The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. WEDNESDAY, SEPTEMBER 22, 1915. THE AMERICAN LOAN.

Southland Times, Issue 17533, 22 September 1915, Page 4

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. WEDNESDAY, SEPTEMBER 22, 1915. THE AMERICAN LOAN.

A telegram published this morning convoys the assurance that the Allies’ loan in America will he successfully floated, and that the amount will he at least XI 160,000,000. This loa.u is raised, it must ho borne in mind, not because the Allies llud it necessary to obtain American capital for the purpose of carrying on the war. hut because it is believed that the raising of an American loan will correct the rate of exchange and give the British sovereign its full value in the United States. The normal value of the sovereign is four dollars seventy-eight cents, but owing to the enormous purchases of munitions made by Britain and her Allies in the United States the exchange rate has been as low as four dollars sixty-seven cents, or a loss of tenpence in the £. By way of a corrective, the Allies first of all shipped gold in large quantities to New York, but New York is surfeited with gold, and the exchange rate continued low and irregular. Then an influential and expert Commission, headed by Uord Reading, was sent over to New York to negotiate a loan, for high financiers were of opinion that the establishment of a large credit in New York would restore the exchange rate to the normal level. The strong financial position which the Allies occupy was proved by the conditions which the Commission imposed. American financiers at first expected that Britain would agree to deposit American securities as collateral security for any loan that was raised. Jn Britain, of course, American railway, municipal and Government securities are largely held, British investors having enormous sums of money locked up in American private and public enterprises. These stocks and bonds would have been additional securities for American lenders, but the Commission

made it clear from the outset that the Allies had no intention of giving any collateral security, and that they proposed to raise the loan purely on their credit. The British attitude was that Britain’s name was good enough security for any sum that she chose to ask. In the banking institutions of the United States German-American influences are powerful, and naturally these influences are pro-German. These hanks no doubt desire to share in an investment so remunerative as a British war loan, but with the knowledge that any loan raised would be used for the purchase of arms and ammunition to be employed against the Germans"they have done their utmost to prevent the success of the loan. Apparently their worst efforts have failed, and they are now endeavouring to participate in the loan with the stipulation that none of the money is used for thr purchase of munitions. To this suggestion, of course, Britain gives a point blank refusal, and the German-American bankers can either share in the flotation on Britain's terms or stand out of it. The only alternatives open to' them are to obtain a good investment at the cost of assisting Britain to win the war, or to lose the investment and suffer the mortification of seeing others provide money for the same purpose. The anticipated success of the loan lias already had a healthy effect upon the exchange rate, and it seems probable that as the result of the Commission’s visit to New York Britain will not only have the satisfaction of establishing a large credit for the payment of debts to American munitions manufacturers, but will also have the satisfaction of knowing that every £ purchases 20s worth of material. The success of the Commission in its enterprise is a further testimony to the unassailable financial position of the Allies and to the magnitude of their resources.