The Washington times., 1915-07-04
A NEW ESTIMATE OF. FOREIGN
INVESTMENTS HERE


vass of American railroads by Mr..
Loree, president of the Delaware and
Hudson, indicated foreign holdings
in American railroad stocks and
bonds to the amount of some two
and a half billions instead Of the
generally accepted estimate of be-
tween four and five billions. There
is no possibility that he got the full
amounts on his lists. British inves-
tors don't pretend to want to pay the
heavy income taxes of their country
when they can get out of paying
them. One way they get out of pay
ing some of them is to cover their
investments in foreign lands in the
names of others. They let Ameri-
can'banks hold them for them. They
have American attorneys and other
agents to do this for them.
And, then, foreign Investments in
this country are by no manner of
means all in our railroad securities.
A very considerable part Of surplus
British capital has been quite as
fond of real estate mortgages in this
country as of railroad mortgages,
not to speak of stocks. German in
vestors have gone very heavily into
American industrial and commercial
enterprises as we'll as into securities
of railroads.
One very reasonable explanation
for the high estimates which have
been made of the amount of foreign
holdings in our stocks and bonds is
the enormous annual payments
which we have had to make abroad
for many years.
1t is rather startling to think that
whereas an average Of per cent
on $4,000,000,O0O of American Sc
curities held abroad would be $780,
100000 a year, to be paid there in
dividends and interest, our American
travellers in Europe have spent in
recent years not far from that an
nual sum. In other words, they
scattered in Great Britain and on
the Continent about the equivalent
of normal returns on four billions
of securities.
The same thing has been true of
the freight bills which we have had
to meet abroad. With virtually all
our overseas commerce carried in
foreign bottoms there has certainly
been more than 500, ,0O0, 900 a year
for us to meet on that score, and
many authorities have estimated it
In the recent years of our prodigious
trade at not less than 5000, ,00O, 900 a
year.
And, Of course, there have been
other very considerable amounts
which we have always had to meet
abroad, such as the remittance of
our alien population back to their
home countries, marine insurance,
exchange, and similar charges
against US by the great trading and
banking countries of the Old World.
Having to meet, with our excess
of exports over imports, with our
gold and with our securities-for
whenever we have been unable to
pay current bills against us in Eu-
rope we have always shipped over
bales of American securities-hav-
ing to meet in that way perhaps
$500, 100000 a year was just like
paying out the average interest and
dividends on not $4,000, 200, 900, but
perhaps three times S5,000,00O, 900
of American securities.
No doubt, because those settle
ments had to be made in such stu
pendous sums annually, semi-an-
nually, and quarterly, we have had
marked up too high, in our minds,
the part which interest and divi-
dends on our securities played in
that grand total.
In any event, if Europe holds. to-
day not more than two and a half
billions of our securities, or even if
Europe holds a billion more than
that, we haven't any need to worry
about a liquidation of those securi-
ties in our markets. In the first
place, private owners of our stocks
and bonds held in England, France,
and Holland do not mean to part
with them as long as they have any
thing else on which they can raise
money. Their governments cannot
make them part with them, and they
will not do so voluntarily, because,
in this crisis of the financial affairs
of all Europe, American securities
of the first class are about the only
absolutely sound and very nearly
dead-sure investments they can see.
They want to hold on, and they will
hold on, to the one good thing they
have as the last reserve to take care
of their imperative necessities if
everything else should fail.