Evening star., 1932-02-06
Everybody's
Business
payr ent of Debts to Amer
;cans IN Gold Held I'm
POSSIBLE, Regardless of
Theoret;ca1 Possibilities.
BY DIR. MAX WINKLER.

NEW YORK, February (N.hN.hD
At the beginning OF 1882 America
stake abroad amounted to close 10
$4,000, 10000 This sum is generally
referred to as commercial investments.
They include securities of foreign gov
ernments and political subdivisions, as
well as securities Of foreign corpora
tions sold to and held by the American
public, They are estimated at S9,oUo' ,
900 600, and occasionally are calleo
portfolio investments.
The above amount also includes So
called direct investments abroad; tnaI
is. American funds placed IN foreign
enterprises which did not involve Lhe
sale Of securities in the American mar
ket. At the beginning OF the currenI
year such direct investments accounted
for So, 500, 100000
The major portion of Americas port
folio Investments of 00,000,000 is
Scheduled to be paid in gold OF the
weight and fineness existing at the time
the securities were sold. This Is ooVl-
ously impossible, regardless OF theo-
retical possibilities. The stock OF golo
which is at the disposal OF America
debtors is very substantially belo" tne
sum which the United States hopes 10
collect.
While America has often been re-
ferred to as the land of unllmlteo pos
sibilities, it Is nevertheless olmcuII 70
see how she will manage to enforce Ine
unenforceable. How can one expect 10
receive what does not exist? PerhapS
washington experts could ennghteh Ihe
To be sure, many will prefer to
criticize American bankers for having
underwritten, and American investors,
institutions as we'll as individuals, for
having purchased foreign bonds. Re
gardless of the soundnesS OF such crltl-
cism. the fact remains that the Unlteo
states has thus far at stake in foreign
lands the impressive sum OF $29,00U,-
OO0 600. equivalent to almost $1,000 per
American family comprising four people.
Even in 1881, admittedly one OF the
worst years in the economic history OF
many nations, not excluding the United
AGGREGATED s425 ,202, 900, bringing total
Investments at the beginning OF 1882
up to e53,456.O0O, as compared with
sf7 528 254.OOO in 1881 and $2,625, ,OO0,-
900 in 1913. IT,.
II it is borne in mind that prior to
the war the United States was debtor
nation to the extent of about $4,000
600 900, the transformation into one Oh
the worlds leading creditor powers
must be regarded as nothing short OF
miraculous. America has accomplished
within less than a decade and half
almost as much as Great Britain has
within q century.
However, in the course of her desire
to achieve this goal the United States
or rather those charged with guiding
the economic destinies Of her people,
have paid no attention to fundamen-
tails. The cardinal principles OF sound
finance were ignored. Americas chief
aim was to create a new high record,
cost what might. She is beginning to
pay for her early negligence. Nations
which have been accommodated In the
American market, regardless OF the uses
to which borrowed moneys were put,
are finding it impossible to meet their
engagements. Many have already sus-
pended payments. Others will follow.
At the present time foreign loans
held by American investors which are
in default, wholly or in part, aggregate
about 81, 500 900, 900. Assuming a re-
turn of only 6 per cent-many of the
foreign bonds sold in the American
market bear interest at the rate of 7
and per cent per annum-the return
on the above amount is $90,000.000,
sum which the American public is
hardly in position to lose at this
time.
Unless something is Goae speedily