The Birmingham age-herald., 1921-09-21
GERMAN MARKS DESTINED ID CAUSE ) DISAPPOINTMENT
Exchange Brokers Tell Why It Is German Advantage to Keep Value
 Down

It is understood that a good many Birmingham people have invested In German marks at the low prices in the hope of making handsome profit.
 Whether or not these marks will advance Is discussed in detail in communication just received by Ward, Sterne & Co. from one of theii New York correspondents. It reads:
 Replying to your letter of Sep tember s. the question which you ask in your letter goes to the heart of the whole German situation, which ap- pears just now to be very menacing.
 Laying aside for a moment the desperate need of Germany for money to meet reparat!on payments, the for this excuse could be hardly char actcrized as other than a breach of good faith.
 There have been immense quanti- ties of German government bonds and German municipal bonds consigned to this country to be sold at the best market winch has given brokers here an opportunity to punch" sales anu then pick up the bonds from the con- sienors agents in block at times when the rate of exchange might be most in their favor. That is to say, for example, these brokers couid sell these bonds on the basis of the mark being 1.3O, pick the bonds up when the mark was around 1.20 and acquire very handsome profit in the ex change operation
 The sale of new issues of foreign currencies which are depreciated (as they all are) means in effect that the nation or municipality making such new issue of security is going short" of it's own currencies. In other words the more new marks, bonds, checks, currency or bank deposits that there may be sold for dollars, the less in- centfve there is for the German peo- pie, their government, their banks and their municipality to put the mark up in terms of other curren- cies. You will really not get this idea until you look at it from the other angle.
 Suppose the German municipality could borrow s1,000o0o in a dollar loan. With the mark at 1c, 1t would be equivalent to 100, ,0U0 marks. Now suppose the Germans were able to give the mark value of 2c, they could then repay the s1s000, ,000 loan and have 100,000,000 marks left as a profit in the exchange operation.
 Now, if the German people are heavily short" of marks, why should they put the mark up? Certainly. one never heard of any operator be- ing heavily short of stock in the market doing anything to help the "bullS' put the market m
 If France were to go into Ger many to take possession of coal fields and steel plants in order to collect the separations due to France, 1t would only mean that the fiat is all in the fire again"
 As stated in the beginning, the only possible excuse that can be made Tor what Germany has done in the way of selling her marks abroad Is that her need was so des- perate that she had no choice.
 This house has steadily refused to handle German securities except such few small orders as came unso- licited to us and we are rather in- clined now to tell all of our custo- mers to take their losses and get out. Incidentally, we might say that one of the best posted men in ex- change in New York, who represents one of the largest dealers in foreign moneys, bullion, currencies, etc. stated to the writer of this letter the other day that the way things looked to him.. he did not consider the Ger man mark worth any more than the Russian rouble.
 This Is a rather long discussion Of the Economies in control of the situation but the writer does not Know how to answer your questions any more briefly"