The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1921-05-22
A-B-C OF FINANCE
THE COLLECTION OF INTEREST PAYABLE ABROAD
BY sIGMUND

With the extension of the American
investment field since the close of the
war 10 include an ever-increasing vo.-
rme OF foreign government bonds, the
American investor is faced with the
problem OF how to collect coupons which
are payable abroad in foreign currency
This question does not arise in connec-
ton with the external loans of foreign
governments floated in this country, for
these are made in terms of United
States currency and the borrowing coun-
try provides for the payment of nterest
in this country and in our fphds, at the
office of a designated agent here. But
ror their internal loans. foreign gov
ernments rarely provide for the pay
ment of interest in any other country
than their own. The American holding
bonds of such issues must therefore
find means of transforming his foreign
coupons into available United States
funds.
In order TO relieve investors OF the
many perplexing complications in con
nection with the cashing of coupons
payable abroad, many banks have estah-
lshed foreign coupon services, whicn
enable the holder OF foreign coupons to
sell them Immediately when due ana
avail himself of the proceeds without
delay. The coupons must, of course, be
sent abroad by the bank purchasln
them, for encashment. but the avail
ability OF the funds to the investor is
seldom affected by this procedure anG,
furthermore the bank relieves the Gus
toner of a variety Of complicated opera
tions which sometimes precede the cash
ing of foreign coupons.
The tax requirements of differen;
countries must always be considered BY
holders of foreign coupons. For ex
ample, the income tax law of Great
Britain requires the deduction at the
source of six shillings in every pound
from all bond interest paid on British
securities. To nonresident holders OF
foreign securities, on which the interest
is payable In England, exemption Is
conferred No exemption is allowed IN
any case of dividends received from 4
British concern, but exemption to non
resident holders of some of the British
government issues is conferred. This
exemption privilege may be availed OF
by compliance with certain formalities
such as the execution of printed dec
iaration called an affidavit and the wit
Messing of such execution by Britis-
consul. when available, or by a notary
public If no British consul is located II
the city of residence Of the owner OF tn,
bonds This affidavit must be made oui
in full detail, giving complete descrir
tion Of the securities. including bon.
coupon numbers and interest dates, adt
listing must be made in strict numerical
order. Only issues which are payable
at the office of the same agent in Lon
don may be listed together on one dec
laration. The declaration will be rejected
whenever the regulations are not com
Tlied with, and such rejection of course
delays the realization and availability
of the interest due.
While the requirements of diffeTen
countries vary. the foregoing example
serves to illustrate the many technica
questions which the investor must b;
prepared tn answer II he sends his cUu
rons abroad direct for encashment.
variety of other forms of affidavit
must be executed to comply fifth interna
bonds have considerable circulation II
;his country.
The investor should also be somewha
familiar with the customs Of th'
country whose securities are under con
sideration. As an example. how man
American investors. outside OF tn
banking houses, know that the Frencl
think of their bonds ia terms OF income
rather than of principle and that eacl
coupon bears its face the number o
francs that will b" paid as interest dur
ing one year on the bond to which /
belongs. usuall< two amounts VIII b.
prominent OF which represents the an
Eual income, and the other the amour
actually payable for the period covered
Ey the coupon
Another Interesting feature In conneC
tion with foreign coupons is the fac
that 10 certain countries the time o
payme-t on coupons is prescribed. Ger
man coupons. for instance, If not pal,
within four years after the due date
become void. Unpaid French coupons
become void after five years; Austriah
a~vr three years, etc. II will thus b
seen that investors holding foreign cou
pons pending the return toward nor
nal Of foreign exchange rates mus