Evening star., 1925-01-04
ATTENTION TURNED
TO FOREIGN BONDS
French and German Issues
Very Erratic During Past
Weeks Trading.
GOLD TREND is REVERSED
Sterling Exchange Nears "Pegged'
Price Of War Time-Higher
Money Likely.
GOLD TREND is REVERSED
BY GEORGE IT. HUGHES.

By GEORGE II. HUGHES.
Special Dispatch to The Star.
NEW YORK, January 3.-The at
tention of the investment market
TINS week has been concentrated upon
foreign bonds. Fluctuations in these
issues have been larger than any
other group, excepting, of course.
purely speculative stocks and thei1,
corresponding bonds
Quotations for French and German
obligations dealt in on the Stock Ex-
change fell away sharply during the
first three days of trading, followed
by substantial recovery after the
holiday. Other European bonds were
arected sympatheticalIy, but to a less
degree. 1t is fair to say that not
since the French first marched into
the Ruhr has there been such con-
Germ exhibited by holders of French
dollar bonds as was evidenced in the
early part of this week.
Reasons for Concern.
The reasons therefor lie entirely
on the surface In the first place,
there was the decision of the allies
not to evacuate Cologne on that date
originally arranged, on the ground
that the German government had not
fulfilled its engagements under the
treaty of Versailles. The point of
issue was disarmament, and the
news dispatches reporting discovery
or hidden supplies of arms in Ger
many were very disturbing
Almost at the same time these dis
quieting cables were coming from
the other side. discussion as to the
French war debt to the United States
broke out in Congress. For a long
time this subject had been dormant.
Suddenly it took on fresh life, with
the net result of making very plain
not only the sentiment in both
houses OF Congress. but of the ad-
ministration that it was high time
the French government made some
move toward caring for this obliga-
tion, even though terms were made
very lenient.
Syndicate Lifts Support.
Press dispatches from Washington
went so far as to insinuate that the
United States Government would look
with disfavor upon any further new
private loans to France or to French
Industrial enterprises unless nego-
tiauons as. to the war debt were
promptly initiated. 1t is no wonder
that the market for French bonds
turned weak.
To make d bad matter worse, the
syndicate which had placed the new
French Is withdrew its support, and
the bonds which had gone to a
premium of nearly a point directly
after they first were offered, drop
ped back almost points from the
original price. In itself this was
nothing unusual. A slump in the
market for new bond issue often
follows the release of the syndicate
members from their agre ement. 1t
is disturbing to investors who hap
pen to have bought in good faith
at the beginning, but it signifies moth
ing as to the merits of the security
But taken in connection with all
these other matters, the syndicate
tunate time.
French Bonds Recover.
After the holiday, with its oppor-
tunity for calm reflection, there was
a sharp recovery not only in the
French but in the German and other
foreign bonds as well. Now, what
are the facts? First, then, no one
seriously believes that France will
not meet both principal and interest
on all the dollar bonds it has sold
in this market. Their status is en-
tirely apart from the question of the
French government war debt to the
United States Government. Second
ly, France must have concessions as
to interest, and possibly moratorium
before she can begin to liquidate this
war debt. No one who has given
French finances any study at all will
deny this. 1t will be a very difficult
matter at the best.
Uncle Sam to Be Fair.
Thirdly, the American people are
tn a ir- Tn
debtor. There is no disposition to
be harsh or unreasonable as long as
beginning is made. Nor is the
United States, which has so much
in common with all the rest Of the
world at stake, going to impede the
progress of European recovery. Self
interest alone is sufficient reinsurance
on this point. AS to political fric-
tion abroad, that must not be taken
too seriously. Healing of the war
wounds is going to be very gradual
and there will be plenty of setbacks,
but the progress which has been eff.
fected already is not going to be
undone in 1925.
It is not a little significant that all
this disturbance in the market for
foreign dollar bonds found no reflec-
tion in the foreign exchanges. Ster-
ling made new high this week, ap4
pEOdcnlHS tH0 peBSed price OF war
times. While there was no CORE i
spending gain in Franch francs, that
market gave no signs of concern, as
II would had the outlook been as du-
bious as the American holders OF for-
eign bonds seemed to believe. This
rise in sterling exchange, together
with the December excess of gold ex-
ports over imports, has a bearing
upon the money outlook and so in
turn upon the entire domestic in
vestment situation.
Gold Trend Reversed.
It must be admitted that the trend
of the international gold movement
appears to have been reversed. So
far the effect upon money rates has
been insignificant. Year end require
ments have been taken care of with
out strain, and the prevailing 4 per
cent charge for 90-day accommoda
tions in any normal time would be
considered low.
Investment bonds have been duh
but steady. Certain banks are said
to have disposed of their holdings of
Liberties in the expectation of high
er money and lower prices for Gov
ernment securities, but to date these
expectations are yet to be realized.
(Copyright, 192J.)