New-York tribune., 1922-01-08

department. OI Lnc HileTlCHU EHpTs
different issues of foreign govern
were sold in New York.
In addition to the dollar bonds and
| foreign currency bonds sold originally
in New York there is large amount
Of foreign government securities which
have been bought as either specula-
ton or an investment by New York
banking houses and which have been
marketed throughout this country.
Prior to the war American investors
seldom bought foreign government Sc
curitics. On the other hand, foreign
investors were large holders of Amer
lean corporation securities. This was
especially true Of England, Holland
and Germany, and to a less extent Of
Belgium and France.
The United States, exporting far
more than it imported, was debtor
country, able to use not only all the
capital that it had to develop it's own
resources. but able to use proftably
the surplus capital of other countries.
Conditions have been completely re-
vcrsed, but it is not safe to assume
that they have been permanently re-
verscd.
During the war vast quantity Of
American private corporation securi-
ties, which had been held abroad we're
shipped back to the United States, in
payment for goods and munitions.
These were followed by the sale Of
Anglo French bonds and then by the
sale Of various issues Of foreign gov
crnment securities directly to Ameri-
can investors, through American bank
ers, and, in addition to this, the Eng
lish. French and Belgian governments
were borrowing credit directly from
tad Ctutn
the greatest part of the demand on
America for goods, necessitating first
the return to America of securities
and then the borrowing by foreign
governments, either through govern
ment loans or through the sale of
securities to investors, was directly in
connection with the carrying on of the
war. 1t would be dangerous to assume
simply because the change has been
so great and of such sensational
character, that America has pcrma
may be true. 1t has been acclaimed far
and wide But it has not yet been
proven.
America stil has vast resources
which will require capital for their de-
velopmcnt, and while it is true that
the permanent machinery for the pro-
duction OF goods of all classes was in
creased during the war at such an abb
normal rate that it is to-day much in
excess Of Americas power of domestic
consumption, it is not safe to hazard
guess as to how long this condition
will prevail
1t is the fashion at present to COM
pare Americas position to-day with
, that of England before the war, but
the comparison is a superficial one
generally The fact shat England had
s..l- Il
proiitably employed abroad than at
home was easy Of irrefutable demon
stration. Such is not the case with
American capital to-day, in the opinion
OF bakers who have given careful
study 20 this subject.
1t would appear that within the next
few years, at any rate, America Will
be called upon to not only continue to
extend credit to many other countries
of the world, but American investors
will be called upon to buy large guam
either foreign government bonds or the
bonds or stock of corporations doing
business in foreign countries. That be-
ing the case, it is of the greatest i'm
portancc that American investors
establish as quickly as may be some
standards OF judgment in regard to the
value of such forms of investment or
| speculation.
The most widely distributed foreign
securities in this country are the
speculative securities, and of these the
small investor holds the ones that are
most nearly a pure gamble. This is
true, first, because Americans, outside
of New England, were not, as rule,
investors even in securities of domestic
corporations They did not have, as
did the English, French and Dutch in
vestor, sound working knowledge of
the principles of investment. The fact
that foreign exchange was fluctuating
widely was further confusing ele
ment, and one which lent it's aid to the
promoter and wildcat salesman.
The purchase of German marks
alone has amounted to many hundreds
! of millions of American dollars. The
purchase has not been confined to New
York or to the money ccnters Of the
country, but has been widely dis
tributed throughout the small towns
and country districts and throughout
the West and Middle West, as we'll as
throughout the Eastern states. There
| will be heavy losses which must be
taken, and no worse preparation for
the American market for sound for
eign securities could we'll be imagined
than this.
One thing, however, may be taken
into consideration on the hopeful side
of the situation. 1T has largely been
the class of people who will either
spend their money or throw it away in
speculation who have bought German
marks and Russian and Polish city
bonds, and it has been the class who
are careful in regard to their invest
ments who have distrusted all foreign
investments. This has been shown
clearly in the investment letters
which The Tribune receives. Take
the letters printed on any Sunday, for
instance, and you will find that the
man who inquiries about New York
Telephone 0s and who holds Atchison
General 4s seldom, if over, inquiries
about City Of Warsaw bonds, whereas
the person who has bought three or
four nearly worthless oil stocks "has
been advised by friend" that he can
recoup his losses in German marks.
The hopeful feature Of this situation
lies in the fact that the cautious in
vestor is susceptible of education and
in time could be taught to take high
grade foreign Investments, whereas
the speculator is far less likely to be
amenable to reason.
Foreign exchange fluctuations are
largely questions Of guesswork. For
the average investor external bonds,
issued in dollars, would appear to be
moro secure than internal bonds, is
sued in foreign currency, of the same