Evening star., 1932-05-08
LEAGUE OF NATIONS
LOANS ARE RAPIDLY
GOING TO FAULTS
Interest Is Stopped on Half
of Eight Issues Sponsored
at Geneva.
INVESTMENT SHRINKAGE
is ABOUT 46 IL PER CENT
Present Quotations on Securities
Raise Doubts as to Continu-
ance of Services.
BY DR.. MAX WINKLER,

| Special Dispatch to The Star.
| NEW YORK, May TOT the eight
governmental loans sold under the aus
piceS Of the League of Nations in the
various markets of the world, to the ex-
| tent OF almost a third of billion dol
lars, four are in default
Prevailing quotations lead to the be-
lief that the prospects Of a continuance
OF payments on three more League is
sues are not especially promising. With
respect to one, no doubts are enter
tanned as to the prompt discharge of
both interest and amortization. Refer
ence is made to the Austrian loan of
| 1928, guaranteed in varying percent
| ages by the leading European powers.
| including Great Britain, France, Bel
GUM, Holland, Italy and Sweden.
Aggregate Value.
On the basis of current prices. the
so-called League of Nations loans have
an aggregate value of less than S135,-
| 100000, as compared with a value, on
the basis of the price of issue Of the
various loans, OF more than $685.
000, ,000.
1t is noted that the face or par
value of the League of Nations loans.
4 which have been sold within the rela-
lively short period of five years, is
1881 ,080, 900, and that the cost to the
investor was S298 1873 900, or about 1901
per bond of 1000 denomination. The
amount outstanding at the beginning
OF the current year was S285, ,342, 900,
indicating that $45, ,738, 900 have been
redeemed or paid off, equivalent to
more than 16 per cent Of the original
cost.
In other words, $138 already has been
redeemed, reducing the investment to
! S763. The present market value per
$1,000 bond is $407, los of 1856 per
bond, a shrinkage of about 4615 per
cent as compared with the original in
vestment. If account is taken of the
fact that the average yield of tho en-
tire group under review at the time of
issue was 7.80 per cent, the loss in
CURED by investors in League of Ma
tions loans is, In spite of the marked
shr1nkage in values and in spite of the
temporary suspensions Of payment. ap-
preciably smaller than the losses regis
tered by other divisions of the securi-
! ties markets.
BY reason of the specific security and
the various guarantees which the Aus
trian bonds enjoy, the issue may be
considered as constituting a funda-
mentally secure investment Marketwise.
1t has given an excellent account of
itself. If we assume that the American
/ investor had purchased one 81 900 bond
at the time of issue, in 1928, he would
have paid $500. To date, about $22O
has been paid of or redeemed, reduc-
! ing the original cost to $500. He has
received by way of interest a total of
| $3.50 per bond, which, at current prices,
has value of $825. In other words, If
he should desire to dispose of his in
vestment today his income, assuming
he has kept his bond since the time of
issue, in June, 1928, will have averaged
more than % per cent per annum.
| Other League loans have proved less
satisfactory. Estonia, Hungary and
Danzig are still paying interest as well
as sinking funds on their obligations.
Greece has announced that she will be
unable to meet payments in foreign ex-
| change, but has agreed to deposit to the
credit Of foreign bondholderS service
requirements In drachmas, to be trans
ferred abroad as and when conditions
| allow.
Bulgaria has proposed a similar plan,
although statement by the London
| fiscal agents for the Kingdoms obliga-
tions Is to the effect that funds are al
ready IN the hands Of the trustees in
foreign exchange, sufficient to cover the
LuVeAest uue May 10 on the t12 per cent
loan OF 1928; and that transfers with
respect to the z per cent loan of 1926
have already been effected for rs per
cent Of the sum required for the next
half-yearly payment of interest and
amortization due July l, and that the
full sum would be paid at due date, by
utilizing to the extent then found
necessary, the reserve fund created for
| that purpose.
| (Copyright. 1892, by the North American
Newspaper Alliance, Inc)