The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1931-12-19
u. S. FINANCIERS
DENY PLOTTING
DEBT REVISION
Tell Senate Probe Group
$1O,0O0,OO0,O00 Issues
Went to Investors.
'CR0WDING' SEEN FATAL
Commercial Obligations
Should Be Paid First,
Senators Told.
'CR0WDING' SEEN FATAL
BY RAY TUCKER
Times Stan COrrespOndent

WASHINGTON, Dec. 19-Any
default or nonpayment of the S1O.-
OOO,OOO,000 in foreign secur.>~
floated in the United States since
the armistice will work hardships
on small banks, institutions and in
diyidualS rather than on the inter
national bankers who handled the
transactions, according to testimony
before the senate finance commit
tee.
The bonds have been passed on
to the American investing public,
and the bankers stand to lose a
comparatively insignificant sum on
this item.
But, according to warnings voiced
before the committee by Thomas w.
Lamont, partner in j. P. Morgan &
Co, and Charles E. Mitchell, presi-
dent Of the National City Bank of
New York, neither public nor pri-
vate obligations will be paid if
statesmen do not combine to re-
store Europe.
wholly Uninterested"
The Morgan firm, Lamont said,
holds no long term credits, while
the National City bank and its aff1l-
late corporation, the National City
Company, has only $2,186,000 worth
of foreign holdings at the present
time. Yet both banking institu-
tions have floated a total of ST.
S78, 1885, 900 in foreign securities irr
the last ten years.
In view of this situation, the in
ternational bankers we're registered
as wholly uninterested in the spe-
cific issue of reduction or cancella-
ton of debts, as suggested by Pres
ident Hoover.
They argued, however, that any
insistence on payment of the pub
lie debts ahead of the commercial
debts will injure international
economy and especially Germanys
economic status.
why" said Mitchell, New York
banks hold so few foreign bonds
they have no reason to try to in
fuence the national policy on
debts"
Public Holding the Bag
1--WE have passed these securities
on" said Lamont, land it is the in
vesting public who hold them now.
The impression that the bankers are
trying to bring pressure is wholly
erroneous"
Nevertheless, Senator Hiram
johnson (Rep., CALI, sponsor of the
Nestigation, insists that all the
banks handling foreign issues be
forced to reveal how much they
have in their own portfolios.
The big bankers, their first two
representatives testified, frankly are
optimistic concerning their advances
to foreign governments. Lamont
declared that France and Germany
are "meticulously'' complying with
sinking fund requirements, and that
the loans are amply safeguarded.
He insisted that the problem of
international finances, unfortun-
ately had been overemphasized,"
and that more attention should be
paid to domestic problems, especial
ly the railroads and their securities.
He called these the backbone of the
financial community"
Argue Loans Helped u. S.
Were it not for the $4,000, 900, 900
in loans to Europe, both men con-
tend that American exports would
have suffered, and the debts already
paid by foreign nations to this
country would have been much
smaller. The loans, they insist,
produced dollars which have bene-
flied America"
L have faith Mitchell told the
committee, that, no matter how
you solve this question. you will
strive to preserve German econ
on1y. If I am right, then these
short term credits are good, and we
are glad to have them.
But if you tell me that the po-
litical debt must be paid before any
of the commercial debts are dis
charged, then say that, you will
have closed Germany, a closed
Great Britain, and, probably, a
closed United States"