Evening star., 1927-05-04
LAMONT SEES PERIL.
IN FOREIGN LOANS.
Financier in Line With Hoo
yer in Plea for Safeguard
ina American Investors.

To what extent should nations go
I'm permitting their citizens to lend
money to other peoples? Herbert
Hoover, Secretary of Commerce, IN
answering the question before the
Third Pan-American Commercial Con-
ference, placed the responsibility on
the commercial and financial; senti-
ment of each of the countries
Thomas w. Lamont, partner In the
firm of J. p. Morgan & Co. speaking !
on the same day @efcre the America"
.scommittee OF the international Cham .
her of Commerce. called ur2r. his sol !
leagues in the banking world 90 Dro- !
tect the investor against the lrdls- !
crininate lending of funds 10 foreign |
countries and corporations.
Hoover Speech Significant
Mr.. Hoovers speech was significant |
I'm that he frankly said he did not |
advocate regulation Of foreign loans /
by law Up to now il has been sup |
posed that the experience of the De-
partments of Commerce and State IN |
interposing objections 70 foreign loans
might have to be accompanied by spe-
cific legislation. The cooperation given
the American Government without /
legislative interference has been OF
such character that the Secretary OF
Commerce feels reliance can be placed
on the commercial and financial men
70 regulate the problem themselves.
Mr. Lamont's speech. delivered by
coincidence on the same day and. like
Mr.. Hoovers, prepared, of course.
many days in advance, was in the
nature of a warning TO bankers.
Lamont Urges Caution.
.From the point of view of the
American investor" Mr.. Lamont said.
''it is obviously necessary to scan the
situation with increasing circumspec-
ton and TO avoid rash or excessive
lending. l have in mind reports l
have recently heard Of American
bankers and firms competing on
almost a violent scale for the purpose
of obtaining loans in various foreign
markets overseas. Naturally it is
tempting thing for certain OF the
EurOpean governments to find a horde
Of American bankers sitting on their
doorsteps offering them money. 1t is
rather demoralizing for municipali-
ties and corporations in the same
countries TO have money pressed upon
them That sort IF competition tends
TO insecurity and unsound practice.
Need of Discrimination Stressed.
saThe American investor IS an inteIli-
gent individual and can be relied upon
to discriminate. Yet in the first IN
stance such discrimination surely is
th- province OF the banker who buys
The goods rather than of the investor
to whom he sells them. ! may be ac-
cused of special pleading in uttering
this warning. Yet a warning needs to
given against indiscriminate lending
and indiscriminate borrowing. In this
1 think my banking friends generally
will cordially agree.
Mr. Hoover'S main thought was that
foreign loans should be made only for
sproductive purposes. This is not a
new doctrine, as 1t was first enunciated
under the Harding Hughes administra-
ton. For example, the United states
i has steadfastly discouraged the lend
ing of money to foreign governments
merely to balance budgets or to main
tain military establishments.
Productive Return Chief Factor.
Mr.. Hoover pointed out that loans
sshould be discouraged "even for that
type of public works which do not
bring some direct or indirect pro-
ductive return" He feels that there
would then be no danger about abil-
fly to repay and there would be less
interference with the national inde-
pendence of countries through loan
restrictions imposed in order to as
sure collection.
In view of the American policy of
aurging reduction of armament. Mr..
Hoover's speech is in line with the
coming effort to be made at Geneva
during the economic conference and
the armament parleys to reduce the
expenditures of governments for "un-
productive purposes. ID. l..
iCopyright. 1927
The largest lake in China is Tung-
Sino I'm II,fuau 900 miles in circlIn1-