Show fl Foreign By R. R Tilton With J Je A. A Hogle Co Investments is the difference between foreign internal and exter WHAT S obligations t I S This is a question mt few investors seem interested in in y t which should have careful consideration involving investigation c conditions surrounding each specific security Issue the issue the tenor of t the he provisions provisions' the Foreign Government Treasury department to I interest and principal when due the exemptions if any from taxation T principal and interest in addition to that very important feature t the il financial position and future of the debtor nation There is a distinctly different footing footing- for the external bonds of fore countries from the position pf internal bonds of the same countries aldering internal issues we include obligations of foreign governments and cities As an Internal bond of Germany pr France is purchased by brI citizen he ho is placing himself in a the same ame position as Germany or France Should Germany or France decide that the quickest way to return to sound normal financial footing is is' through hea taxation on capital possibly as high as as 50 per cent the American Invest would have no rho recourse for the protection of his interests since he oh matter of has no standing excepting that of the foreign has lias no option tut buL to pity pay the exacted tax levy Another equally important feature when contemplating foreign inter inte- Issues is currency Most Moist Of the belligerent countries m in the recent have ground out paper money until there is little intrinsic worth left f Ith units of currency Late reports show that Germany has in excess of marks of at paper currency outstanding against marks gold and sliver silver reserve Krance has about francs in pape c cincy incy issued against approximately gold and silver These two currencies are therefore secured by 2 per cent and 12 pec gold and sliver silver bullion and coin respectively This compares with the tion in in England and the tite United States where there is respectively pounds sterling of paper ape currency secured d by pounds sterling g gand and silver coin coid and bullion or over per cent security while in t country we have t a total currency issues including national bank notes r eral eral reserve bank banic notes and federal reserve notes amounting approximate tp against lit excess of of gold and arId and bullion and dollars of eligible short term paper actual commodities thiS commodities this combined security or reserve represents abo 1 per cent of the outstanding currency M When we stop to consider the various issues of bonds against th of or Germany we find little other than absolute gamble for or the purchase such security Many of the better known issues are said to have in this country iro in greater amounts than amounts than actually exist dealers having agra agro to deliver bonds not in lb their possession and which they now find are Ic possible to secure The imaginary profits to be had from these German bonds through possible exchange appreciation have led men otherwise co to commit themselves without knowing for certain whether th secure the bonds ordered Furthermore there seems to be sligh to assure assura oneself of the genuineness of the bonds In time I these through which we are passing thousands of counterfeits In bonds currency are put into circulation so that only through the most sources should any uch uch securities be he purchased if at all A paper curren may iny be declared by th the government treasury worth 25 per cent or lei the gold mint at any ny time if it appears expedient to do so In lr external loans of foreign governments we find that as they ale j marily prepared for tale sale to investors in other countries there are clam ciau inserted in the bonds for the protection of foreign purchasers effects of any laws that the borrowing nation may under any see fit to pass in its dealings with its own citizens S JM r prominent among such external Issues of unquestioned safety pr cipal and interest are the following In U. U S. S dollars payable In New T City K Anglo 5 per cent due October 15 1920 jH S United Kingdom of treat Great Britain and Ireland convertible 5 53 P per Tc c gold i bonds due November 1 1929 Kingdom of Belgium premium sinking fund 7 7 per cent gold live five year bonds bond's dup June 1 1945 Tj j French cities Lyons Bordeaux Marseilles 6 per cent fifteen year b bond due November 1 1934 1134 in British sterling payable in New York City at per pound S S' S Imperial Japanese government 4 per cent bonds due January l 1 ii 1931 |