New-York tribune., 1922-11-20

tieVeu 70 pc sound But the political
factor in the case Of France looms un-
usually large. Paris must be won,
bankers feel, to course based more
on business principles and less on SEN
tlment than at present before stabil-
| lty in the quotation either OF francs or
OF French external bonds can be real-
ized. We regard French government
issues az reasonably good foreign
bonds, topped only by such securities
as those of Great Britain, Canada, Dem
mark. Norway, Holland, Switzerland
ana Argentina. We recommend them
rather for the man of imperturbable
| temperament or the man able to hold
until maturity than for an investor
who. may be- forced to sell either by
anxiety or circumstance. To Y. p.
we should say, therefore, examine your
temperament and your position and
then decide what to do.
Brazilian government bonds-and the
reasoning hereg applies with only
slightly less force to Sac Paulo bonds
and other Brazilian state or municipal
lssues--do not rank so well as those
OF France. Afactor in their weakness
has been the. circumstance that the
market has over the last year or so
been .glutted with Brazilian issues.
I More important than this, however. is
I Brazil's past record with regard to her
external loans. She has escaped actual
default through the expedient of sus-
pending sinking fund payments and
funding interest for stated periods.
! This happened in 1898, when interest
for three years was funded and sink
ing funds were suspended for thirteen
years, although resumed on January /,
1910. In August, 1914, inability TO
meet interest was followed by a
similar funding agreement, interest for
three years being funded and payments
resumed in August, 1917. Sinking
funds fer various external loans, in.
Guiding the per cent loan and the s
per cent loan of 1895, OF 1eO3-'05, of
1908 and OF 1909, among others. were
suspended for thirteen years, i. e., until
This record was established prior to
the sale of the Brazilian ga in this
country. The issues have since been
much criticized because of their back.
ground, and this adverse publicity has
proved unsettling. Sinking fund and
interest service on the loans placed
! here have been met as due, and bank
cannot be regularly maintained. The
| political sltuationi in Brazil, which last
summer at election time threatened a
showing of arms. has not been helpful,
| while other unfavorahle Influences on
the bonds have included the weakness
Of Brazilian exchange, her unsatisfac-
| tory trade, position, the extravaganza
OF the Pesoa administration, the con-
tlnued output of paper milreis, arti-
fetal regulation of exchange opera
tions and of the coffee supply, the lat
ter parelleling the unsuccessful at
tempt Of Cuba to salvage the sugar
situation, and the discouraging re-
ports of the international exposition at
Rio. Trade collections in Brazil, more
over. have been slower than in other
| South American countries, bankers re-
1 port.
Piling these facts and conditions one
upon another, offers adequate explana-
tion of the decline, but analysis indi-
Gates that many Of them are only
slightly relevant to the soundness of
the security. The success or failure of
the exposition at Rio, for example, ex-
ercises an adverse influence to-day. A
year from to-day it probably will mean
nothing. Many other conditions are
temporary and subject to change Gov
eminent extravaganza may be checked
and, current reports show, is likely to
be checked, etc. The favorable point
is the growing recognition in South
American countries of the asset value
| Of good credit.
The advent of the Bernardes Admin
jstration last week has resulted in q
| marked change in sentiment toward
Brazil in the financial district. Pesoa
was able, but a polished diplomat
rather than careful manager. Ber-
nardes, III contrast, has made a record
of economical administration during
six years tenancy of the governorship
OF Brazilian state. Brazil's back
1 l. y InA
upon the lack of variety of her export
| products; more particularly it has re-
suited from the political complex as
evidenced in governmental extrava-
gance, boarding of coffee and regula-
tion of foreign exchange trading. There
is now the promise that politically
conditions are TO be bettered. Brazil
ian exchange since the Inauguration
! of .Bernardes has recovered sharply.
! Whether results will bear out current
hopes is yet to be demonstrated
AS to purchase of Brazilian SIS OF
Sac Paulo IS, we do not rate them as
better than second class. There is a
political risk; there are the present
temporarily adverse conditions, and,
! finally, there is the record not merely
of funded interest and suspended sink
ing fund payments but of fuctuatlng
and badly managed trade coalitions.
IL you are prepared to take the risks
involved to obtain the high return, and
can afford to do so, they are relatively
no more speculative than most bonds
offering like return and less 80 than
many. They are suitable, for example,
for the investments for business men.
/ American Writing Paper
/ ouestion--wiil you kindly let me have
| any Information that you may have rer
Es4rding American Writing Paper Company
| preferred stock. If you havs any inforrna-
! company / would be glad to have ii and
4 should also like to know the amount
4 OF dividend that is now accumulated on
the preferred stock. Does the company
seem TO he we'll managed and prosperous.
and in your opinion are they earning more
4 than enough to take care OF bond inter-
est and sinking fund requirements. | ap-
wise regarding the probabilities Of stock,
but perhaps you ean tell me whether this
icompany Is doing profitable business or
1 not.--M. S.
4 Answer-There has been no recent
i earnings statement from which we can
determine the present income of the
American Writing Paper Company, hut
in midsummer the company was re-
ported to be operating at 80 per cent
of capacity. This company is reputed
| to be conservatively managed. No
diyidends have ever been paid on the
common stock and at present some
thing like 1853 per cent is owed on the
! preferred. Il seems likely that the
: - -. a u.