But when England and France stepped up to our money counters again,
Uncle Sam put sentiment aside and became a pawn broker. "I think you are
all right," he said, "but you are in a war that may last a very long
time and I must have collateral."
To English pride this was a terrific jolt. I happened to be in England
at the time and I recall the astonishment of no less a distinguished
individual than the Chancellor of the British Exchequer. It was
unbelievable that any nation could demand greater security than the
good name of the Empire. "If the elder J. P. Morgan were alive this would
never have happened," said the London bankers. They knew that the
Grizzled Old Lion of American Finance always held that character was the
best collateral. In the war emergency, however, many American bankers
thought to the contrary and the net result was that with all external
loans thereafter England and France have been forced to dig into their
strong boxes and do what any individual does when he borrows money--put
up a good margin of security.
An illustration of this secured obligation of the British Government is
the issue of $300,000,000 Five and a Half Per Cent Gold Notes dated
November 1, 1916. Principal and interest are payable without deduction
of any English tax in New York and in United States gold coin. The
holder of these notes, however, has the option to get his money in
London but at a fixed rate of $4.
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