Evening star., 1932-06-28
FIXED DEBT GAINS
IN bUS|NESSLULL
Growing Mortgages Regarded
as important Damper
on Recovery.

By the Associated Press.
NEW YORK, June 28.-One thing
that the business slump seems to have
stimulated" is fixed debt-bonds and
mortgages.
While bank loans, brokers' loans. re-
tail credit and similar forms of more
liquid debts have been hquidated in
great volume, total bonds and mort
cages outstanding at the end of 1881
actually increased ST per cent from
1929.
A tabulation by Moody's shows the
1881 total of fixed debt to be Sl34,-
700, 900, 900. as compared to 1927, 400
100000 In 1929 and $99, 400, 100000 in
1925.
The 1881 total represents almost half
of the national estimated wealth Of
$285, 600, 10000 in 1881.
Held Recovery Obstacle.
The rigidity of this item is held by
Moody's to be principal factor pre-
venting recovery from present business
conditions. This opinion is held be-
cause prices have gone down. Declin-
ing prices mean that the debtor must
sell more goods to get the dollars TO
pay the debt.
Thus the $I34, zoo, 900, 900 debt is, as
measured by the decline in wholesale
prices, 80 per cent harder to pay of
than 1t would have been in 1929. II
the debtor must sell raw materials he
needs 45.7 per cent more goods, because
raw material prices have fallen that
much. If he sells manufactured goods
he has to meet a decline Of 26.5 per
cent in their wholesale prices.
Similarly, If he is a renter, or wage
or salary Garner, his task usually Is
y,znro difficult horafIcn hn ie receiving
less money.
Not only is it necessary to sell more
goods or do more work to get the same
number of dollars. but it is more diff
cult to sell the goods or to get the
work.
These difficulties apply to more liquid
forms of debt, but not in the same
measure, since brokers' loans, for in
stance. are secured by collateral which
may readily be turned into cash.
Federal Debt Increases.
The fixed debt of the Government
was $17,500 600, 900 at the end of 1881
it is now about S19 1000 100000 In
1929 it was s16,500,000, 900. This debt
must be paid from taxes, and taxes
must be increased to get more money
from taxpayers who are earning less.
Corporate debt was S44 900, 000, 900 in
1881, as compared to SAL ,700, 900, 600 in
1929 To meet their debts the corpora
tions must sell more goods for less
money when the difficulty of selling is
greater.
Similar is the case Of $37 900 900, 900
worth of urban real estate mortgages,
$4,000 000, 900 worth of farm mortgages
and $8,100, ,000,0o0 Of foreign bonds.
Interest charges on the total Of $l34,-
700, 900, 900 are about $780, 600, 900.
which is 5000, 900 900 more than in 1929
These figures are based on the face
value of the obligations, but what will
actually be paid on them remains to be
seen. A good many bonds have been
defaulted as to interest, some as to
principal
In other periods much of the fixed
debt has been wiped out or reduced in
that way. There are reorganizations,
where the bondholders take common
stock in lieu of bonds or take renewed
bonds, or other settlements.
The market value of all bonds on
the New York Stock Exchange Is about
80 per cent less than the face value.
the amount that would be paid did the
bonds mature fully.