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Show uu WILL THEY REPUDIATE THEIR DEBTS. Short term bonda are advocated by a New York banker aB a means of overcoming the financial disturbance caused by the heavy drop in foreign exchange. The-situation is reviewed as follows: "The crisis in exchange has become more and more acute, and is now per- haps tho chief element of distrust. j -rton.6tlme' sterling fell as low as I u' foLlowod a Partial recovery: aitnough. Bomo exports wero predict- lng even lower rates. Thia amounted I to a diaoount of about 6 pr cent for exchange on London compared with 17 per cent on Paris, 19 per cent on Berlin and 26 por cent on Rome, The causes of these abnormal rates do not need explanation. That oven greater uneasiness does not exist, is duo to the fact that a numbor of eminent emi-nent British bankers are on the way hero for the purpose of making an early adjustment. The rush of enor-mouB enor-mouB war contracts continues, and provision for their financing Ib a very urgent necessity. Tho excess of exports ex-ports over Imports, which amounted to $1,000,000,000 for tho year ending Juno 30th, may run as high as $2,000.-000,000 $2,000.-000,000 whon the caloncar year ending December 31st ie reached Tho only methods of settlement are either a return of American securities, imports im-ports of gold, or tho placing of a regular reg-ular government loan by tho British government. Tho best method to adopt Is to issue a short term loan, say for two, live, seven and ten-year periods, which would bo the most likely to succeed. The shorter term Issues could bo, I think, placed on a 4 1-2 per cont basis, whllo the longer dates would require a higher rate, say, 5 per cent; all redeemable in gold and to 'be free from taxation How tho average American Invostor would take such a security Is somewhat some-what problematical, but many of our financial institutions and our big capitalists capi-talists would undoubtedly subscribe freoly now that the danger of war with Germany is passed. British credit has not yet been sorlously strained, and seems abundantly ablp to finance the war through to tho end Yet tho danger of overcrowding this mnrkot with excessive foreign obligations obli-gations is not to be overlooked " Tho uncertainties of tho war mako bond issues doubtful. There Is a possibility of Germany gaining a victory vic-tory so declslvo ns to greatly lessen the importance of Great Britain in world affairs, or of so crippling the British empire as to make British obligations of no value. That possibility, possi-bility, though remote, causes financiers finan-ciers to hesitate to placo their money In English paper. If the bonds were backed by American securities held In Europe, their sale might be facilitated. facili-tated. Thero Is not a nation Involved in the European war whose bonds are a safe Investment A conservative view Is that the conflict will end with the exhaustion of all the contending con-tending forces and thero will bo no territorial aggrandizement. But tho tremendouB debts will wolgh so heavily heavi-ly on the nations that all will be compelled com-pelled to repudiate their obligations. Therein Is the great danger of Investing Invest-ing In these war bonds. None of the nations can pay interest inter-est on the billions of borrowed money. mon-ey. Repudiation will become Imperative. Impera-tive. no |