Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-03-27
EUROPEANS BUYING
U. S. BOND ISSUES
Demand for Sound American
Securities Has Shown
Increase.
By PRESTON S. KRECKER.
snatcb to tine Star.

Special Dispatch to The Star.
NEW YORK, March 27.-Money, like
water, seeks its level. In 1928 and 1923
the tide was flowing from Europe to
America. England was sending US her
pounds sterling, France and Switzer-
land their francs, Holland her guilders
and others in less quantities their cur
rencies. The magnet which drew Eu-
ropes savings to our shores was high
interest rates paid here at that time
on short-term loans of every descrip-
ton.
Altogether the most incredible sum
of more than $4,000, 100000 In value OF
foreign capital found investment IN call
loans, bank bills, United States Treas
ury certificates and other short-term
loans last year or was left here on de-
post for foreign account. Those fig-
ures do not include foreign long-term
investments here nor gold earmarked
by the Federal Reserve banks Tor Eu-
ropean account to the amount OF
$50, 900, 900.
Return Flow Of Capital.
After the stock market imitation bub-
BILE was pricked last Autumn the tide
turned, and foreign capital began to
flow out. The outward movement re-
Gently has accelerated its speed, since
our money rates have dropped to low
est levels in six years. Foreign bankers
their funds in short-term American
loans at current interest rates and are
taking much of it back home.
It is true that money rates abroad
are about on level with the low in
terest paid here, with the result that,
so far as rates on short-term loans are
concerned, there is little to choose be-
tween our market and those Of Europe.
On the other hand, there Is difference
in favor of European markets due to
the fact that foreign bankers are re-
quired to pay a double income tax on
all profits made In American markets,
one tax going to Uncle Sam and the
other to their home governments. In
vestments at home bear the burden Of
but one tax.
Our Congress last year amended the
law to exempt from the Federal in
come tax all profits on investments
here by foreign central banks, but did
not exempt the great commercial banks
OF Europe from that tax.
Permanent Investments.
While Europe is withdrawing her
short-term funds from the United
NS0S~O, eAAC ACFCASC - AQc ia
investments in bonds and stocks Such
investments are increasing and are be-
leved to be larger today than they
were when the stock market crashed
last Autumn.
One of the largest institutions ham
ding foreign investments reports that
its portfolio of investments made for
European account has been growing
| steadily ever since the first Of the year
and today is at the maximum.
Europeans are the shrewdest investors
In the world, whether at home or
| abroad. American bankers handling
private investment accounts for foreign
| clients ind that the latter are keener
| judges Of values than Americans, due
| doubtless to the fact that they were
| investing IN securities In Europe for
centuries before we we're. They know
better when to buy and when to sell.
Foreigners Hold Securities.
! A great deal of European capital is
going into bonds just now, both Aneri-
can securities and their own fSreign
dollars bonds. Many of the lattD Still
yield z per cent on the investment.
Europeans also are buying high-grade
| American public utility stocks and sea-
Soned industrialS. Investments for for.
| e1gn account, more particularly in bonds,
appear to be permanent. Securities
bought are being shipped abroad to be
locked up In European strong boxes.
Copyright, I9a0.)