Foreign Loans

Ever since the U.S. became a creditor nation, it has been aware of the fact that lending money abroad Js not always a sure way of remaining popular.

Loans made by the New York market to Argentina have been severely criticised in that country for various reasons. Still more recently, the Japanese have shown widespread dissatisfaction with the terms of the loan contracted here. Many charges were made that the interest rate on the loan (TIME, Feb. 18, 25), was far too high and reflected upon the nation's credit. Much of this grumbling is, of course, due to politics. A minority party habitually assails the terms of a foreign loan made by the party in power.

Foreign countries who come as borrowers to New York must, however, remember one important element in that market--the tremendous existing demand for long-term capital as compared with the financial markets of less rapidly growing nations. Foreign bond offerings in New York must compete with better known and more popular home investments on the basis of the interest rate. As long as America itself calls for the steady investment of several billions of dollars annually in home business and other enterprises, foreign borrowers will be bound to find financing here somewhat expensive.