The Washington herald., 1919-01-23
new ALLY LOAN
TO Be FL0ATED
Holland Says British Gov
eminent Will Soon Want
Hundred Million.

Shortly after the departure of y.
p. Morgan for London and Paris
there comes the announcement that
the British government has success
fully approached the American mar
ket so that in a few days formal an
nouncement may be made that there
has been fioated a hundred millions
of British government issues. Mr..
Norgan's firm leads the Syndicate
that will undertake this financing.
This issue is to be represented by
one or two-year notes and the loan
wiz command interest at the rate Of
az per cent. The transaction it
self is a large one and yet it is
by no means as large as some of the
bankers financing yet to be perfected
that has taken place between the
United States and our allies. The
chief importance or the most signh-
cant feature OF this transaction is to
be found in the fact that il repre-
sents the first complete foreign gov
eminent financing or a single issue at
least since the United States entered
the war
Although 1t is the hrst many are
yet to follow, for in one way or an
other the 500. .OO0. 900. possibly SO
1000 900. which our allies owe to the
United States must be taken care OF
and in such way that the loans be
represented by long time bonds.
wouId Convert Notes.
\ Something Of this kind is now un-
der way in the new financing which
the bankers will undertake for the
floating Of SlOO.OOO.0OO of British
government notes. For it is the de-
sire of those who hold thes notes to
convert them into twenty year 5i2
per cent bonds Of the government of
Great Britain.
The Secretary of the Treasury
holds in something like escrow or
as trustee, for the Federal gov
eminent. approximately 500, ,0O0,OD
represented by demand notes, not
time notes. which our allies have
deposited with the Treasury Depart
ment so that evidence Of their in
debtedness to US might be in hand.
For the present these demand notes
will lie securely in the vaults of the
Treasury Department. They differ
from the notes which the British
government is about to float in the
United States through the medium
That is from one point of view a
private transaction between the
bankers and Great Britain. The
sanction of the ~>leraI government
, has been given to these transa ctions
so that morally at least although
not legally behind them stands the
authority Of the United States
The demand notes which are in the
Federal Treasury are essentially in the
form OF receipts, acknow ginS the
payment to our allies of money or the
extension of loans or credit When
peace is actually established and pro-
claimed after peace treaties have been
ratified. thea the foreign soy ernments
will turn their attention as rapidly as
possible to these obligations of theirs
which are held in the United States.
Men who are OF influence in the gov
ernment i-CleS and p-ho are num-
bered among the leading inanciers of
the United States are OF the opinion
that foreign nations viii offer Ior.g-
time bonds bearing a tate Of interest
yet to be determined With which to
take up the demand notes. When this
transaction is completed then the
Federal government will have in its
possession from eight to ten billions
in foreign government bonds behind
which stand the credit. faith and re-
sources OF foreign governments. That
will represent an accumulation of Sc
curities Of unquestioned value. greater
in amount by billions than any which
our government has heretofore pos
sesscd.