The Birmingham age-herald., 1920-03-01
Many Advantages of
 AngIo-French Bonds
By HOLLAND

By HOLLAND
 New York, February 29-(Special)-
 With a certified check for slO0. 900 in
 his wallet, business man of New
 York awaited this morning the stroke
 of the clock at 10. for al that hour, or
 as soon after as possible. he expected
 to exchange that check for Anglo
 French bonds. He gave several req
 sons for making this investment. In
 the first place, he said he believed that ]. r. Morgan was correct when he as- serted that at the time the loans were negotiating that there was no better security than that furnished by the joint credit resources, and good faith of Great Britain and France. In the next place the income from these bonds is highly satisfactory. And in the third place the interest and ultimately the principal are to be paid at the office of
 J. P. Morgan & Go. in gold.
 He would have, therefore. an option for large amount of gold, not less
 than $lo0,000, so that in this way he
 would be protected to the limit of the
 option in case there were any business
 demoralization. Furthermore. he had
 reason to know that the negotiations
 between American bankers and the
 English and French governments have
 proceeded so far that there is no doubt that the bonds will be paid off at ma turity. They will mature in the au tumn of this year. The total issue of the bonds Is $500, 000,000. It was the first Of the great loans made by Amer ican bankers to nations across the sea, and is presumed still to be the largest of any loans of that kind. It was made in 1915 at time when England and France were in a somewhat desperate emergency. Both nations sent repre- sentatives to the United States. Lord ! Bedding being among them, in the hope that loan in as great an amount as $1, GOO, 100000 could be placed with American bankers. The suggestion of such loan were made in the early spring of 1915, and the understanding 1 is that it represented certain confer ences which Harry P. Davison had while he was In London and in Paris. WHAT MIR. MORGAN SAID The first proposition of billion dollar loan was halved. 1t seemed to l the American bankers that 800 0000o0 was as large an amount as could be absorbed by American investors at that time especially as no visible negotiable security stood behind the proposed loan. It was necessary for J. P. Nor gan, who organized the syndicate ot American bankers, to speak publicly, saving that there was not the slightest doubt of the safety of the loan, of the payment of all the obligations which 1 it involved. and it's liquidation at ma tlrity. Had not MT. Morgan thus spoken, the chances are that the loan would have been a partial failure As ] it was, there was need of intense pres sure, the most urgent pleading and the most skilful but honorable financial strategy before the final $100,O00,00o was subscribed so that it was at last announced that the loan was success. l It will be paid. The business man who bought this morning block of | the Anglo French bonds, paying sl0o,- | 900 for the purchase, may have next October that amount in gold. because there is no longer any doubt if it were i necessary. Great Britain would send | $500, ,000. 900 in gold to the United States with which to make payment of these l bonds. Probably action of that kind will not be necessary. The presump- ! tion Is that an understanding has been reached whereby as much as 25O,0O0. 900 | of the loan will be liquidated in gold, l while the balance will be refunded Into | the long time bonds.
 1 Few realized at the time this loan was negotiated that it would be almost l forgotten when comparison was made l cially those made by the people to our own government, were placed upon the market It will become traditional. however, as the first of the great loans l made by Great Britain and France in | the United States. negotiated with | American bankers and with the ap-
 proval of the federal government at Washington. There was an earlier time l when the administration at Washing | of 10 ak in of | loans by American bankers to foreign nations especially the contemplated l loan to China.
 THE STORY OF GOLD
 Recently attention has been called to the amazing falling off in the pro duction of the gold mines of the United States in 1919, being only little over one e-halfl of the production yearly for several years before the European war But there is another feature of the gold situation whic his attracting even more attention.
 It is to be found in the reports from Washington, which tell of the steady decrease in the total gold holdings in the treaury department. year or so before the war ended this country con- trolled a little over s3.000,000 in gold.
 No other country possessed anywhere
 near that amount. Possession of this kind gave cOnfidence because It Was large enough to stand as a reserve be- hind the issue of currency.
 Today our total gold holdings are
 about $300, 900, 900 less than they were eighteen months ago. Each month
 since the first of last July has made
 q record of a decrease in our gold hold ings. So people are asking what is the reason Why cannot we keep our gold? The answer is almost paradoxical It illustrates the peculiar international trade situation. There are no prece- dents for this condition. For upon the international ledger there stands in the aggregate a credit trade balance in favor of the United States of s4,000,- 900 900, and in no other way can this balance be eliquidated than by sending gold, which is impossible, or by sale of securities here. or by the issuing of credits Nevertheless the United States. upon international trade. owes Asia and South America. It is impos- sible to offset our favorable trade bal ance with Europe by our unfavorable trade balance with South America and Asia, because Europe is also debtor to those countries. So it has been inev to liquidate the unfavorable trade f>' ance Already the situation causes somewhat vague suggestions that there be governmental interference whereby the export of gold may be prevented. The gold situation raises one of the several very important questions to which satisfactory answers must be given within few months.