Show Loan Policy of State Department Defended Government Interest Based on Desire to Protect U. U S. S Investors By United Press WASHINGTON Jan 7 The 7 The state department replied today to congressional congressional congressional critics of ot its foreign loan policy polley in a formal statement declaring it had never passed on the security or merits of foreign loans Holding its interest has been based entirely rely on a desire to protect American Amerlean Amer Amer- ican lean investors the department stated that its advice to bankers had dealt I entirely with political aspects of the thel In a few instances it added added add add- ed ed it had pointed out to banking groups loan arrangements which seemed obscure or unsound A second statement from the department department de de- de dealing with its policy toward toward toward to to- ward German bond issues revealed that as early as 1924 the department warned bankers that reparations and Dawes' Dawes plan payments had bad priority I over other German bonds I LOANS I INVITED The departments department's loan policy it said originated in a statement made March 3 1922 during the administration tion of or President Harding Following a conference between the cabinet and American investment bankers the bankers were invited to discuss projected projected projected pro pro- loans with the state department depart depart- ment nent but were not ordered to do so The resulting practice followed by bythe bythe bythe the department the tho statement said was to acknowledge requests for examinations ex ex- of loans if there was no objection to them as follows In the light of ot the information before it the department of state offers no objection to the flotation of this his issue in the American market Regarding projected loans that it of the department wrote as follows LOANS DISAPPROVED You will therefore appreciate that this department is not in m a position position tion to indicate that it perceives no objection to the financing to which you refer The department pointed out the following fol following lowing salient features of Its loan policy policy policy pol pol- icy 1 On the whole the department does not ask t to be notified of purchases purchases pur pur- chases of of- foreign n securities unless they are to be sold on the open AmerIcan Amerlean Amer Amer- ican lean market 2 The practice of examining loans loan'S was established to safeguard essential American interests 13 3 The department has never on the business merits of loans 4 14 The department has guarded against the use of its opinion by banking bank bank- bankIng ing houses and advertising loans L I |