New-York tribune., 1922-01-08

transaction. This involved more or
| less directly arrangements for the pur-
| chase Of English goods and materials
by the country, or it's citizens, whose
securities were taken by English in
vestors. The English banker thus
worked hand in hand with the English
manufacturer, and the whole transac-
ton, including the establishment of
credits in England, the sale of goods
to the foreign consumer and the sale
Of foreign bonds to the English in
vestor, was under the supervision Of
men trained in international banking
American bankers and manufactur
have as yet had little experience in
this kind of international transaction
as an investment pure and simple
foreign government bonds depend for
their worth on two factors--tbe ability
of the foreign country to pay interest
promptly and principal when due, and
the willingness of the country TO meet
its obligations. For convenience for
cign government securities offered in
this country may be divided as be-
tween Central America, South America
England, British Domnions. France,
Scandinavia. the rest of Europe, ex-
cept Central Europe. and finally Ger
many and Central Europe.
Germany and Central Europe have
neither the ability nor, in some in
stances, the willingness to pay, and
thelr securities and currency are so
highly speculative as to approach a
gamble.
OF the Central American countries
offering securities in this market,
Cuba, Mexico and the Dominican Re-
public are the most important Cuba
has an issue of 5 per cent external
bonds, due in 1914, selling in this
market on an investment basis-that
Is, at price to yield about 81. per
cent to maturity. She also has two
external issues due in 1949, one Ak
and one per cent, Of which the 4 X
per cent sells on a 6.34 per cent basis
and the 5 per cent on a GIT per cent
basis. The Dominican Republic has a
customs administration per cent
bond, due in 1858, selling on a slightly
lower than 6 per cent basis. In the
case of both Cuba and the Dominican
Republic the security of the bonds in
the minds of investors probably rests
largely on the knowledge of the close
interest of the United States in their
affairs.
Argentina, Brazil. Chile and Uruguay
nave issues Of bonds in United States
gold listed on the Stock Exchange. In
addition the City of Rio de Janeiro and
the state of Sac Paulo have American
dollar bonds AS an indication of the
credit of these countries. Argentine
bonds arc selling on approximately a
per cent basis, Brazilian bonds on a ~
per cent basis, Chilean bonds on about
an per cent basis. and the bonds of
Uruguay on about ~ per cent basis
or little better. With all of these
countries the question of willingness to
pay seems more important factor
than ability to pay.
England's Willingness to pay is COM
monty regarded as beysnd question.
NO nation has ever manifested longer
continuing sense of commercial in
tegrity than England. Although
measured in dollars the English nuSI;c
debt is tremendously heavv-s7 $50.
100000 on December 81, 1920, exclu-
slve of the 1882 900 900 owed by the
English government to the United
States, there appears to be not a ques-
ton in the minds of English statesmen
OF the ability of the country to both
pay interest promptly and to amortize
the debt. England, with in many ways
the heaviest burden financially of any
country, has been the first to work
out definite plan for the reduction OF
its paper currency and the re-establish
ment of the finances Of the country on
a gold basis.
The English dominions have the
traditions of British credit and the the
sacredness of debts, and in addition
have greater natural resources. This
IS particularly true of Canada. Aus
tralla and New Zealand have drifted
away from the British form of gov
ernment toward state socialism. and
therefore the investor in the securities
OF these countries-there is only one
now listed on the New York Stock Ex-
change, State of Queensland Is
should watch the trend of political
opinion in these countries and their at
titude toward the payment of debts
falling due in London. There is no
direct advantage to be gained, as far
as extension of American trade is con-
cerned, in an investment in Australian
securities.
Investment in French bonds is
largely a matter Of faith in the good
sense and thrift Of the French people.
The credit of France in the past has
been of the highest. Ter financial pol
icy, however. since the armistice has
been quite different from that of Eng
land She has ISSUED great volumes
OF paper currency and her tax budget
IS based upon the assumption that in
some way or other Germany will be
compelled to pay her indemnity. Given
the will and the common sense, how
ever, to attack her financial problems
IN the right way. the ability of France
to pay is generally conceded to be
ample France is q self-contained
country. able to produce more than
she consumes, and with a thrifty and
industrious population.
or the Scandinavian countries Nor
way has an agricultural and maritime
population, Sweden an industrial pop
ulation, and Denmark is largely
trader nation. Left to themselves and
without some great European catas-
trophe in which they are involved. both
their resources and. ability to pay. and
also their will to pay, are generally
conceded to be assured. AS previously
explained, the conditions which forced
these countries into the American
markets for goods were war condi-
tions, and it is questionable whether
IN the case of the Scandinavian coun-
tries further American investment in
either: government securities or those
of private corporations would lead to
an extension Of American trade with
those countries.
Of the other European countries
borrowing in the American market
Belgium and Switzerland are the two
most important. Belgium has made
greater strides toward Industrial re-
covery than any other European coun-
try. She has repeatedly demonstrated
both her ability and her willingness to