The New York herald., 1920-01-26
New York Financial Expert
Explains American Feeling in
- London Times Article.
NEEDS OF EUROPE. KNOWN
Last Loan Great Britain Offered
Here Was a Near Failure,
He Reveals.
lsreeia, Cable to the Herald 1,

LONDON, Sunday.-"The need of financ-
ing Europe to keep up American export
:. trade is appreciated by American bankers,
I but the inertia of the American invest
! ment market prevents the conversion of
( their convictions into action
This was the gist of a leading article to-
! Times by Thomas w. Lamont, of New
! York.
Mr.. Lamont presents statements show
ing the immense total to which American
exports have grown and the extraordi-
: nary measures. such as gold imports and
foreign credits. which are necessary to
finance this trade. He continues
This huge total of exports naturally
; brought flood of foreign bills into the
American markets. Exchange rates gave
way and dropped to lower and ever lower
levels. / venture to say that neither the
american people nor the people at large
on your side OF, the water appreciate the
tull significance of stopping government
control and restoring commerce to private
initiative so far as that action might af-
lect foreign trade and international
credits.
On the other hand. bankers and busi-
ness men on both sides of the water are
much concerned with financing Europe s
trade with America. On this side there
is. no lack of understanding and appre-
citation among the leaders OF industry.
Many Difficulties Ahead.
"Europe's needs in foodstuffs, clothing,
raw materials and tools is fully under
stood, and so is her need of credit. but
j., there are Observation-Disclosures not to
! lie minimZed-in the way of tranSating
this understanding into action. Some OF
. these difficulties may not generally be
appreciated on your side. One is the gem
eral inertia of the American investment
markets Investments bearing fixed rates
of interest continue to sell in our mar
kets at prices yielding high returns. I'm
. ooubtedly high rates, the income tax
and the high cost of living have influence
in England.
1T is probably not generally known that
whereas the last British loan of $780,
! d00O 900. offered America last November,
bore the outward semblance OF success.
il was put over by the narrowest possi-
BILE of margins, and If 1t had not been for
the sustained cooperation of group OF
American bankers long identified with
British war finance the loan might have
been a failure and such a failure would
have been due to the fact that large pri-
vate capitalists and investors in Amer
lea cannot now afford to put money into
taxable securities"
Mr.. Lamont then points out that al
though the yield on foreign bonds in
America is large, rich people cannot af-
ford TO buy them because the yield is cut
down as low as one and one-half per cent
hy taxes. He continues
$50 Ions, therefore, as our very heavy
individual incomes and SurtaXes prevail 1t
is going to be difficult to float large for
eign loans in America. OF course on this
inn a . n
try at large the sound gospel of trying to
support our export trade by granting liber-
al credits TO Europe
Small Investors Necessary.
"The movement must be shared in by
the small as well as the large investor.
We have been urging the gospel of goods
and services as being as essential now as
in wartime In this, however. there are
Two difficulties is that the incentive
of such an appeal as describe upon patri-
otic grounds is now gone, and the second
fact Is that tho investing power OF the
small buyer cannot he sufficiently mobil-
izcd to float large European loans if our
large investors find themselves obliged to
stay out Of the market.
Tho fact is, as I say, that our markets
continue TO lack investments with a fixed
rate Of return. Foreign issues now yield "A
higher return than many domestic securi-
Ties in our markets. How can the great
solvent nations of Europe offer fresh
Ioans7 At any such rates OF interest 1t is
important for them to do SO without grave
discrcdit TO themselves
ron your side readers of this paper VIII
readily appreciate that the activity and
- poisc Of our investment market is gov
crned by range of possibilities here, \
way Of foreign borrowing for inv Ncstment
funds must ultimately come from national
savings
Your leaders speak of eXtravagance in
Europe, and America confcsses the same
sin. America cannot help Europe and Eu-
rope cannot help herself unless the habits
.of work and thrift are ciung TO through
the difficult days Of reconstruction az
well as through the hard days of war.
Unless America works and saves so as to
lend TO Europe and unless Europe works
and saves so as TO help herself, all plans
for the restoration of Europe are in vain :
MIR. Lamounf's absorbing article. further
says that American business reaiiZes that
american exports may be cut down abrupt
ly and with a great shock 70 American
business. The gradual reduction of Amer
ican exports and the gradual increase of
imports. he says. could be accomplished
by granting credits TO Europe, thus pro-
vidng means for a gradual American tran
sition without undue disturbance. III