestion was to make the loans
directly to foreigners and also to re-
move many of the restrictions now
existing and greatly to enlarge the
scope of activity.