The Washington herald., 1919-06-08
BONDS OF BRAZIL
TYoFFEREDU.S.
Purchase Would Be Open
ing Wedge in Latin
Trade

time OF the war between Japan and
Russia lend Japan a large amount OF
money. That transaction Is now re-
ferred to as a precedent of many mil
Klions, perhaps hundreds Of millions. in
foreign securities much of the pro-
ceeds being used to pay. as Japan
paid. for American commodities.
Now. the city of Rio de Janeiro has
brought to New York 1000. 900 of It's
bonds in the hope that these may be
sold to American investors. OF itself.
this is a small proposition in COM
Iarison with other transaction which
have taken place between the United
States investors and other nations.
II Is trining In comparison with the
purchase by IN American banking
syndicate s5oo.00o.0 900 Of securities on
the joint account of Great Britain
and France.
Nevertheless. in spite of the COM
paratively trifing amount the pro-
position is spoken of as highly sig
nifcant- Brazil turns to the United
States when formerly II would have
been inevitable. IL funds were need
ed by the Rio or by Brazil itself.
that the offer would be made in the
London market and IL would have
been gladly accepted. In fact there
was recent statement. informal in
its nature. of 4 suggestion made by
Great Britain that a very large
Cblock of Brazilian securities which
had been sold in the London market
before the war be accepted by the
United States in partial liquidation
or as an offset to the stupe ndous
debt which Great Britain owes this
country. The mere fact that Lon
dom is in position to offer Brazilian
n a
partial offset to the debt which is
owed to this country shows how
greatly or how almost exclusively
Brazil relied upon London for leans.
London Market Is Closed.
Now that market is closed. The
City OF Rio de Janiero therefore
comes to the United States and
hereafter Brazil. Argentina, Chilli
and other South American coun-
tries will probably come to the
United States in search of funds
the security for which is to be
represented by their bonds.
This means that our trade rela-
tions with South America are GER
tain of large and rapid increase.
We invest in South American Sc
curities: the South American ma
tions are thereby able to buy heav-
lily in the United States for it Is
now a well demonstrated rule that
trade instead of following the flag
as formerly or the rails follows the
course of the financial market
When this loan is placed with
American investors it might be
worth while to attach to the securi-
ties the statement that the trans
action is a sure forerunner of heavy
foreign financing and of export
business
The European situation as it has
been described by Mr.. vanderIip,
Mr.. Dawson and others and the re-
latiOn of the United States to it,
have today been spoken of as sug-
gesting the conditions associated
with the reorganization OF some
of the railway systems of the
United States. The Richmond Ter
minal furnishes perhaps the best
example. 1t represented a thick
ENHANCEMENT of various securities
and overlapping and underlying
mortgages. The whole proposition
involved as difficult labor as does
the solution of highest abstract
was ready to take hold of the
situation was ended. 1t was un-
tangled after patient and brain
racking labor. TEt1 the resources
of American investors were utilized
80 as to bring order out of chaos
and the establishment of a fairly
profitable unified railroad system.
So 1t Is with Europe.
The present day situation in Eu-
rope is likened to the railway situa-
tion in the days when reorganization
was necessary. Mr.. Dawson speaks
Of the European situation as COM
fpIicated. representing various and
sometimes conflicting interests so that
at present neither he nor any other
kDf the financial leaders can find the
means by which the entanglements
can be ended or the proper threads
taken up so that at last 1t will be
possible to do what the United States
stands ready to do. namely furnish
credit, material. and any other aid
which may be necessary if Europe Is
TO become normal.
When Europe is thus made normal.
the United States will reap the bene-
fit. Mr.. Dawson 10 persuaded that
the complications will be ended. the
situation will be cleared and the Unit
ed States will then be In position to
give what Is called the long pull"
which is needed IL Europe Is to be
stabilized What investors have done
and will do with propositions which
come from South America, investors
must do with propositions which come
from Europe.
Attempts are under way to find
the path which will lead to the solu-
ton of the problem. Senator Owen.
of Oklahoma. has suggested that
CORPORATION be organized with a capi-
tai of $1,000. .00o. 900. with the purpose
of extending long credits to those in
Europe who are in need Of facilities
of that kind.
This proposition is spoken of today
. IN the Wall Street district as not
new one. although it Is new in some
of the details suggested by Senator
Owen. Others have counselled the
formation of corporations with very
large capital which will be able to
furnish credit to those In Europe who
need aid. and especially to those who
will be glad to buy American COM
modities IL only the United States
will facilitate the purchase of them
by means of long credits.
Credits BuiIt Trade I'm south.
Long time credits served England
and France. also Germany. in Sc
curing an almost exclusive interna-
tional trade with South America
Two American corporations, each of
:hem very large manufacturers of
certain commodity. ventured into
he South American field some years
ago. One of the corporations As