Rensselaer Journal, Volume 10, Number 49, Rensselaer, Jasper County, 16 May 1901 — Foreign Bonds as Investments. [ARTICLE]

Foreign Bonds as Investments.

.The recent action of American capitalists in taking >50,000,000 of the new British war bonds gives timely interest to the article by Prof. Woolsey, in the May Forum, in which he discusses the risks in all kinds of foreign bonds. He points out the radical differences between government bonds and private loans. A government bond has no collateral behind it—no property on which the creditor may levy in case of default. The security of such a loan depends upon the credit and the good faith of the state that borrows. Nor can the bondholder proceed sin-gle-handed against his debtor by judicial methods. His only redress is through the diplomatic interference of his government. If he be a small and uninfluential holder he may have to wait long before he can set the governmental machinery to work. As a matter of fact, all government bonds of all countries are purchased out of pure patriotism—nothing else. The bonds sold in this country go to British residents here anxious to relieve the country to which they owe allegiance. In other words, the bonds were taken by branches of British banks doing business in the United States.