The New York herald., 1921-04-12
League of Nations Bonds.

With or without the support OF the
United States, the principal nations of
Europe, excluding Germany and Rus
sia, have determined to launch an
int national bond issue under the
supervision Of the League of Nations
and bearing joint and several guar
antees Of the Governments concerned.
The wisdom Of testing the possibili-
ties of such loan was agreed upon
at the Brussels financial conference
last September, although the feasibil-
lty Of selling bonds In one country to
strengthen competitors in another
VAS not unanimously believed 10 be
promising. At any rate, the task of
putting out the bonds and finding
market for them has been delegated
to Sir u. DEuMMoNp FRASER, X. b. r.,
NJ. Com. a British banker of high
repute.
Sir DRUMMovD FRASER found upon
undertaking the work that the scheme
formulated by NJ. TER MEULEN, a
banker from Holland. and adopted by
the Brussels conference embraced
everything but prncticability. His
first duty was to acquaint his English
banking colleagues with the fact that
while the support of the League OF
Nations and the guarantees OF the
various Governments would provide
the basis for an excellent collateral
security no suggestion was embodied
In the scheme for creating or finding
a new reservoir of capital where a
borrowing importer In needy coun-
try could deposit the bonds and ex-
tract the requisite international buy
ing power.
Sir DRuMNoND no doubt realized
that IN the end somebody would de-
mand to know just who was TO fur
nlsh the credit on gold basis for the
new scheme. for his first utterance
after his appointment to the under
taking was as follows:
"As far as the Ter Mculen scheme
goes II is wonderfully good. But I
am pushing II a step farther. by the
Ter Meulon scheme the credit pro-
posed Is given BY the exporter and 1t
takes no account OF the mechanism
by which foreign trade Is financed.
To make the Ter Meuien BOND ne
gotiabie, the essential element I con-
si1er is that the exporter should not
necessarily be the person 20 give tho
credit. In plain English, this means
that the exporters must, II required.
be financed.
"ryow who IL 70 do IL? The re-
serves OF the British banks are i'm
mense To-day they total In home
banks f3, 900. .ooo. 900. actually half OF
the whole money borrowed for the
successful prosecution of tho war.
These are being fully used by the
banks for day TO day borrowing on
short term credit. What wa want n
long time credits. want 20 ask you
all TO help me-"
The clrcumlocution by which Sir
DHuMMorD arrived at the real con-
tre Of his announcement--tha the
British bnrks would have to bear the
burden of the international bond Is
sue--is too obvious 10 he overlooked.
The BRUSSELS financial conference
could find numerous willing bcnefl-
Charles Of an international bond issue,
but II could not conjure up the neces-
sary credit That must come by re
sorting 70 cash reserves OF whatever
creditor nation could be invelgled into
the scheme. so far the only milton In
the League with reserves which would
serve the purpose u Great Britain.
It can be taken as u pTedestined
conclusion 20 the whole international
bond scheme as Mt present cSnsti-
tuted that among British bankers