CONFIDENCE IN THE ALLIES

Dominion, Volume 10, Issue 2918, 2 November 1916, Page 4

CONFIDENCE IN THE ALLIES

The American firm of J. P. Morgan and Go. has, from the outset of the war, acted as financial, shipping and purchasings agents for the British Government, and practically for the Allies, sinco all purchases are made jointly. It has not been quite an easy matter to arrange financial questions with American capitalists, and it is easy to show that tho Allies have proceeded step by stop during the past two years in the task of impressing American financiers with the resources of tho Allies and their ability to meot all engagements. The period of complete confidenco appears now to have been reached, for in this issue it will he seen from a cable message that _Mtt. Henry Davidson, a partner in the firm .of J. P. Morgan and Co., who has returned to New York from a visit to England, is of opinion that "tho future of tho Allies is security enough for unsecured Government bonds. This emphasises a remarkable change in American sentiment. When early in tho war England and Prance desired to borrow the comparatively modest sum of £100,000,000, it was necessary to send a deputation of financiers and othera, headed by the Lord Chief Justieo of England, to place the claims of the Allies before the American financiers, and to canvass for subscriptions. Tho loan was issued at a high rato of interest, and the underwriters were exceptionally well treated. In August last the British Government raised £50,000,000, in two-year 6 per cent, secured loan'gold notes. It was stated in tho -prospectus: "These notes are a direct obligation of the British Government, and are secured by tho deposit of bonds, stocks, and other securities, of tho market value of approximately 300,000,000 dollars, tho valuation 'of the same being approved by Messrs J. P. Morgan and Co. Tho subscription price is 99, and accrued interest, at which price the notes will yield slightly'over 51 per cent." Thus so recently as August last the British Government had to lodge 300,000,000 dollars of 'approved securities to obtain a loan of 250,000,000 dollars, yielding the lenders 5i per cent, interest. To-day. J. p[ Morgan's partner says the future of the Allies is sufficient security. It is a great tribute to Britain, who is financing the Allies, and incidentally it. goes to show that as regards financial resources, the Allies have not reached anywhere near their limit. The Allies have been borrowing in America mainly to stabilise the exchanges bctweon London and New York, which were severely affected owing to the large purchases of munitions.