Evening star., 1932-02-04
Everybody's
Business
Far East Troubles Have
Had Little Effect on Value
of Long-Dsfau1ted Chi"
nese Bonds Held IN U. S.
BY DIR. MAX WTSKLER.

NEW YORK, February 4 (N.AN.AD.
Disturbances in the Far East have
had no appreciable effect upon Ameri-
can so-called portfolio investments in
China; that is, on Chinese bonds and
miscellaneous securities sold to and
held by United States interests. With
but few exceptions, Chinese loans traded
in on the American markets have been
in default for years, and while the pres
ent difficulties do not tend to improve
matters, bonds have reached levels where
even the worst seems to have been dis
counted.
More than a generation ago-in June,
I9ll-an American banking syndicate,
comprising J. P. Morgan & Co., HUM,
Loeb & Co. and two New York banks,
the First National and the National
City, introduced to the American in
veSting public the first Chinese loan.
1t was considered a privilege to invest
in China. and the American investors
who sought this privilege took up about
ST, 100000 par value of Chinese Imperial
Railway per cent bonds, known as the
Hukuang lean, at 1907
Payments since the World War have
been very irregular, and for years the
issue has been in complete default,
selling at about 10 cents on the dollar.
The bonds no longer respond to news
from the Far East
In addition to the above loan. OF
which about S6,50O,OO remains out
standing. American holdings of Chinese
securities comprise the Chinese 6 per
cent loan of 1916, which became due
for payment in 1919, outstanding at
IS. 100000, and another 6 per cent issue
of the same amount sold in 1919 and
due for payment two years later. Need
less to point out that neither issue was
paid at maturity.
1t is somewhat strange to find Ameri-
can bankers willing to underwrite and
American investors willing to buy new
bonds while payment is withheld in
respect of loans already outstanding
Perhaps the answer lies in America S
desire to become a creditor nation
nay, the worlds greatest creditor ma
achieved her ambition, but has paid
rather dearly.
Otter Chinese issues include the SIS
of 1896, Of which $l50O,0OO are un-
derStood to be held in the United States
81 100000 Of the per cent loan known
as the French issue; 50 600 900 of 5s of
1925, and 100000 par value of mis-
cellaneouS loans. There also are out
standing and held by American inter
eStS S1,l50,000 of the ChuchoW- Chin
chow 7 per cent railway loan, 1908, $50
of the Federal Wireless 8S of 1921,
81, 100000 of the Chinese National Avia-
ton IS of 1923, s500G,000 of the Shang-
hal Mutual Telephone Co. bonds, $57,-
$4,000 of obligations of the Shanghai
Power Co. and $7,500,000 of miScella-
lOanc American firms
The total Of loans OF the above cate
CORY aggregates $85 1853, $50. to which
must be added direct investments total
ing $114112,0 900. The latter sum in
cludeS investments of American capital
in petroleum undertakings to the
amount of $42,850,000, $10,22l 900 in
manufacturing establishments, $685.
900 in merchandising organizations and
S54O66,000 in miscellaneous enterprises,
bringing the total up to approximately
$200,000,000 If account is taken of
American investments in missionary,
educational and philanthropic estab-
lishments, estimated at S75,000000,
Americas total stake in China amounts
to $274,970,750.
In the course of the past year Clarke
H. Clark -Hawkami, fellow at the Geneva
Institute for Higher Studies, made a
survey of foreign firms operating in
China. According to his reports, in
1881 there were 55l American firms,
employing directly or indirectly 6970
persons. This compares with GIT Brit
iSh firms, with l1,7l4 employees, and
4,64S japanese firms, employing 20l,72l