Evening star., 1937-03-07
loan CASH SOUGHT
IN j. s. BY FRANCE
Application of Johnson Act
Discussed in Bonnet
I Morgenthau Farley.

this country would lend helping
hand. The Treasury views were given
to Georges Bonnet, Ambassador from
France, and relayed to a high repre-
sentative of the British government.
THE French were reported to have
sought information on two important
points. Henry Morgenthau, jr., Sec
retary of the Treasury, 1t appeared,
promised continued cooperation IN
stabilizing currencies, including the
franc. On the second point, the ex-
tent Of participation by investors Of
this country in the huge French ma
tional defense loan to be floated to-
morrow. the Secretary was apparently
noncommittal.
There was the usual secrecy con-
cerning the conversations. Secretary
Morgenthau, at a press conference,
declined detailed information. He
said publicly that he could not give
any legal opinion on the ramifications
of the Johnson act, prohibiting f1ota-
tions of foreign securities in this
country by countries in default on
their war debts.
No Agreement" Indicated.
Certainly, the plain implication
from the Secretary was that no
agreement" had been reached where
by American investors would be en-
abled to take up part Of the French
loan. The assumption" given by
Treasury officials was that the Secre-
tary had not advised the French gov
ernment on the legality Of any Amer
lean participation. The attitude at
the Treasury was that the johnson
acts Interpretation was for the Attor-
ney General.
Ordinarily American corporation in
helping a foreign government, owing
war debts, to float a loan would be
laughed at. Secretary Morgenthau's
failure to fatty deny the French
evertures or to vigorously scotch
reports from abroad had the natural
effect of giving them some credence.
Appraisal of the delicate situation
was difficult. Taking into considera-
ton the pledge of tripartite currency
stabilization and the fact that the
French loan relates to armaments in
War-jittery Europe, piecing together
OF scraps of information brought
this conclusion.
The United States attitude sum-
married into one of friendly CO.
operation" with Secretary Morgen-
thau refusing to go beyond the
spirit" of existing laws (the john
son act. here, he has the use of a
S2,000,000,000 stabilization fund. The
prime consideration of the French
Government was anxiety to keep this
country's good will. But there ap-
peared no doubt that the French
would not be adverse, to put it
mildly. for an expression of Ameri-
can financial interests that might
result in the proposed French loan
being received confidently by French
citizens. British and American par
tlcipation in the loan would, of
course, insure its success.
French Accounts Differ.
Ambassador Bonnet, at least pub
licly, obtained no assurance that
the johnson act would permit any
type of American participation. In
what appeared to be inspired news
paper accounts in France, given no
shred Of official confirmation here
it was reported that the United
States Government would not oppose
American banks advising their clients
that the French loan, payable in
;rk,
investment.
The Treasury fatty refused to
interpret the johnson act. Secretary
Morgenthau's attitude, as relayed by
Treasury officials, was that it was not
his place, from legal viewpoint, to
interpret the law. But in any event,
he was said to feel that he could no
more comment on the French loan,
since he did not know its terms and
character (to be announced tomor-
row., than the French could comment
on our quarterly financing Ito be
announced tomorrow. This state
ment in itself was confusing, for
observers could not see how the terms
of the French securities could make
under the johnson act went.
There was general informal opinion
here that nothing in the johnson act
prohibited any American investor
from sending funds abroad to pur-
chase French securities. The general
tenor of the johnson act, and the law
is not one easy of Interpretation, is
the objective of prohibiting flotations
of foreign securities here by American
banking syndicates, such as those Of
the late l920s. which made the Amer
ican investor large stakeholder in
the obligations of foreign nations.
The law is avowedly designed as a
club to compel war debt settlement,
by removing American money mar
kets from the reach of the nations
which defaulted on sums due this
country. On the other hand, whether
American banking interests, as a
friendly gesture to France, could go
out Of their way to urge American
investment in the loan, was a moot
question, certainly involving the
Esprit" of the johnson act.
Harrison Attends Farley.
Before going to the White House
yesterday afternoon, where he con-
ferred with the President on relief
expenditures, but where it was believed
he also informed Mr.. Roosevelt on
the French monetary situation, Mr.
Morgenthau talked with Ambassador
Bonnet and with v. A. L. Mallet
counselor of the British Embassy
George L. Harrison, head of the New
York Federal Reserve Bank, was
called into the conference. The banl
Is the fiscal agent Of the Treasury.
At press conference, Mr. Morgen.
thau said: Il am sorry I can't discus.
that (referring to his meetings..
am not going to try to parry. I'm moi
going to say anything on that"
Later, Treasury officials permitted
amplification of Mr.. Morgeithaus re.
marks to include II can't give any