The Washington times., 1933-01-12

EXPERT FIXES
FIGURE At
INQUIRY
Or. WlnkIer Sets SO, ,750, 900 as
Value Of $50, ,0O0, 900; US.
Sales Put at $26, ,000,000

Sales Put at SIG, ,000y 900
The s5o,00O,0O0 issue of de.
bentures floated by Ivar Kreuger,
Swedish match king, $26,500, 900
Of which were sold in this country
shortly before his suicide in Paris
last year, Is worth about $9,76O,
600, Or. Max Winkler, New York
city economist and foreign bond
expert told the Senate Banking
Committee today.
He testified that had Kreuger
not substituted inferior col
lateral" back Of the original de-
bentures, the Kreuger $50. .000, 900
issue would be worth $24, SOC, 900
or about half of its original value.
He said that when the issue was
first put on the market it was
adequately protected, as adver-
tised, by collateral representing
40 per cent Of the par value or
$50, 1000"
Raps Brkerage House
Seator Couzens (R.) Of Michi-
gan. asked Winkler If he thought
Lee HigginSon q Co.. New York
investment house which handled
the $26, 100000 American issue,
'did their full duty in the dis
tribution Of the debentureS"
Winkler replied:
Personally, I do not. Lee
HigRinsOn apparently did not
inform itself adequately Of the
nature Of the substitutiOnS
made by Kreuger."
Discussing earnings, Winkler
said that had the original col
lateral remained intact. 1t would
be paying $35 annually on each
bond when $50 annually was due
II the security remaied on the
advertised basis. The substituted
collateral, he said, was paying to-
day about SIS annually on each
dehneture share.
Securities Substituted
Winkler declared that the sub
sfitution clause Of the indenture
under which the Kreuger deben'
lures were issued was so drafted
that the then hard.presSed Kreu.
ger could take out the good col
lateral Securitise. such SO French
bonds. and even substitute bonds
Of Q Chinese city, had he so de-
sired.
Early in 1880, Winkler said,
KrefIQeP substituted ,JOgOSlayian
bonds, regarded as inferior" for
the French bonds which were
originally back Of the issue.
Senator CouZenS asked II he
thought 1t possible for Congress
to legislate to protect the public
against such tacicS as hose used
by KWreuger. The witness said:
"I should think sO.'
Winkler suggested as corrective
legislation the enactment Of laws
similar to the so-called British
company act, under which com.
panieS are liable in both civil and
criminal action for misrepresenta.
ton.
Good Word for Kreuger
He was asked how the first
bonds substituted for French
bonds back Of the debenture com.
pared in value with the French
securities, and said:
'1The JugoSlavian bonds sub
stituted for $13,416,OOO in
French bonds January %, 1880,
were distinctly inferior. I would
say they had . value Of about
is cents on the dollar"
Winkler said Kreuger actually
''deported himself better" than he
might have had h ESQ desired un.
der the wide latitude accorded
technically by the Substitution
clause" Of the agreement for the
transaction. He said:
"He nigh have substituted
bonds or even les Svalue for his
original collateral"
Americans Hold Bag.
The examination returned to
reports Of a progressive syphon-
ing Of the remaining assets Of
the Kreuger transactions into
Sweden, with American investors
holding the bag of liabilities.
Winkler said three Of the
various types Of bonds substituted
for original collateral by Kreuger
were now in default, insofar as
interest was concerned-Hun-
gartan, Jugoslavian and Ecua.
dorian securities. He said there
was doubt even as to the owner.
snip OF the remaining few assets
Of the Kreuger setSup.
Frank AltSchul, chairman Of
the New York stock exchange
committee on the stock list, the
next witness, said his committee
passed on applications for listing
securities on the exchange.
CouzenS asked If q listing on
the exchange was in any way a
guarantee Of the value Of securi.
ties. and Altschul gave q negative
reply.
He said, however, q security
must have created some sort Of
record for itself" before his com.
mittee would list it on the ex-
change, and that in the public
mind 1t is a valuable asset to
have q security listed on the ex-
change.
SCHOOLS ACCREDITED
J. Blair Buck. director Of sec.