New-York tribune., 1919-04-16
Urges Investment
Trusts as Aids to
Foreign Financing g
Fredrick Says Security Hold
ing Companies Offer Best
Means of Facilitating In
vestment in Foreign Issues

Leopold Friedrich, director and treas
urer of the American Smelling and
Refining Company, and an authority
on foreign exchange, declared ycstcr-
day that invcs tment trust corporations
in the United States for the purchase
Of foreign securities along the lines of
similar companies in Europe are neces-
sary if the United States is to aid
foreign countries finance their recon
struction purchases in this country.
Bankers here have been discussing
for somc time the ndvisability Of
forming such corporations, and it is
expected in the early future steps will
be taken by leading American fnan-
cial Interest to launch movement in
this direction.
In England and on the Continent the
Investment trust corporations consist
Of holding companies which are char
tered to purchase securities. The
capital stock Of the investment trust
corporations is sold to the public and
the proceeds used for the purchase Of
government and corporate stocks and
bonds.
Seek Outlet for SURPRISES
"With The slowing down Of indus
'fial activity in The United Staies,' %
said Mf, Ffsdtiek Yesterday, "the
managers OF the plants whose capacity
liad been SO enormously enlarged dur
ing HE war are beginning 10 turn ia
the field Of foreign trade in order ia
nnd an out Jet for their products, On
lha other hand, foreign nations, ea.
peelally. t hose that had TO bear the
bfunt or the terrible conflict in Europe,
are looking anNlously to the United
sta les FOR help IN their reconstruction
problems, They need cotton, copper,
steel, machinery and many other of
our products. They lack, however, the
ready cash and credit to pay for their
purchases"
ut has been suggested several times
dufIng the last few months that there
should be established in the United
States investment trusts. which insti.
tutlons would be great factors in the
education of the American investor to
the value of foreign securities.
Holding Companies
he investment trusts under dis
cuSsioh are nothing else than holding
companies for foreign securities
hesc investment trusts work on
the insurance company plan, selecting
securities from all parts of the world,
The Investment Trust Corporation,
Ltd., OF London, for instance, shows in
It's statement for 1917 not less than
~ KINDS OF investments, the Second
edinburgh Investment Trust, Ltd. of
Edinburgh. Scotland, 23S, and the Met
r,opol'tan Trust Company, Ltd, of Lon
don, 220. These investments include
foreign government ISSUES, municjpal
loans, mortgage bonds, preferred and
common shares in railroads, public
Itilltes. banking, commercial and in
dustrial corporations"
Mr.. Friedrich said that it requires
many months to organize such invest
ment trusts snd that those that are
established in the United States viii
have to be on a much larger scale than
the ones in Europe. a beginning should
be made, he said by establishing a
company with a capital of from $50.
100000 to $1oo,0oo,O 900, to be paid in
gfIaduai!y, according to requirements
After 1T is found that the share capi.
tai becomes insufficient, he stated. p
bord issue would be arranged