Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-29
CREDIT TO BRITAIN
AROUSES INTEREST
Wall Street Watches KeenIy
as Bankers Prepare to
Extend Loan.
BY CARLTON A. sHTvELY.


Special Dispatch to The Star.
NEW YORK, August 29.-Interest in
the preparations for q huge private
banking credit to the British govern
ment has been so keen this week that
every movement of bankers, every con-
Sultation of a special nature and even
the routine meetings Of bank dfrec-
torates and the Federal Reserve Bank
boards. here and at Washington, have
been credited in Wall Street with some
connection to this credit.
Those who have had a hint of what
was going on behind the curtains took
a somewhat different view of things.
AS matter of fact, the food tide of
confidence which greeted the forma-
ton Of the new British cabinet this
week made II doubtful for a while
whether q credit would be asked.
Sterling, with only slight aid from the
supporting credit at the Federal Re-
serve Bank and at the Bank of France
recovered TO the highest price level
since the beginning of the German
credit crisis two months ago.
Precautionary Measure.
As 1t Is. the new British credit, which
is one made directly TO the British
treasury by a syndicate of banks.
headed in this country by j. P. Nor
gan & Co. and by commercial banks
in France, and which should not be
confused with the recent $3.50 000, 900
credit placed by the New York Federal
Reserve Bank and the Banque de
France at the disposal of the Bank of
England, Is arranged largely as a pre-
cautlonary measure. Bankers expect It
VIII be drawn upon, but only to a small
extent. Its great size is designed To
impress the world with the still lln-
tapped hugeness of the resources Of
Great Britain rather than to measure
the pressure expected on the pound
sterling.
Meanwhile bankers are concerned
with other things besides bolsterinp
the currencies of foreign nations and
provlding foreign credits. Commerta-
tors hastily assumed that the meeting
held In Washington this week of four
leading Wall Street bankers with
Governor Meyer of the Federal Re-
serve Board and President Hoover was
concerned with the British credit.
such was not the case, it NAV be
stated on the best of authority. Gov
ernor Meyer called the bankers IN
washington to discuss one phase of
the business situation, and the dinner
at the White House which followed
was incidental and in the nature of a
courtesy call.
This meeting was only one of sew
eral which have been held and win
De followed by others, whereby the
Federal Reserve Board and the ad-
mlnistratton hope to obtain a clearer
view OF the actual situation. No spe-
cial significance attaches to it. but II
Is more likely that the real estate no.
sltion rather than foreign credits was
discussed. Admittedly the bad condi-
lion OF the real estate market and the
irlgldity of millions of dollars of hank
loans based on real estate. as well as
the depreciation and frozen nature Of
a vast amount of bank investment in
real estate, is one Of the worst phases
OF the business depression.
Bankers Survey.
In recent critical survey of the
nelo, the Investment Bankers Associ-
ation published some rather Startling
ngureS. They estimated that approxi.
mately 90 per cent of real estate bonds
faced losses ranging from 10 to loo
per cent. OF the estimated total ~
SlO.O0O,00O,000 in real estate bonds
outstanding it was found that in Chi
cago alone S400, 000, 900 were in fore
closure, with other cities showing the
same proportion. The Investment
bankers predicted little new real es-
tate bond financing until the situation
mas cleared, which it is showing no
convincing signs of doing.