Evening star., 1925-10-25
u: s. FAVORS BANKS
FOREIGN LOAN BAN
SeIf-Imposed Bar Raised to
War Debt Laggards
PIeases Officials.
BY DAVID LAWRENCE.

The Federal Government is very
much pleased with the attitude taken
by New York bankers who have
taken the position that there Will
be no further loans to foreign coun-
tries until agreement has been
reached to pay war debts to the
United States.
While Charles y Mitchell, presi-
dent of the Ma atiohal City Bank, who
saw President Coolidge the other
day did not intend Of course. to
Indicate that the bankers in New
York had taken concerted action in
their self f-imposed embargo on for
eign loans To certain countries, he
did mean that each institution en-
gagged in the internationa banking
business recognized the unwisdom OF
floating any loans in contraVention
of the desire of the Department of
State.
No concerted action really has
been necessary. for Mr.. Mitchell
speaking rur his own institutions :
policy. reflects the viewpoint of
others who know that if the Gov
ernment frnWus on an International
loan it has scant chance with Amer
lean investors.
No Loans Sought
Much more important than the
expressed Willingness of the bank
ers to defer to the wishes OF the
Department of State is the fact
that foreign governments which
have vet to make debt settlements
with the United States have prac
tically stopped negotiating for loans
in New York. because they know
such a step is futile. In a sense.
therefore. the New York bankers
are invountarily aiding the Wash
ington Government in convincing
foreign countries Of the economic ad-
vantages of an early settlement.
There are two significant phases OF
the matter which are not escaping
, attention. One is that the Depart me nj
of State is anxious TO avoid the i'm
preston that il has sufficient influence
with private bankers to persuade them
to make loans or TO guarantee them
when once they are made. and the
other is the delicacy which The ia nk :
themselves feel bout Government reg
ulation of private loans. The latter
has been suggested by various mem
berS of Congress as a means OF bring
ing European debtors to time and
while the objective in this case of self
imposed restraint now might meet
with the approval of the bankers, il
would nevertheless establish an i'm.
portant precedent involving a good
deal of red tape later on especially as
now is expected, when loans some day
open up on large scale to various for.
eign interests needing American cap.
ital
The program which at the moment
is considered the logical direction for
development in the whole international
situation is this
First. Settlement by foreign debtors
especially France of her debts with
the United States and Great Britain.
Second. Provision in the budget for
payments to be made on the war debts
Third. A balancing of the budget bv
making provision for pa yment or re
funding of internal loans and obliga
tons. This means further taxation as
we'll a s reduction of expense as for in.
stance. in armies.
Fourth. Sterilization of exchan ange
through the Improvement of the credit
structure, borrowing sufficient funds 10
meet maturing obligations and arrang.
ing for necessary credits to take care
of transition periods.
Each one of these Steps taken in
order by France is expected TO clarity
the whole European situation. espe
cially aiding the smaller countries and
generally attracting American capital
to the industries abroad that need aid
through the natural processes of in.
vestment and commerce
'Copyrght. 1ao5l