Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-01-28
MEN AND MONEY
By NJ. S. RukeyseV.
(CopvriEht. 1879

Capital ts international. 1t flows
across boundary lines to the places
where 1t will command the highest
wages.
In its new role of world lender,
America is gradually adjusting itself
to cosmopolitan conditions.
In the f1otation recently of &2S,ooo,-
900 Royal Dutch issue of l5-year an
per cent debentures, yielding ASS per
cent, A. new milestone in American
financial history was passed. Ameri-
can investors. in rushing for low
yield issue. showed that they have
escaped from financial provincialism
and will buy foreign issues on their
merits, irrespective of special lures.
Heretofore, alien issues had to offer
higher yield than domestic bonds and
shares in order to woo dollars from
Americans. Americans had been in.
experienced In foreign lending and
loathe to assume hazards in strange
and distant places. but now financially
the world Is becoming smaller
One leading international banker In
Wall Street. in discussing this signifi-
cant change, which went unnoticed in
the press, said TO me:
Five years ago 1t was with great
difficulty that we persuaded American
investors to buy foreign government
securities. Foreign corporate loans
were practically impossible. Today.
as a result of the work done on Ger
man industrials, Italian power COM
panies and other Old World issues,
the American investor Judges foreign
corporate securities about as readily
as he does American company issues.
Was Complete Success.
The Royal Dutch issue was com
plete success. The subscription books
closed Immediately. The issue has
the lowest coupon rate of any Eu-
ropean loan ever fioated In the Ameri-
can market and indicates new phase
IN the development of New York as
an international lender. It demon
strates the greater understanding by
the American investor and a growing
willingness to grant the same posi-
ton to corporations Of the best credit
in other countries as 10 the top grade
American corporations. The recent
fir ncinR for the Standard Oil Co.
New Jersey and Royal Dutch were
done practically on the same yield
basis"
OF course, the Royal Dutch Co. is
international In character and is in
special status.
AItnOuEn interest THAAA IN general
are less discriminatory than in the
past against foreign borrowers, the
American investor is likely still to
favor a home corporation IL all other
factors are equal The significant
change, however, has been the grow
ing understanding OF foreign risks and
the increased willingness to assume
them.
Full Consequences Not Grasped.
The full economic consequences of
the new role of New York as world
financial center has not yet been
graSped.
As a matter OF fact, the role is fast
being transformed, as America comes
of age in an economic sense.
Foreign lending viii inevitably give
Americans an increasing interest in
the course of world events.
There are some who fear the policy
of lending capital to nations which
compete with America for trade. And
those who support the free lending
policy reply that American industry
is virile enough to compete In re-
habilitated world; that 1t does not re
quire a PROSTATE world in which to
operate and succeed.
Political questions also arise. The
Department of State asks bankers to
submit for consideration to the Gov
eminent loans to foreign nations. and,
though it absfains from giving spe-
cific approval. 1t asks for the priv
lege of expressing objections to fnan-
cial projects which are inconsistent
with the major diplomatic policy OF
the Government. When Charles E.
Hughes was in charge of the depart
ment, he expressed opposition to loans
for militia ristic purposes.
1t is difficult to segregate govern
r,ert loans. Loans intended for con-
structive purposes may free other
funds for the purchase of ornaments.
One advantage of loans to corpora
tons is that they are likely to be for
business purposes, which
will create sufficient revenue and
profits with which to meet the indebt-
edness. Loans to governments are
more haphazard, but European gov
ernmenes are at length putting their
finan cial houses In order.
Wall Street bankers believe that
significant changes are imminent in
French public finance. which viii pave
the, way for new foreign borrowing
on aAcolossai scale.