The daily worker. [volume] (Chicago, Ill.) 1924-1958, 1927-04-01

! GtlSCb against IuS SndCkllnE
of American bankers by the govern
ment in the business of foreign loans.
1 There exists notably an embargo
on loans to those countries that have
not yet settled with the u. S. Gov
eminent the question of their indebt-
edness to this country. The ban re-
fers chiefly to France which by refus-
ing to sign the war debt agreement
has deprived itself of the public loan
market here. Of course, neither the
State nor the Treasury departments
could legally interfere with the plac-
ing of French loan, if that course
were taken by the bankers. But the
international bankers" know very
we'll the value of working in perfect
harmony with the Government that
comes to their support any time there
appears some danger of defaulting
on payments to these same bankers
on the part of some hard pressed
debtor.
AS if is, it was Germany that
secured about third of the foreign
loans floated in the American market
during 1926, while France received
nothing, the rest of the capital placed
abroad going chiefly to Canada and
Latin America The whole Of that
capital reached in 1926 the tremen-
dous sum of $1,354, 824,670 and con-
stituted like everything else in this
country-with the notable exception
of proletarian class consciousness-a
''record" for the world.
This year the foreign loan situation
looks somewhat different and less
favorable for the international bank
ers." The figures compiled by
Moody's Investment Service show
that the respective activity up to
now is considerably below that of
1925. Moreover there is being notice
able according to the same authority
"a steady decline in the quality of
such loans"
We shall deal some other time with
the reason for this turn of affairs.
At present let us note that the bank
ers are pressing upon the Govern
ment to remove the ban on loans to
France whose issues were in the past
conspicuously absent from this mar
ket.
THAT despite Washington's ban
4 France has been able to obtain
money from the American bankers
in an indirect way is a known fact.
/ Tho hopIyarc ,,yo,.o l,,,.,,,,o. ob,.ooI Al.
"choice pieces" of French financing
and locking the respective bonds in
their vaults in anticipation of a
change in the policy of the govern
ment.
But Wall Street is not satisfied
with such indirect procedure. They
demand free investment market, a
public offering of French securities,
instead of buying merely French
stocks and investing the money them
selves. They complain that the Eng
fish and the French as well as the
Dutch and the Swiss bankers are reap
ing now a gold harvest by getting
the French loans that are yielding
high interest rates. This at the time
when the American surplus capital is
yearning for profitable foreign in
vestments and the New York Stock
Exchange is taking steps to make
New York the great international
market of the world not only for
bonds but also for stocks.
So Wall Street is picturing to the
Government the danger of losing its
financial leadership to its old Lon
don rival. The pressure is not without
some effect, as witnessed by the re-
cent announcement of Andrew Mellon
that the Government had no objec-
tons to private offerings of French
securities in this country. But the
ban against public loans still remains,
though the bankers are convinced
that soon there will come an adjust
ment" of this situation. It is not
excluded that MELONS desire to see
his sick daughter in Europe has some
thing to do with this belief, as there
are some other problems of interna-
tional finance to which he will have
to attend in Europe.
THE enormous financial change
L that followed the World War and
made the United States the financial
giant of the world has found this
country-because of the rapidity of
the change.-in various ways unpre-
pared to utilize it's new financial posi-
ton. The country has notably turned
from a comparatively minor holder
of the worlds gold supply to a possess
sor of almost half of the world gold
reserves. The gold holdings of the
United States stand now March '27)
at the enormous figure of $4,585, 7s7,-
COO out of a total world supply esti-
mated at $9,603, 759, 900, or approx
mately As per cent. This represents
credit base that calls all the time
for initiation on the one hand and for
an outlet to other countries with less
gold on the other.
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