Perth Amboy evening news., 1922-11-04

is to bet on a sure loser. Nc n ever
went to a horse race who put his
money on a horse that he knew was
sure to lose. Yet, the fact hat the
companies offering these foreign
bonds remain in business seems to
indicate hat some thousands of AM
orleans constantly are doing a thing
equally foolish.
Not Enough Gold in the World
The principal reason the investors
must lose is hat it is impossible fer
them to win unless some King Midas
comes along and turns everything
he touches into gold. He would have
to work a good many eight hour days
to touch enough objects to produce
the value of gold necessary to bring
these currencies and securities back
to a point where a majority Of the
American purchasers would make
money on them.
Gold is the backing of bonds and
currencies. American paper dollars
are worth 81 each because the whole
world knows that there is actual
gold back of the currency. European
marks, rubles, kronen, ct cetra, are
not worth their normal value be-
cause the whole world knows they
have practically no gold back of
them.
Now, the stern fact that makes 1t
impossible for the investors ever to
win is this: These countries nave
issued paper money and bonds pay
able in paper money, in such enor-
nous volume that there is not near
ly enough gold in the world to make
them good. The argument has been
made that when Germany, for in
stance, gets back on her feet she will
get the gold to put back of her marks
and they will return to par. There
is not enough gold in all the
tries of the world to bring the Ger
man mark back to par.
The outstanding volume of Aus
TRAN crowns is approximately one
trillion. An outside estimate places
the worlds gold supply at about $10,-
000,000.000 so 1t will be seer that
it will take several times the whole
world supply to take care of the Aus
trian crowns alone. Yet Americans
still buy Austrian crowns and Aus
trian bonds payable in Austrian
crowns. There are 800, 600, 900, 900
Polish marks outstanding. There
are about the same number of Ger
man marks, but the German mark
production is increasing tremendous
ly. Forty-eight billion marks were
issued in the month of August alone,
and Germany nov is issuing them at
the rate Of $500. 900 a day.
From these figures it will be seen
that these currencies cannot return
to a They might have. had the
imitation stopped before these
amounts reached such astronomical
proportions. Now, the worst thing
that could happen to the European
countries would be to have the mark
go back to par.
Estimate that a pair of shoes is
worth SO. Now they would cost
1000 German marks. Germany
buys the $40 shoes and agrees to
pay 10000 marks. A magic wand is
waved and the mark returns to par.
Germany has agreed to pay 10000
marks for the shoes, whether the
mark is at par or not. Therefore,
she must pay the equivalent Of S.
900 for a pair of shoes. Extend this
calculation to the great debts which
have been incurred in terms of Ger
man marks, Polish marks, Russian
rubles, Austrian own and the
others. 1t will be seen that to have
would mean that these countries
would have to repay thousands CT
times what they borrowed.
Common sense dictates that they
will not permit their c~urrencies to
return to par. even If they could.
They cannot, because the world does
not hold enough gold to make them
worth that. Therefore. the Ameri-
can purchaser of such currencies or
securities is betting on a sure loser.