The Birmingham age-herald., 1919-07-14
/Maiin\ \ | 4900 /
AMERICAS PART
 IN WORLD FINANCE
By HOLLAND

By HOLLAND
 New York. July 1S.-(Special.)-By the first of July and continuing through the month, approximately three hundred mii- lion dollars will have been paid in New York to fortunate investors in the form of dividends or interest Some of this represents earnings that have been se- cured in the past three months and some of it Is in the form of half yearly divi- dends and interest Much the greater part of this sum will, the bankers think, be available for reinvestment. so that. as far as three hundred millions will go. so far will money market conditions be benefited.
 Beginning also with the first of July are the preparations. or it might be bet ter to term the movement the first steps, preparations already having been made, in the direction of the colossal world financing upon which the United States is now to enter. Bankers say it is to be new experience for us and that the great financiers of Europe are aware that it is not only new but is stupendous. In the past we have done very little world-fi financing excepting that which was made necessary by the eNigencies of the war since 1914 including the ten billions which were loaned to foreign govern ments
 
 looked upon by other nations as only an incidental factor in the financial tram sections of the world. We had done very little in the way of lending money upon l the good faith or the securities of for l eign nations. But as far back as 1908, | the Imperial Government of German is '. sued the first treasury notes ever put out by Germany. Sir Felix Shuster, who was in this country about this time. spoke to his banking friends in London upon his return to England of that in- ternational financial incident as fore shadowing larger relations of the United States to world-Gnancing. Sir | Felix may have had in mind the fact that the United States would soon be | called upon to accept a good many mill | lions of English consoles This unim- peachable security was placed with American banks through the influence of James Stillmau. MT. Stillman after visit to Europe was persuaded that the money markets of the world would not become normal until Great Britain had adequately financed the debt created by her war with the Boers. It was the con- | dition of the money market a that time. | due chiefly to the fact that Great Brit 1 ain had not permanently financed it's war debt, which. in the view of the ahler , of men of finance, was the cause of the so called rich mems panic panic so l great that the common stock of the | United States steel corporation was at one time quoted as low as nine dollars | a share
 WHEN JAPAN CAME TO US ! The brilliant men who directed the af fairs of Japan at the time of her war with Russia realized that Japan was in need not only of funds but also of commodi- ties in large amounts. They therefore caused an approach to be made to Amer ican bankers. And this was done only two or three years after our banks ab- sorbed some millions of English con- sols and also the treasury notes which were issued by Germany. We accepted the proposition made by Japan and the result was that at the close of the war between Japan and Russia in 1904 there | were held by American banks many mill lions of Japanese notes and the money
 thus obtained by Japan was almost ex-
 cusively used in the purchase of com
 modities in the United States of which
 Japan stood in need. This was a pre-
 cendent which eleven years later and for
 three years thereafter was followed by the European nations with which we
 were in alliance. For they secured vast
 loans in the United States and the money
 or credit thus obtained was available to
 pay for purchase of munitions and other
 commodities which the United States
 was selling to these nations At last
 and suddenly we had become the leading
 nation of the wor+@-in international fin
 ance.
 There had been some rather small |, loans made by American bankers to other
 nations or to people of other nations especially in South America before 1914. Now we are to undertake the greatest
 piece of constructive world-financing of
 which there is any record The Federal
 Reserve board at Washington apparently
 is persuaded that these various under l takings on our part will be successfully achieved. There is nothing new, at leas>
 so far as the industrial leaders ana
 bankers are concerned, in the state
 ment made by the Federal Reserve board
 in its July bulletin. For some weeks our men of finance and our industrial
 leaders as well our merchants have been confident that the era of great pros
 perity had begun and that it would not end until we had not only aided the world
 until we had vastly increased our own
 wealth.
 OPTIMISM JUSTIFIED
 Nevertheless the judgment of the Fed
 eral Reserve board will tend to convince } the public that the opinion of our busi-
 ness leaders who have been very opti- mistic for some weeks was justified by
 the facts. The reserve board states that |, the prospects for successful and pros- | porous fiscal year which began July 1 are excellent and that there is to be a large output of commodities and almost | unprecedented financial returns to the
 manufacturers, to the farmers and to the
 men who work with their hands.
 II The best opinion here seems to be that MT. Vandelip's view of the European situation is not entirely justified by the facts MT. Crosby of the treasury de. IPrtment who has been in Paris in of ficial relation since the meeting there o1 various governments does not accept MT Vanderlip's opinion that Europe is bank, | rupt Those who have talked to MT Davison are confident that he does no | regard Europe as bankrupt. The nations of Europe are in an almost chaotic con l dition. Many things are in confusion By, J Europe has vast potential resources ana |. these may be exploited and well develop {. ed. perhaps more speedily than many per sons think, provided only the United States stands sponsor so to speak not merely by word but by acts for Europe: | reconstruction. What remains to b, done in Europe after the assurance tha | the United States will not fail in thi: | emergency. is the working out of ordel | from confusion. the beginning of the sta
 balizing of industry and of certain re construction work. such as France nov contemplates, even though the cost ts
 France may be as much, nearly, as tho debt of Europe to the United State.
 treasury, ten billions.
 III It is to be wonderful really fascinat