New-York tribune., 1922-01-08
No Trade Financed

In this connection it is noteworthy
that none OF the overseas fnancjng
cofponations that have been organized
by the largest financial interests in the
Shlteo states have thus far succeeded
IN GeVeloplng any apprcciable volume
OF busincss- Without exception thcv
nave found the practical difficulties of
an lnsupelablc character
WIN view TO overcoming the
present Insecurity of European in
Vestnents there has been devcl-
oNce ourlng the last year the So
called Ter Meulen' scheme named
named after its originator. a prominent
DVtch hnaNcler. This plan has been
lnco9sed by the International Financial
Conference. which was held in Brus-
seis IN The autumn of 1920 bv the
council Of The League Of Nations, and
by the ntornational Chamber of Com
merce at ITS conference in London,
June 1921 The Ter Meulen" plan,
there orc. is the next experiment in
extending credit to the distressed ma
tons of Europe.
In brief. the purpose is to encourage
r~lolc trade by providing a special
iorm OF security which Will reinforce
the credit Of tie European importers.
ne exporter, IS under present con-
dluoNs. seeks out his own customer in
nuroTe. alrangcs the terms Of sale anl>
lnVestlGatcs the credit standing of .xe
buyer But III order TO improve his
c.eait standing and thus make it pos
sibie to purchase the goods REQUIRED
on more favorable terms. the importer
approaches bis government and bor-
lows rom it for the period of the
credit Ie1 Meulen bonds, which he NAV
use a. collateral for his own promise
Laeh borrowing government will ar
ian&o 'ne condi'lons under which it
VIII loan bonds 20 its citizens. But
( before The whole transaction is COM
pletea there must be obtained the an
prevail OF an international commission
Go he appointed BY the League of Ma
llcns This commission must satisfy
itsV'l tA2t the imports consist of "nec-
eSsarY commodities. 1t must also see
mat the total amount Of bonds author
ized Tor issue is not exceeded Thus
international, partisan and pre-
sumably scientific control is secured.
.ycc"Tity Is Needed
To make the credit sound it is OBJ
vious that there must be satisfactory
security back Of the government bonds.
The plan therefore provides that the
GcVernments which issue the bonds
Sha!l pledge as security rcvenue-pro-
ducing assets (to which gold value
can be assigned of sufficient amount
to satisfy the international commits
SION. 1t is suggested that the most
suitable assets for the purpose will be
export and import duties and revenues
lfom state railways, government mo-
nopolies, forests etc.
Now, IN case the importer is unable
to pay for the goods when PAYMENTS are
due, Che exporter who has extended
the credit may seize the collateral Sc
curlty the Ter Meulen bonds - in
SATISFACTION OF his claims. These
bonds he may then either hold as an
lnVes estment or sell in the investment
market. Ii viii doubtless be pro
V'ded, however, that if he wishes to
sell the bonds they must first be
offered to the issuing government. 40
that it may buy them in il it so de-
slres. 1t should be added that these
Ter MeNien bonds may be sold to
american investors through the for
elgn financing corporations; or they
may be pledged AS collateral by the
financing corporations against their
own securities. which may be issued
Tor sale to American investors. Tho
rate OF interest on these bonds will
* "Acu oS each country. While all of
1nc details have not been determined
to our knowledge--it is suggested
mat the rate should be the normal
rate that such Country might expect
to have to pay in the open market.
The duration of the bonds will doubt
less be from five to ten years.
1t should be observed that the Ter
Meulen scheme has three princinal
features. First, it permits in large
measure the utilization of existinr
trade and financial practice and ma
chlnerv. The export may be arranged
as heretofore through ordinary pri-
vate channels, and the Ter Meu)en
bonds may be marketed through the
already established financial agencies
Second. it permits the greatest pos
sible amount of fcxibiitv, allowing
the methods to be adjusted to the
varying conditions in different coun-
tres. Third-and this is the heart Of
the plan-it sets up machinery for
placing back of the credit of the in.
aiVldual the credit of his government.
Rejects Ter Meulen Plan
:. What now is the hope from this Ter
Meuleh scheme? Will it solve tho