The Bridgeport times and evening farmer., 1920-07-03

City 20 per cent. in excess of the face amount of the 1oan-Ameriean stocks and bonds, English railway bonds, bonds of the British colonies and in dependent nations, in short nego- | tiable securities of every kind which patriotic British owners had loaned the government to help raise the funds it needed for war purposes. As the government agreed to keep the collateral equal at all times at mar lSer value to 120 per cent. of the value of the notes outstanding, and the trustee could have sold the col lateral on any breach of the agree ment, it will be seen that the bond holders were spendidly protected.
 The fourth type of security is the
 pledge of definite revenues to meet
 the interest charges and sinking fund
 charges of the bonds. The Govern
 ment of Santo Domingo issued per
 cent. Customs Administration Sinking Fund Gold Bonds of 1908 to be re- tired by 1858. Under treaty pro- visions between the United States and Santo Domingo, the customs pledged as security for the loan are to be col lected by Receiver appointed by the President of the United States The Reorganization Loan of 1913 of China | has a pledge of the salt revenues which are collected by Chinese repre- sentatives, but this loan has a clause | providing that if there should be a default, the collection of the salt revenue shall be in the hands of for | eign representatives of natives.
 Foreign governments may pledge 1 as security for their external loans, ! revenues without explicitly giving the l bondholders the right to go in and administer the collection of such pledge revenues, but this has salu- | tary influence in indicating to Min 1 isters of Finance that such revenues | are reserved for these specific pur- poses and further, if the bondholder's l own government will exert proper in | huences, his rights may be protected. | To attract investors who desire an 1 opportunity for speculative profit without correspondingly speculative risk, convertible privileges have been 1 attached to several recent foreign is- | sues. One of the best known is the l British 3 1-2s, due Nov. 1, 1922, and l Aug. 1, 1929, which are convertible at | the fixed rate of $430 for 1 pound
 into National War Loan Bonds Gan | internal issue) payable Feb. 1, 1929 | at 105. With exchange at present | levels, these bonds are selling on 1 their value as a promise to pay prin-
 cipaI and interest in gold in New | York, but if sterling should move 1 above s4.S0 their privilege might be- i come of substantial value, making ii | possible for the bondholder to obtain
 the War Loan by conversion at q l cheaper price than if he had bough; 1 them in the open market, and hence 1 to make a profit by selling at the higher market rates the bonds thus | obtained.
 l A somewhat different privilege is | attached to the 25,0c0,000 Kingdom of Belgium External Gold Notes of | fered last January, when Belgian ex l change was approximately II franc | to the dollar. Under the arrange
 fore maturity turn in his S1 900 not
 to the fiscal agents of the Belgian 1 Government, requesting them to sel II 900 francs at a rate not less ia
 vorab1e than II francs per dollar il
 the exchange market; after payin!
 the noteholder par and accrued inter
 est the fiscal agents divide any profit
 being the difference between $1. .00t
 and the then current price of Il, 900 Belgian francs, equally betweel
 the noteholder and the Belgian
 Government. Thus if Belgian ex
 change should move up to 10 franc be sold for $1,100, and, in addition
 to his 1000 principal, the note holder would receive half of tn As1oO profit, or a total of $1,O50. Il