In 1915, a massive Anglo-French loan for $500 million was floated in the United States with the cooperation of a syndicate headed by
J.P. Morgan & Co. The latter, which became in 1915 the British and French purchasing agents in the US, was increasingly influential. The Anglo-French loan was a limited success. The syndicate found buyers scarce. After 1915, more modest expedients were sought. In 1916-17, various devices were employed, including offering guaranteed UK government loans. Late in 1916, a plan championed by Morgans to issue short-term Treasury Bills in the United States was rebuffed by the Federal Reserve Board at the behest of the American President
Woodrow Wilson (1856-1924), who hoped refusal would force the allies to heed his mediation proposal to end the war. Wilson’s gambit failed but allied financial precariousness was exposed. The overdraft on Morgans reached the staggering figure of nearly $400 million in the spring of 1917.
[25] France had reached the end of its tether. Could Britain continue? On its own account perhaps, but not paying as well for the allied accounts, at least not for long. American belligerency extricated London from the worst spectres, though it raised other fears. Would the United States supplant Britain as the dominant global financial power?
[26]
