The acceptances for the goods thus bought become negotiable
documents and are bought and sold by institutions and investors at a
discount.
This evidence of debt is not the kind of foreign investment suitable for
the man or woman with savings to employ because it is more or less a
banking transaction. These credits usually net about 61/2 per cent.
With the exception of a comparatively small amount of German and
Austrian Bonds bought in the main by natives of these two countries for
purely sentimental and patriotic reasons, the entire bulk of European
loans placed in America is for the Allied countries, principally England
and France who are our heaviest customers in trade.
The largest foreign loan brought out here so far is the Anglo-French 5
per cent External Loan which was negotiated through J. P. Morgan &
Company--Fiscal Agents for the Allies over here--by the Commission
headed by Lord Reading and Sir Edward Holden. It is the Joint and
Several Obligation of the Governments of the United Kingdom of Great
Britain and Ireland and the French Republic, is dated October 15, 1915,
and is due five years after that date. It ranks first amongst the
foreign war obligations of these countries.
This was the first big credit arranged by England or France in the
United States and the proceeds were used, in the manner that I have
already described, for the purchase of American goods and to stabilize
the foreign exchange.
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