Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1922-11-30
trade and industry of the whole eoun-
The Loan Industry.

| try.
The Loan Industry
One method by which the industry
of some foreign countries, notably
Great Britain, has been fostered. is
the granting of loans to other coun-
tries by British bankers Sometimes,
but not always, perhaps not even in
majority of cases, the British cap
italists, in negotiating with foreign
borrowers, have been able to reach
all agreement that a part, at least.
Of the proceeds of the loan, should
be expended directly in Great Brit
ain for the purchase of products Of
British industry. In some cases this
practice has been of long continuing
advantage, especially where it in
volved the purchase Of railway or
other machinery supplies during a
period Of years following the making
of the lean. Sometimes, where the
loan was effected to finance an indus
trial undertaking in the borrowing
country. the lenders have been able
to secure representation IN the man
agement Of the concern thus financed,
with consequent flow of continued
/, orders for supplies to the manufac-
turers of their own country.
Recent months have seen an extra
ordinary development in the capacity
of the United States to grant foreign
loans. American investors have
shown themselves more and more
willing to absorb securities based On
the pledge or guarantee Of foreign
! governments, and to some extent on
the pledge of foreign industrial en-
i terprises. Apparently, therefore, the
situation has been reached where
American investment bankers, in ne
! gotiatlng loans to foreign borrowers,
i will occasionally have opportunity TO
shape their negotiations in such a
way as to provide additional employ
ment for American industry as has
been done by British, German. Bel
j gian and other European bankers
/ heretofore, and as British bankers es-
/ pecially are now doing not infre-
/ quently.
| 1t was with these facts and this
situation in view that the Committee
on Banking of the National Foreign
| Trade Council recently addressed a
letter to trade organizations and
chambers of commerce throughout
the United tSates suggesting that the
attention of individual investors be
called to this matter. This was with
view to encouraging the issuing
houses handling such foreign loans,
to arrange, wherever practicable,
that a part, at least of the loan pro-
ceeds should be spent directly for
American products.
Opposition Arises.
This request evoked immediate
| opposition on the part of some Of the
prominent investment bankers and
issuing houses. In their published
arguments against it, however, they
all, SO far as has come to my notice,
enormously assumed that the pro-
/ posal of the Committee had been that
| the suggested stipulation should be
! applied to all foreign loans f1cated in
| the United States. That was not the
! fact. The original letter of the Com
mlttee pointed out that not all for
| elgn loans are susceptible Of such a
! stipulation, but advocated it's inclu-
/ sion wherever practicable" Between
including it by negotiation wherever
| practicable" and including it by in
sistence in all cases, there is a vast
and very material difference.
It is clear that some foreign loans,
including a few of no little irnpor-
!, lance, are susceptible Of such an ar
rangement, and it is desirable that
American investment bankers, when
negotiating such loans, should al
ways have IN mind the possibility Of
rendering beneficial service to
American industry A case in point
was the recent loan negotiated in
New York by the Dutch East Indies
government. The Dutchmen expected
that the American bankers would ask
them to agree to spend some of the
forty millions they were borrowing
for American products, and were pre-.
pared to accede to that request They
went SO far, in fact, as to open nego-
tiations with two electrical concerns