Evening star., 1932-04-24
AMERICAN
| IN KREUGER CRASH
NEAR S29,0OO,0))
Present Values of Various
Securities Are AnaIyzed
by Expert.
MOST VALUABLE ASSETS
ARE COLLATERAL BONDS
But These Have Declined to Slight
ly More Than 20 Per Cent
of Loans.
BY DIR. MAX WINKLER.
Special Dispatch to The Star.

vesting public almost a quarter of a
billion dollars The financiers of Stock
holm have estimated American losses
in the securities of the Kreuger g. Toll
combine, i'll one form or another, at
half billion, but this estimate is un-
doubtedly too high.
Whether Ivar Kreuger actually COM
mitted suicide or whether he is still
alive in Borneo jungle on some other
Far Eastern isle, whittier he is re-
ported by some to have fed, fearing
sensational revelations within his "gi-
gantlc empire" is irrelevant to the
countless securities holders now. They
are more interested in the ultimate fate
Of his enterprise.
The present value of Americas in
vestment in the former match kings
business barely exceeds $4,000. 900 Be
fore long the value may shrink further.
and what was only a short while ago
represented to be a fundamentally Sc
cure investment is selling today for
hardly more than souvenir. prices. A
rather costly ventureI
Values Estimated.
The estimated values of the Kreuper-
Toll securities are as follows:
Present
Kreuser Toll SIS. 1859 $4,000 900 50 500 600
american certificates. 6O,OOO, 900 500 non
common stock "a and
International Match IS. ''0OO'OOO '''''-''''
International Match IS. N''0O'O'O 4'OOO'OOO
1871 :...;...::...,,. 100000 100000
preferred ........... 17.5oooOo $4,000
OF the above investments the Kreuger
81 Toll bonds are of especial interest
because of the apparent security which
they enjoyed at the time of sale IN the
American market in March, 1929. This
security consisted of bonds pledged un-
der debenture agreement and having
an aggregate par value of more than
$50, ,000,0 900.
With the exception Of Ecuadorean
bonds and the possible exception of
Latvian bonds, the various issues
pledged, or said to have been pledged,
were in 1929 regarded as fundamentally
secure investments. Many of them had
market value appreciably in excess of
par, while those which had no official
market could in those days easily have
been disposed of.
The indenture provides that the
ratio Of the par value OF pledged Sc
curtties to the par value Of outstand-
ing debentureS must always be l20 per
cent. The same applies to the income
from pledged securities. Failure to
maintain such ratios does not consti-
tute default unless there is a default
In the interest or sinking fund on the
debentures, but provision is made for
deposit of additional collateral to re-.
store the ratios.
Pledged securities may be withdrawn.
provided the above ratios are main
tanned. There also may be substitu-
tions. In case the latter take place,
eligible securities must be put in place
OF pledged securities withdrawn. The
following are eligible: '.--..
A-1ssues Of sovereign countries or
bonds Of cities with more than 900, 900
inhabitants.
B-Issues Of mortgage banks.
C-Railway shares, dividends which
must be guaranteed by a sovereign gov
ernment. Apparently. nothing is said
about such dividends having to be paid
The circular contains four pages of
material descriptive of the Kreuger &
Toll Co., with particular reference to
the secured debentures. Elaborate sta
tistics, balance sheet figures and earn
lngS statements are presented. One
looks In vain for the name of an ac-
counting firm. 1t Is not there.
Swedish Viewpoint.
In this connection, it Is of interest to
quote from an article in the Svenska
Dagbladet, written by Gustav Cassel,
well known and highly regarded econ
omist. Prof. Cassel says when highly
responsible American financiers placed
their names under Kreuger emissions,
1t was natural that we in Sweden
imagined that they had carefully ex-
amined the firms position and that
they exercised reliable and thorough
supervision over its leadership. If
abroad at this moment we are held re-
sponsible to large degree for the
Kreuger f1asco, We, too, to lesser de-
gree, may hold foreign interests re-
sponsible. Year after year they
have given Kreuger g. Toll tremendous
moral backing without bothering to test
the firms position. Responsibility for
this lies with these people, not with
Sweden"
Under date Of August IA, 1929, the
Governing Committee of the New York
Stock Exchange approved the admis-
sion OF the secured debentures, on the
basis of an application sumbitted on
behalf of the Kreuger & Toll Co. by the
American director of the company.
In this application the company
agrees:
Not to dispose of an integral asset
without notice to the stock Ex-
change.
ITO publish promptly to holders of
bonds and stocks any action in respect
to interest on bonds dividends on
ITO notify the Stock Exchange if
deposited collateral is changed or re-
moved"
After the suicide of Kreuger on
March IL, 1882, rumors began to spread
that there had been certain irregular
tiles In connection with the handling
Of the pledged securities. This is not
in accordance with the facts, because
all changes which took place were in
strict accordance with the provisions
Of the tndenture.
Collateral Bonds.
A recently published notice by the
New York Stock Exchange refers to a
statement made by the trustees, ac-
cording to which the information
relative to substitutions had been
currently available" for debenture hold
ers at the office of the trustees, al
though it Is unfortunate that this in
formation was not made public at e
time when 1t might have been useful,
it may be borne in mind that the
indenture does not oblige the trustee
to volunteer such data. -
Be that as 1t may. the collateral
bonds are the only issue In the var
ious Kreuger enterprises which seem to
possess concrete security. Even under