Milford chronicle., 1920-09-10
WORLD WAR UPSET
FINANCIAL AFFAIRS
EUROPE, FORMERLY A MONEY LENDER,
NOW BIG BORROWER OF AMERI-
CAN DOLLARS.

Whatever else the great world wa
3 may have done it certainly turned fl
nanciaI affairs upside down. Away
nrior to August, 1914, the people o
me United States had turned to Eu
rope for financial aid when big under
-alings needed capital and always
such aid was forthcoming because the
security offered was generally on q
Dar with that provided elsewhere and
rates of interest and of dividends were
far more attractive than were those
offered by the Old World investments.
european money helped wonderfully
to build our railroads, to develop our
natural resources and foster our in
dnstries and the European capitalist
vas we'll repaid for the investment of
bis capital in America.
But the war sent back here $4,000
900. 900 of American securities. That
was the first effect and the securities
which were re-marketed in the United
states we're well absorbed by the
american investors who bought them
at prices which in the early days of
fne war looked attractive. But as in
rerest rates advanced until a return
ol eight per cent. instead of four per
-ent. is exacted. the repurchased Sc
urities have fallen in market value
ar below the prices obtained for them
when Europe resold them here.
The second step was the placing of
European loans in the United States.
Great Britain broke all precedents
and made an external loan here. a
ioint loan with France for S500,000,-
600. which was negotiated in 1915. to
run five years and bear interest at.
five per cent. This was the largest
foreign loan negotiated during the
war. as this country soon had its
hands full raising over twenty bill
lions of loans to prosecute the war on
our own behalf. The United Kingdom
later borrowed S20O,0O0000 at 51a per
cent? and loans of the French cities
were sold here, while Belgium, Italy,
the Swiss Republic and Sweden have
all been large borrowers.
Now the first of these big Obliga-
tions is about to mature, the Anglo
French loan of S500,000,000 becoming
ue on October Is. Great Britain is
rully prepared to meet her proportion
o the joint obligation and for months
ne has been sending large quantities
Of gold to the United States. France
has sent some gold and will send
more, as she expects to meet about
150,000.000 of the S250,000,000 due as
ler portion. France plans to float a
lew loan here for S100000,000 before
he oil Standing loan becomes due in .
rider 70 raise the balance to dis
.harge that obligation. This Offering
S likely to be made this week, possi-
liy on Tuesday. Instead of five per
.ent., France will pay eight per cent.
on the use of American dollars. As
be new Offering will be accompanied
h various novel features new to
.nerican investors, the details of the
ond issue are awaited with interest.
MOI only does the world come here !
3 Borrow but having no money to ,
an to us the United States must fl I
ance its own needs. As European s
errowers are willing to pay high {
stes of interest domestic borrowers a
ave to match this attraction with I
lually high rates and thus railroads. Y
hieh formerly borrowed fauney- al 4 2
, per cent. are now paying ~ to +
per cent, while municipalities and
zen the Federal Government is bOr-
wing at six per cent. on taX-free
,curities.
Yes, the war upset financial af-