The New York herald., 1921-05-21
FOREIGN LOAN sums
MUST BE USED HERE
Harding and Cabinet Act to
Aid Z. s. Exports and Settle
Oversee Bills.
WARNING TO BIG POWERS
Many Have Been Seeking Need
ed Hard Cash by FlotatiOns
on This Side.
WARNING TO BIG POWERS
Special Despatch 10 THE New YORK HERALD.
New York Herald Bureau.
Washington, ID. C., May 90.

speeidI Despatch to THE New YORK HERALD
New York Herald Bureau.
Washington, u. C.. May 20.
President Harding and his Cabinet
have determined that all funds pri-
vateiy raised by allied and other Pow
ers in this country through flotation OF
bonds here or otherwise must be spent
In this country to rehabilitate export
trade and settle outstanding balances.
This means that money raised by for
eign Governments or municipalities
from tho American people must be
spent in America.
Means for the accomplishment of this
purpose are not definite. In the pres
ent situation the Governments only
power lies in the moral influence 1t can
bring 20 bear on American bankers and
the people.
After the Cabinet meeting to-day an
official statement was made that the
Cabinet had discussed the problem of
fa.voring American exports and the de-
sirabilty OF the application Of the pro-
ceeds OF foreign loans made in financial
markets here for the purpose OF ex-
porting commodities and the refunding
of outstanding liabilities.
Grave consideration has been given
by the President and his advisers to
the practical stagnaton OF American
export business. with a consequent
backing up Of American industry This
II ascribco to many causes, not the least
OF which is the inability of buyers to
rot further credit here or to pay cash
or i proper Offset in goods shipped in.
The floating indebtedness of Europe
10 the United States has been variously
cstiinsted. ard there are no complete
oeficia figures. but the best official esti-
mate obtainable places the sum at an
cgsregatc OF s3.5O0,o00.00o. This in
eludes Jo00OO.0O0 In bonds floated in
'his country by European governments
aud municipalities. The remainder rep
rcTents trade balances due. loans, ad-
rances or credits extended by American
firms or individuals to European firms
or individuals and unpaid balances due
American exporters.
To-day's official statement is taken
70 mean that hereafter all sums raised
through bond issues in this country
must be pledged and some, guarantee
given TO the American people that the
funds so secured will be used either:
~ To refund maturing foreign n1u-
not be otherwise cared for.
ca In the purchase of American goods
or raw materials for export to the
country raising the money. or
(3) Tn settlements Of credits. bills due
or other items outstanding. so that the
way will be cleared for additional credit
and possible buying.
The new policy does not apply TO or
influence in any way the loans and
advances made by the American Gov
ernment to allied governments. IL Will
have nothing to do with negotiations
for the refunding of these loans and
advances
There is seen in the declaration a
warning to European and other Powers
which have been looking to the United
states as the only possible source OF
the hard cash in which they stand in
reed Some European statesmen have
been outspoken in the declaration that
the countries deeply involved would
have to look to the United States as
the one field for the floatation of any
large additional credit and some plans
have been made accordingly.