Evening star., 1941-07-22
Britain Given
New Loan Of
Investments in U. 5.
Are Accepted as
Collateral for Funds
list OF Securities on Page Alb

BY the Associated Press.
The Federal Loan Agency an
nounced today S425 900 900 loan tn
Great Britain. against an estimated
s500,000,000 worth Of collateral, 10
help the British pay for war supplies
ordered in the United States prior to
enactment of the lease-lend program.
The loan was authorized bv the
Reconstruction Finance Corp. with
the approval of President Roosevelt
and at the request of Jesse Jones,
Federal loan administrator, the
agency said in statement.
The deal was arranged, the state
ment explained, for the purpose Of
providing the British with dollar eX-
change without having to sell their
securities and investments al forced
sale"
Provision Made for Extension.
Funds to the total Of S425 OO00 ono
will be paid out 10 the British al the
rate of approximately sl0000O000 .
month under the terms Of the deal.
and the loan, bearing interest AT :
per cent annually, will mature in Is
years. 1t may then be extended for
five years. provided two-thirds Of the
principal has been repaid.
Interest and dividends from the
collateral securities TO be pledged IN
the r. F. c., however, plus earnings
assigned to it from United States
( ~ pri+
companies, were described in the
statement as adequate 10 amOrtlze
the entire loan by the end OF the
maturity period.
The loan agency's statement said
this new financial assistance to Tar-
harried Britain was authorized
under a law enacted last month,
which specified the r. F. c. could
make loans TO a foreign government
to enable that government to get
maximum dollar exchange value foI
its property in this country.
Market Values Drop.
When the lease-lend program was
enacted the British already had
piled up huge orders for munitions
here. 1t was said AT the time they
had funds, securities and other
property available TO meet those OBJ
legations. but required lease-lend as
sistance in supplying future needs.
To turn the securities into dol
lars, however. meant marketing
/ them in this country. In discussing
the loan now authorized, Secretary
| Morgenthau said recently that con-
| ditions on American markets had
presented difficulties in this regard
/ and a loan at this time was de-
sirable to assure the British OF OBJ
( tanning maximum value.
Whether one loan will BE- ade-
ouate to meet all British needs was
not stated. Mr.. Morgenthau said
Britain's obligations to United
States manufacturers at the first of
/ the year amounted to between
81 300 100000 and sl.400, 900 O00 but
he could not estimate how much
this had been reduced in the slA
months since then.
SOlldteTdl LOT bodH,
The loan agency statement said
that collateral for the loan fell into:
three categories:
Securities OF 81 United States
corporations listed on the New York
Stock Exchange. These were said
to have a total present market price
value of S205 100000.
Unlisted securities Of 46 United
States corporations. The estimated
value of these securities was put at
Sll5. 100000
The capital stock of IL British
owned United States insurance
companies estimated to have a total
net worth Of more than 80,000,000,
There will be no change in the
control or management of these
direct investments, including the
insurance companies" the state
ment said. Their financial posi-
ton and stability will continue un-
affected
Insurance Earnings Assigned.
In, addition 10 this collateral Sc
curity, the loan agency said, there
will be assigned 10 the R. F. c, the
/ earnings of the United States
branches of al British insurance
companies not incorporated in this
1 country" These branches were de-
/ scribed as having net American
assets. above reserves to meet policy
obligations in this country. of ap-
proximately 100000 900 in cash and
United States Government se-
/ curities.
The total income from the coll
lateral and the earnings of the in
surance companies. it was said.
have averaged s36,0O0,0O0 annually
for the past five years.
"On the basis of the past five
years" the statement said, "the
available income would amortize
the loan in approximately Is years"