Evening star., 1941-04-13
'Specu|dtors Find
Rich Harvest in
German Bonds
Collect as Much as 50
Per Cent Interest by
Fancy Juggling
By CHARLES E. HARNER,
Associated Press Financial Writer.


NEW YORK, April 12.-By one
of the most amazing juggling acts in
international financial history, some
spectators are now collecting as
much as SO per cent in interest on
the purchase price of deprecated
German bonds.
These securities, issued by the
government, states and municipali-
ties of Germany and by German
industries, are called dollar bonds
because they originally were sold to
United States citizens for United
States dollars.
Today. with no money whatsoever
coming from Germany and with all
but two minor German dollar issues
in default spectators are buying
these bonds to such an extent that
some recently rose to the highest
quotations obtained since the pres
ent war began.
The United States Treasury, the
Federal Bureau of Investigation and
the Post Office Department all are
known to be watching the opera
tions closely. Spectators say none
of the activity is illegal.
The speculative risk, of course,
stems from the uncertainties over
the ability of Germany to continue
to make interest payments, with its
monetary reserves depleted and its
normal trade cut off. The Specula-
tor who buys a German deprecated
bond, CANDLES that the next in
terest payment will be met when
due.
Simple Method Used.
The simplest method, although not
the most lucrative, of operating the
speculation is as follows:
Buy a German government bond
either the 7 per cent Dawes plan
or the 512 per cent Young plan
from your neighborhood broker.
Both these bonds are listed in the
New York Stock Exchange. Be sure
YOU get one which is stamped U.
S. A. domicile of 1888, to prove 1t
was in this country before the war.
Neither one pays the interest 1t
originally was supposed to; the
Dawes now pays per cent and the
Young pays a. However neither one
costs the 81 900 per bond which
American investors originally sent to
Germany: you can buy Dawes for
s130 to s140 and Young for $50
to 500.
The interest payofr, however. still
is based on the 81 900 face value of
the bond. J. P. Morgan g. Co. and
the Hamburg American Line, as pay
ing agents, have been paying $50
per Dawes plan bond and $40 per
Young plan bond in interest
annually.
In other words, unless things
change, you get $50 year on a $40
investment or maybe as much as $40
q year for your $780,
These payments are guaranteed by
the German government.
Other Pays Better.
The more complicated method en-
ployed by spectators has ramifica-
tions leading to Switzerland in Eu-
rope and Rio de Janeiro and Buenos
Aires-as we'll as other capitalism
South America, and pays better.
Eight years ago the German gov
ernment announced that, due to a
lack of dollars, it could not permit
political subdivisions and German
corporations financed by American
funds to pay their dollar bond in
terest direct to the American in
vestors.
Instead, it provided that state and
municipal funds and corporation
earnings, in marks, set aside for
such interest payments, would have
to be given to the conversion Office
of the Reichsbank in Berlin.
Then, instead of paying the
American investors in dollars, as
the bonds specified, Germany Of
fered funding bonds" bearing per
cent interest themselves as II. o.
US" for these interest payments.
Persons who accepted these fund
ing bonds were supposed to be able
to turn them in at future date
for cash payments of their bond
interest due and, in addition. to col
(See SPECTATORS, Page E-3)