Evening journal., 1921-06-13
BIGGEST BOND
ISSUE READY
Will be Quoted in German
Securities at Bargain
Rate
MUCH DOUBT
ABOUT RESULT
RY cHAs. MCCAIN.


LONDON-Germany's new repa-
raptions bonds will be marketed-if
they get that far-at a price between
or below 45 and 65 per cent of their
face value.
The highest estimate-60 to 65 per
cents given by government o1i-
cials. The other-45 to 50-is an
optimistic financial one.
Though Germany will deliver to
the Reparations Commission the in
itial instalment Of her $3S,O00, ,O00,-
900 in bonds on July /, there is so
far no information as to TO what
really is to happen to the worlds
biggest bond issue,
Officials point ont to potential in
vestors that the bonds are backed
by the entire resources Of the Ger
man Empire. Financiers point out
that the bond market is bad and that
Germany's reparations record so far
is not dazzingly good, or likely to
become so for quite a time.
Two things will help largely to
determine the price Of the bonds,
when and II marketed.
First Germany's record from June
1, when the first instaiment OF repa-
rations-S2 $3.50. 900. .000-was due, to
the time the bonds are marketed.
Second. investors conhdnce in
Germany's ability and intention to
pay the interest and principal.
Prospective buyers probably will
ask themselves; First. il it to Ger
manys interest to make the issue
attractive when the lower the price
the cheaper Germany, or individual
Germans. could buy them back. thus
discounting heavily the reparations
bill?
Second. is there any means by
which Germany could repudiate the
issue at some future time?
Third, II the bonds are all mar
ketcd. would the Allies protect in
vestors at any cost in the event Ger
many attempted to evade payment,
inasmuch as they are not backed by
Allied credit?
J Official and financial replies 20
the first question are. No. To the
second and third. replies vary.
Investors may comfort themselves
/ with the thought that. II the issue
is the biggest in history, the holders,
! no matter what or who they are, will
4 be the largest body OF creditors in
history. II il is possible TO market
only ] per cent. Of the bonds, 80 per
cent will be held by Allied govern
ments TO whom they represent in
some cases a practically sole barrier
agains; bankruptcy. II % per cent
are marketed, they win be In the
hands OF individuals who presumably
would do their best TO force their
governments to take active steps 10
make the issue good.
The Allies hope IL will be- possible
to market most Of the bonds. IL the
price is high" enough. They say
Germany will be made to pay? They
hope. also. that either the original
OF subsequent buyers will be Ger
mans The inducement is a heavy
reduction in the actual total AZ repa-
rations to be paid to outsiders. and
knowing the financial power OF Ger
many there are many who believe
this will be the solution. II this is
the case. il will be years before Ger
many actually benefits. as the bonds
are TO be issued by the Preparations
Commission. as Germany Is able to
pay interest and, sinking fund on
them from her stated annual pay
ments OF $500. 900 900. plus a TWEEN
ty-six per cent tax Oh her exports
To the investor the inducemeni
will be a 500 bond. i've per cent
. bond. marketed at perhaps fifty
backed by the entire resources OF
D the German empire" His Response
! r.~oottr,aIfx- will ha fu prnnnrffnr, b.
his success in satisfying himself thai
b there will be collectors willing ant
able TO keep the necessary portion
] OF the empires resources at th'
: command OF the bondholders.