The united states through its corporations and individuals has invested over $30,000,000,000 in foreign investment throughout the nations. The total figure in 1959 was $29,735,000,000 and the distribution of these corporate and private invest­ments was as follows:

AMERICAN INVESTMENTS ABROAD, 1959 (BY AREA)

Canada	$10,171,000,000
Latin America	8,218,000,000
European Dependencies in Latin America	772,000,000
Europe	5,300,000,000
Africa	843,000,000
Asia	2,236,000,000
Australia and New Zealand	876,000,000
Other	1,319,000,000
Total	$29,735,000,000

By industry this is the way the total breaks down:

AMERICAN INVESTMENTS ABROAD, 1959 (BY INDUSTRY)

Mining and Smelting	$2,858,000,000
Petroleum	10,423,000,000
Manufacturing	9,692,000,000
Public Utilities	2,413,000,000
Trade	2,039,000,000
Other	2,310,000,000
Total	$29,735,000,000

In the year 1950 this was the breakdown of private investments of U. S. corporations and individuals abroad:

AMERICAN INVESTMENTS ABROAD, 1950 (BY AREA)

Canada	$3,579,000,000
Latin America	4,445,000,000
European Dependencies in Latin America	131,000,000
Europe	1,733,000,000
Africa	287,000,000
Asia	1,001,000,000
Australia and New Zealand	256,000,000
Other	356,000,000
Total	11,788,000,000

Between 1950 and 1959 American foreign investment had increased to 2½ times its size at the beginning of the period, and increases were pretty well scattered throughout the world. The point to be made in this presentation is that the American investment abroad is very substantial and has been growing. The owners of the $30,000,000,000 who invested apparently feel that the investment is sound. Otherwise it would not have been made.

While the stock market and the correct assessment of the future of securities is probably the most difficult of all studies, the analysis of foreign investments ranks just behind it in difficulty. The problems arise because of several factors: distance from the investment, the risk of devaluation of the currency of the foreign country, exchange control so that you cannot get your money out of the foreign country, and outright expropriation which is synonymous with interna­tional thievery. In 1959 American investment in Cuba was $955,000,000—nearly one billion dollars. Now what it is, if anything, is problematical.

As an example of foreign investment, in December 1958, I had a meeting with the owner of a hotel located in Havana, Cuba. The meeting took place in a fancy Miami hotel, and the proposi­tion that was offered to me appeared to be most attractive. The owner of the hotel stock was in need of funds to enter into some kind of a business deal. He wanted $100,000, and he was willing to pay annual interest of 15%. His security was the entire stock holdings of his new Havana hotel, which was showing a handsome profit.

On the surface the deal looked fine. A return of 15% was good, and the collat­eral looked good. If he defaulted I would be the owner of an excellent income-producing property. But I was an avid reader of True Magazine, and I had been fascinated by the rise in power of Fidel Castro. I hardly dared mention the fact that I had some fear that perhaps Castro would take over Cuba. I recall when I mentioned this doubt everyone at the meeting immediately laughed. The possibility did seem to be a remote one to everyone—except the owner of the hotel who knew the local situation better than anyone present at the meeting— but fortunately not better than True Magazine. By obtaining the loan he would secure $100,000 in cash for a year. In that time, the way the wind was blowing could be determined. Either Castro would be defeated, and he could pay $15,000 and get the stock of his hotel back, or Castro would take his hotel over —which he did—and he would keep the $100,000 while I was left holding the hotel. Fortunately, I did not make the loan.

Expropriations of foreign properties by local governments are rare, but they have taken place, the most prominent being the Nazi expropriations of all kinds of properties in all conquered European countries and the Mexican expropriation of oil properties. Any time an opposing faction gains strength, particularly a revolutionary, military faction; there is great fear of the loss of foreign invest­ments. It is popular for the new regime to steal these properties officially and give them to the people or some to the people and some to themselves personally.

Another tale of foreign investment, in 1949 the British pound sterling was devalued. Overnight it went from $3.68 to $2.80. This devaluation meant that if you, an American investor, had $3.68 deposited in an English bank and desired to "bring it home," all you had to bring home would have been $2.80. If some zeros are added, and the sum deposited was $36,800, you could bring home only $28,000. Your overnight loss would have been $8,800—one quarter of your entire investment.

Many of us sports car enthusiasts remember the devaluation for a more happy reason. Overnight the Jaguar XK-120 moved in price down to a level we could afford, and I promptly bought one. A car formerly priced at $3,680 could now be purchased for $2,800—quite a drop in price.

Foreign investment was wonderful in the summer of 1959, we had a pleasant time when we arrived in Madrid. The peseta had just been devalued. The month before we would have received 40 pesetas for each of our dollars. Now we received 60. We had 50% more buying power. But if we had deposited $3.00 in a Spanish bank prior to the devaluation, we would have received a deposit credit for 120 pesetas, whereas if we wanted to bring our money home after the devaluation our 120 pesetas would buy only $2.00.

Consider this foreign investment example, in 1960 both West Germany and Holland revalued upward by about 5%, so that if a person had money in either one of these countries he would have profited by 5%. His $1,000 investment would have became $1,050. This proce­dure is unusual. The same thing in effect happened under the administration of President Franklin D. Roosevelt. The dollar was devalued from $28 per ounce of gold to $35. A person who deposited $28 in a foreign country could' have brought back $35. Similarly, with the outflow of gold that appeared daily in the papers and necessitated a statement on the part of Presidential Candidate Kennedy that he would not devalue the dollar, there was at least some risk that devaluation would again be employed in this country. The rumor that such devaluation might take place was no doubt responsible for a great deal of the money flow out of the United States to other countries.

Thus we cannot be sure when we send money abroad that we will get it back, or that we will get back the same amount. On the other hand, we cannot be sure that by keeping our funds in the United States we are doing the wisest thing either.

Exchange control is the final worrisome factor in investing abroad. When a foreign country imports more than it exports it can pay up only in gold, and this payment depletes a stock of gold, which is definitely limited in amount.

Since the foreign exchange situation in a country can change in a matter of months, you must keep up with foreign currency news in any country in which you invest.

The fact of the matter is that although there are certainly risks present in investing abroad which are not present when investing in the United States, there are certain great advantages, which in large measure offset the risks. The advantages are partially summed up in the following table:

PRIME RATE FOR COMMERCIAL LOANS PER ANNUM
July 1960

U.S.A.	5%	Mexico	10%
Austria	8.5	Netherlands	4.5-5.5
France	7.25	Switzerland	4.5-5
Germany	8-8.5	UK	6.5
Italy	6.5-7.5
Japan	9

This table illustrates the advantages in investing abroad only. This is not what the individual investor necessarily earns on his money. It indicates the borrowing rates large and well-established corporations pay for bank loans. The U. S. rate is what the biggest American corporations paid in July 1960. In general the whole rate structure of a country is based on this prime rate. In Austria the prime rate was 3.5% higher than in this country.

However, the real disparity in rates is even greater than this. In Germany a number of business loans were made in 1961 at 11½% and in France at 9½%. Rates in the United States for comparable risks do not remotely approach these figures.

Foreign corporations and foreign banks borrow in the United States regularly. This "foreign commercial paper" and these "financial notes" are payable in dol­lars at an American bank. The payment in dollars protects the investor against devaluation of the foreign currency. The loans also carry local bank guarantees, and if the bank is sound the guarantee means something. These are some of the rates obtainable in mid-1961:

Mexico	ANNUAL RATE
Notes guaranteed by Nacional Financiera up to 6 mos.	8½-9½%
6 months to 1 year	9-9½%
Pemex, one of the largest Mexican Companies up to 18 months	9-0%
Panama
Up to 6 months - no guarantee	12-3%
Guatemala
Up to 6 months	13½-14½
Honduras	12½-14½%
Costa Rica	13 -14%
Argentina
Bank loans guaranteed by prime banks (1-3 years)	11½%
Bank loans guaranteed by secondary banks (1-3 years)	12-2½%
Chile
6 to 12 months	11 -11½%
Peru
Up to 1 year	10½11%

This type of foreign investment loan can be secured through international banks with branches in the United States, from American banks with foreign branches and through pri­vate investment organizations, which will be listed later. The only difficulty is that such investment opportunities are available in sums generally not lower than $10,000, and the person with $2,000 to invest finds this source in most cases closed to him.

The most obvious places to invest abroad are those nearest home—Canada and Mexico. It is probably sounder to deal with Canada. The language is the same as that of the United States, the laws affecting business transactions are roughly similar, and the ethical standards of the country are most similar to ours. Furthermore, Canada does not have a history of devaluation of the currency as against ours as does Mexico, nor has it expropriated American property. In 1959 the Canadian dollar was quoted at $1.05 and in the summer of 1961 at $.97. The American investor would thus have lost 8% of his investment in that period. This was not, however, an actual devaluation. It was simply exchange fluctuation that takes place from day to day—only this time it was extreme.

These are the prevailing rates in Canada as of mid-1961 as set forth by The Royal Bank of Canada through its American office at 68 William Street, New York 5, N.Y.:

CANADIAN CHARTERED BANKS
Canadian Fund Deposits - On Savings Accounts 2¾%, interest payable half yearly on minimum quarterly balance.

Fixed Term Deposits - Minimum $100,000, varying rates from 2¾% for a minimum of 30 days to 3½% for 364 days.

CANADIAN TRUST COMPANIES
Canadian Fund Deposits - Savings Accounts rates varying from 3% to 4%, interest payable half yearly on minimum half yearly balance.

Fixed Term Deposits - Minimum $5,000, varying rates from 2¾% for a mini mum of 30 days to 4½% from 3 to 5 years.

CANADIAN FINANCE COMPANIES *

Short Term Notes - Minimum $5,000 rates varying from 2¾% for a minimum of 30 days to 3½% for 364 days.

Mid-Term Notes - Minimum $5,000, rates varying from 5% to 5¾% for terms from 1963 to 1967.

* Gairdner and Company Ltd., 320 Bay St., Toronto, Canada, issues a monthly periodical entitled "Short Term Money Market Letter" listing rates offered by Canadian Financial institutions.

Among brokerage firms handling first and second mortgages is the Dean Realties Company, 423 Mayor Street, Montreal 2, Canada. In the spring of 1961 they were quoting rates on residential first mortgages of 11.2% and on second mortgages of 19.5%. Occasionally commercial properties were covered by such mortgages. Funds are placed in trust by the investor with a notary who dis­burses to the property owner once the deed of loan has been properly executed.

In Mexico mortgages are not the best investment for non-Mexicans because of a number of complications and red tape. Industrial and commercial loans sometimes yield 10% or even 11%, but they have to be administered locally, and there is another form of investment peculiar to Mexico which is much more convenient for non-Mexican investors. There are a number of financial institu­tions, which pay very high rates and are relatively safe for Americans to invest in.

These are mortgage banks, which are very similar to our building and loan associations, although principal deposited is not guaranteed, as is the investment in the American building and loan associations. These mortgage banks are called financieras and are subject to regulation under law by the National Banking Commission and the Bank of Mexico. One such organization of standing is Intercontinental, S. A., Paris No. 15, Mexico 4, D. F., Mexico. These are the rates per annum paid on time deposits in Mexican currency:

Three months	8½%
Six months	9
Nine months	9½
12 months	10
Two years	11

Interest is paid quarterly, and the minimum amount accepted for deposit is $1,200.96.

Financiera Colon, S. A., Dolores 17, Primer Piso, Mexico 1, D. F., Mexico, compares with a finance company in the United States, which would handle auto and truck financing on time sales contracts, but is subject to the regulations applying to all financieras. On deposits of three months or more, 10.8% is paid per annum in the local currency of Mexico. If payment is desired in dollars, the rate is 7%. The rate differential is explained by the devaluation risk.

Credito Mexicano, S. A., Isabel la Catolica No. 43, Septimo Piso, Mexico 1, D. F., also a financiera, pays in U. S. dollars 7% on deposits to six months and 7/2% on deposits over six months. The corresponding rates in pesos are 10% and 10/2%. Interest can be paid monthly, or it can be accumulated and reinvested every 90 days.

The Sociedad Mexicana de Credito Industrial, S. A., V. Carranza, No. 54, Mexico 1, D. F., Mexico, is another financiera paying about 10% on deposits in local currency and 7% in dollars.

In Mexico there are a number of investment counselors—stock brokers—this combination of functions apparently being the result of the need for money on a loan basis in Mexico. One such advisor or counselor is William E. Hughes, Apartado 774, Monterey, Mexico. He places deposits with financieras at 7% per annum payable in dollars and 9% in pesos, but if $5,000 or more is deposited 10% can be received with monthly compounding.

Casasus, Trigueros y Cia, S. A., Torre Latino-Americana, Piso 23, Mexico 1, D. F., Mexico, also handles such deposits with interest ranging up to 12% per annum.

William B. Richardson, Lopez No. 1, Mexico 1, D. F., Mexico, performs a similar advisory and placement function.

Speaking of foreign investment, there is another type institution in Mexico which is generally called a mortgage bank but which secures funds with which to buy mortgages from the public through the issuance of Cedulas Hipotecarias. These are in effect their bonds, which pay, as a rule, 8% per annum. William B. Richardson handles these as does Casasus, Trigueros y Cia, S. A., and William E. Hughes. Small amounts may be deposited. These bonds are bought and sold in the market easily and are thus almost equal to cash, but at the same time pay 8% per year. The proceeds of the sale of the bonds are used to lend on mortgages to a maximum of 50% of the appraised value of the home for not over 10 years. Banco Hipotecario de la Construccion issues such bonds, and accounts can be started with as little as $400. Additions to the deposit in the bond account can be made for as small a sum as $8.00.

Two high-grade opportunities to invest in Mexico were offered in 1961, which illustrate what some of the financially safer Latin American countries have to offer.

A truck trailer manufacturing company in Monterrey, Mexico offered notes carrying the guarantee of a financiera in Mexico City. The company agreed to pay in dollars and the financiera guaranteed this payment in dollars. The notes were repaid over a period of one year, in equal monthly installments so that as time passed with its attendant risks the notes were gradually being repaid. The rate of interest was 11½% per year. This investment was called to my attention by one of the large international finance companies, Transoceanic AOFC in New York.

A second high-grade investment opportunity was pointed out by Intercon­tinental Credit Corporation of New York. This was a series of notes payable in one year's time or less. The obligor was a distributor of sewing machines in Mexico. The company guaranteeing the notes was a large American corporation listed on the New York Stock Exchange. The guarantee was, however, in pesos, not in dollars, so that the risks were (1) a devaluation of the Mexican peso before the note came due and (2) the inability to secure dollar exchange so as to get funds back to the United States. A large international bank in New York acted as collection agent. The rate was 12% per year after deducting collection charges.

Both of these foreign investment loans are considered good for high rate loans. The big risk is the devaluation risk and the inability to secure dollars when the loan is paid in pesos. The other drawback is the fact that sums of under $10,000 were not of much interest to the borrowing organizations. In fact, they were more interested in sums of three times this size.

There are several financial organizations with offices in the United States that specialize in the financing of international enterprises and that from time to time have the investments available for American investors. Three of these organizations are Willard International Financial Company, Ltd., 79 Wall Street, New York 5, N. Y., International Basic Economy Corporation, 30 Rockefeller Plaza, New York 20, N. Y., and the Deltec Corporation, 72 Wall Street, New York 5, N. Y.

The last named organization specializes in financing in Brazil, Argentina, Venezuela, Peru and Chile. It performs these functions among others:

"Private placement of short and medium term Latin American obligations in the United States and Europe. These obligations generally carry institutional guarantees or are secured by substantial collateral and return a high rate of interest with occasional additional incentives in the form of options, free equity or profit participations.

"Servicing the clients of its associated banks and institutions in Europe and in the United States by providing them with investment, financial, industrial, tax and legal advice and assistance in Latin America."

One of the offerings of this organization can be used as an example of a better grade foreign loan: Permanente Sociedad Anonima Comercial Y Financiera is an Argentine corporation organized to finance installment sales of automobiles and accessories. The notes issued by Permanente are unconditionally guaranteed by its parent company, Industrias Kaiser Argentina, S. A., Industrial, Comer­cial Y Financiera, one of the largest industrial enterprises in Argentina. It is an affiliate and licensee of Willys Motors, Incorporated and manufactures jeeps, light trucks and passenger cars. It recently began the production of the Renault Dauphine.

The notes issued by Permanente are 180-day and 270-day notes. For notes of 180 days and shorter the annual yield is 8½% and for over 180 days 9%.

The only trouble with these notes is that they are issued in denominations of $50,000 and thus the smaller investor must either join others in purchasing such a note or he is barred from this investment.
The notes are payable at the principal office of the Chase Manhattan Bank in New York, and in order to protect the investor from exchange fluctuation or devaluation, Permanente has purchased a contract for future delivery of the money in New York in dollars. There is also a restriction on how much indebted­ness Permanente can incur, since the more the debt of any particular corporation, the less security any particular creditor has. Permanente cannot incur any indebtedness, other than in subordinated debentures from its parent Kaiser, greater than 75% of its receivables.

At the present time foreign "commercial paper" is being offered, in the United States with a very active market in New York—loans of up to one year to foreign banks or industrial concerns with the guarantee of foreign banks. The most active originators of these loans are Latin American banks. The investors for the most part are American as well as foreign financial institutions—banks, finance companies and trust funds, but individuals do take these loans or partici­pate in the larger ones.

Some of the organizations offering participations or acting as brokers for these loans are:

N. A. Bogdan and Co., Inc., 63 Wall Street, New York 5, N.Y. Short term loans guaranteed by foreign banks are payable in New York in dollars. The amounts are generally $20,000 to $25,000, although smaller amounts can sometimes be combined into one loan. Rates are 9% to 12% per year and countries of origin are Argentina, Chile, Colombia, Mexico, and Peru.

Feuchtwanger Corporation, 60 East 42 Street, New York 17, N.Y. finances foreign importers for 90 to 180 days and handles notes of foreign corporations guaranteed by leading South American banks. Participations yield 9/2% to 11% per annum. The countries specialized in are Colombia, Ecuador, Chile and Argentina.

Truman and Co., Inc., 70 Pine Street, New York 5, N.Y. offers investment opportunities as low as $10,000 at a minimum rate of 10%. The funds go into foreign loans in Chile, Colombia, Mexico, Peru, Venezuela and Argentina, and such loans have bank guarantees.

Overseas Investors Consultants, 500 Fifth Avenue, New York 36, N.Y. has investment opportunities for 90 days or more in Mexico at 8.6% to 9.8% per year, in Argentina at 11% and in Chile at 11%.

American Union Transport, Inc., 17 Battery Place, New York 4, N.Y. offers Latin American industrial loans guaranteed by banks for terms of from 6 to 18 months and at rates of from 10% to 10/2%. Denominations of as low as $25,000 or even lower are handled, some through participations by several investors in one loan.

Other organizations handling similar loans are:

Continental Commerce Corp., 30 Broad Street, New York 4, N.Y.,
Intercontinental Credit Corp., 2 Park Avenue, New York 16, N.Y.,
J. Ballay and Co., Inc., 2 Broadway, New York 4,
N.Y., and Park Bridge Corporation, 52 Wall Street, New York 5, N.Y.

The foreign departments of banks doing an international business are helpful in locating and assessing foreign investments. Some of the banks that may be contacted are:

Riggs National Bank, Washington, D.C.Luis F. Corea, V.P.

The First National Bank of Boston, Boston, Mass., Robert S. Boit, loan officer.

Continental Illinois National Bank and Trust Company of Chicago, 231 South LaSalle Street, Chicago, Illinois, Roger E. Anderson, V.P.

First National Bank in St. Louis, St. Louis, Mo., James L. Sharp, V.P.

United California Bank, 600 South Spring Street, Los Angeles, Calif. Gustav Riedlin, V.P.

Mellon National Bank and Trust Company, Pittsburgh, Pa., G. C. Schoch, Assistant V.P.

Chase Manhattan Bank, New York, N.Y.Charles Cain, Executive Vice President; Alfred Barth, Senior Vice-President.

State Street Bank & Trust Company, Boston, Mass., Louis C. Farley Jr., V.P.

A number of foreign banks have representatives in the United States who perform similar functions, including:

Union Bank of Switzerland, 14 Wall Street, New York 5, N.Y., Charles de Vivis

Banca Nazionale del Lavoro (Italy), 1 Wall Street, New York, N.Y., Giovanni A.
Vicinelli

Barclays Bank Limited, 120 Broadway, New York, N.Y. A. Stewart Macmillan

Midland Bank Ltd., London, 44 Wall Street, New York, N.Y.John Pryor

Banco di Roma (Italy), 40 Wall Street, New York, N.Y., G. Gambatesa

National Provincial Bank Limited, 44 Wall Street, New York, N.Y.Michael W.Varese

Westminster Bank Limited, 1 Wall Street, New York, N.Y., A. E. Cooper

Credito Italiano, 67 Wall Street, New York, N.Y.Mario Calamai

Banco National de Mexico, 45 Wall Street, N.Y., Luis Calera, Agent.

Canadian Imperial Bank of Commerce, 20 Exchange Place, New York, N.Y.,
G. R. Sharwood

Bank of Montreal, 2 Wall Street, New York, N.Y., Wallace J. Wilson

Another foreign investment loan came to my attention a few months ago which was relatively good and high yielding: A large commercial establishment in Asuncion, Paraguay, wanted to borrow something up to $50,000 for a term of three or four years at a rate of 12% per year, the interest to be paid quarterly or semiannually. Both principal and interest were to be guaranteed by the Banco del Paraguay. Both interest and principal were to be payable in dollars in any bank in the United States as designated by the lender.

This loan was one of the offerings of Gerardo F. Sichel, Asesor Economico Financiero, Maipu 92-701/2, Buenos Aires, Argentina.

In late 1961 England became one of the main opportunities for international investments for both the small investor and the large investor.

Probably most of the large banks in England, and these are very large and very conservative by anyone's standards, have close affiliations with finance companies specializing in time-sales contracts on automobiles, appliances and other items. These finance companies the English refer to as hire-purchase companies. In many cases the banks own a part of one or more finance com­panies, or own them wholly. Deposits could be made in the soundest of these bank-affiliated finance companies at rates of 7% or more. One affiliate of one of the largest banks would pay 7¾%for as short a term as three months. In fact, the shorter the term the better, from the point of view of the finance company. This rate was geared to the so-called bank rate in England which bank rate corres­ponds to our American prime rate. If the government lowered the bank rate the 7¾% rate paid by the finance company would be proportionately lowered.

The very large Lombard Banking Corporation of Curzon Street, Park Lane, London, W-l, was paying 7%.

Smaller finance companies paid even more. The Pinnock Finance Company of 17 Hanover Square paid on the following basis:

Withdrawals on one-month's notice	6% per year
Withdrawals on three-months' notice	7% per year
Withdrawals on six-months' notice	8% per year

The minimum deposit was £25 ($70). If £500 or more were deposited ($1,400) an extra one per cent interest was added to the above schedule so that the maximum rate was 9%. The finance company was small and newly organized so that up to date financial statements would always have to be secured, but the deposits were guaranteed by a somewhat larger finance company.

Other examples of deposit investment opportunities for the smaller investor were:

Westminster Credit Finance, Ltd, 60/62 Finsbury Pavement, London, E C-2	8½%
Gwent and West Finance Co., Ltd., Carlyle House, Newport Road, Cardiff Wales	8½%
Hodge Industrial Securities, Ltd., Carlyle House, Newport Road, Cardiff, Wales	8½%
Lincolnshire Finance Co., Ltd., Akrill House, Clasketgate, London, England	8%

These are examples only and other names can be secured from consulting English newspapers available in many libraries.

The large London banks can advise on which of their affiliated finance com­panies (hire-purchase companies) are accepting deposits. Some of these large banks are:

• Lloyds Bank Limited, 71 Lombard Street, London E C-3, England
• Midland Bank Limited, Poultney, London E C-2, England
• Barclays Bank Limited, 54 Lombard Street, London E C-3, England
• National Provincial Bank Limited, 15 Bishopsgate, London E C-2, England
• Westminster Bank Limited, 41 Lothbury, London E C-2, England

In England, Local Authority loans correspond to our American Municipal bonds, except that the English rate for these high grade risks was exceptionally high. Although most local authorities wanted a minimum investment of £20,000 ($56,000) some offered opportunities to invest as little at £50 ($140). These are sample rates:

2 days notice (deposit receipts)	7⅛
7 days notice (deposit receipts)	7¼
7 days notice minimum period one month (deposit receipt)	7¼-7⅜
7 days notice minimum period three months (deposit receipt)	7⅜-7 7/16
7 days notice minimum period six months (deposit receipt)	7⅜-7½
364 days (deposit receipt)	7¼
2-5 years mortgage (subject to earlier repayment on six months notice by either side)	7¼
2-3 years mortgage	7¼-7½
3-5 years mortgage (escalator basis average rate)	7¼
5-7 years mortgage	7-7¼
10-12 years mortgage	7
15 years mortgage	7
20 years mortgage	7
35-60 years mortgage	7
30 years mortgage (repayable half-yearly instalments or annuity basis)	7
40-60 years mortgage (repayable half-yearly instalments or annuity basis)	7

PUBLIC BOARDS

7 days notice  (deposit receipt)	7¼
5- 7 years mortgage	7¼

British Treasury bonds were yielding over 6% per annum, about 4% more than our American equivalent, and all other British government obligations, as well as those guaranteed by the British government, were yielding over 6%, some over 7%.

These are not for the smaller investor, as the minimum denominations are usually in five figures. There is the further drawback that if these bonds are sold after holding them only a short while, payment may be received in blocked sterling, which sells for a discount in dollars as against free sterling. On the other hand, when the British government raised the bank rate from 6% to 7%, the price of these bonds immediately fell so that the real yield to maturity would approach the 7% bank rate. As the bank rate is lowered, the price of the bonds immediately rises so that a capital gain will be provided on an extremely sound investment.

Lists of British government bonds and government guaranteed bonds may be secured from brokers handling these bonds, such as Whiteheads, Rossage and Coles, 2 Copthall Court, London. They are also published in The Stock Exchange Gazette, which can be purchased in America as described later.

Before anyone buys such bonds he must be assured that he will be repaid in free sterling and that the Bank of England will allow him to transfer his funds into dollars.

One of the soundest foreign investment opportunities in the world was offered recently by one of London's largest banks, but unfortunately offered only to the largest investors. The banks were, in effect, prohibited from making any new loans no matter how sound the borrower, and no matter what collateral he offered. One of the largest London banks offered to guarantee a loan made to one of its customers for a term of a relatively few months—at a rate of 8% per year. The security of this loan is very nearly equal to a deposit in the bank itself. Incidentally, the largest British banks were paying 5% on deposits.

In England, the main risk is devaluation of the pound sterling. In the best opinion in England this is not a likely eventuality, but it is a possibility. There is also the possibility that if a loan is made by an American group or person to a British firm, when the loan is paid off, conversion to dollars may not be per­mitted. The Bank of England, however, must approve all loans before they are made, and if this approval is secured it is likely that upon maturity the conver­sion to dollars will be permitted.

This approval does not apply to deposits in finance companies, and this is, of course, the main outlet for the funds of the smaller investor.

Opportunities to deposit in English finance companies are advertised in such newspapers as the Telegraph, the Financial Times, the Times, the Economist and the Stock Exchange Gazette, which papers are often available in libraries.

The Gazette can be purchased for $12.50 per year (it is issued weekly) by subscribing to Thomas Skinner and Co., Ltd., Ill Broadway, New York, New York. It costs $300 per year to receive the publication from England by air mail.

Information on British investments can be secured from:

• Barclays Bank Limited, 120 Broadway, New York, N.Y.
• National Provincial Bank Limited, 44 Wall Street, New York, N.Y.
• Midland Bank Ltd., 44 Wall Street, New York, N.Y.

In depositing a foreign investment with any foreign company a balance sheet and profit and loss statement must be asked for and examined closely. References should be re­quired, particularly references of large and well-known banks.

From time to time, offerings of loans are made in Germany and elsewhere on the Continent. These countries are farther away from the United States and have peculiarities in their local laws which preclude investment for the smaller, un­sophisticated investor to a great extent. The ethical level of German and Dutch businessmen is, however, high, and if larger sums are to be invested, Germany and Holland as well as some other European countries can be examined. Universal-Agentur, Goldberg 2-4, Kahl/Main, Germany, periodically offers loan opportunities in Germany, some of which look interesting.*

* A recent top grade continental offering was that of a Swiss finance company for one year at an effective rate of 6¾ per cent to 7¼ per cent. It carried the guarantee of a first class Swiss bank.

The greatest difficulty in investing abroad is the distance involved in case something goes wrong. You, the investor, cannot get there to take charge of the situation yourself. For that reason only the soundest foreign investments abroad should be undertaken, and those in the most ethical countries as well as those nearest the United States, both in location and in similarity of laws and business practice. Where safeguards can be secured, such as government regulations and guarantees, they should be taken advantage of. High rates should be no induce­ment to forego safeguards. As one finance man once put it, "What is important is not the return on your money, but the return of your money."

The first great danger in foreign investment is unfavorable exchange fluctua­tion, principally from devaluation, and this matter should be looked into care­fully with international banks, which will be glad to help you (most large banks have international departments). The Business and Defense Services Adminis­tration in Washington, D. C. is a government organization of specialists on each country of the world who will help you by mail or in

person, and the Department of Commerce probably has an office in your nearest large city which can be consulted on the exchange situation in any country in which you are interested in investing.

The U.S. Department of Commerce through the Government Printing Office issues the Foreign Commerce Weekly, which contains up to the minute interna­tional news. This should be read by any international investor.

The International Monetary Fund, Washington, D. C, through the Govern­ment Printing Office issues a monthly report entitled International Financial Statistics, dealing with the financial condition of every major country in the world. This is a "must" for international investors, since it aids in forecasting exchange fluctuation, exchange controls and devaluations.

A summary report on the same subject is issued by Selected International Indicators, 11 West 42 Street, New York, N. Y.

The second difficulty in foreign investment is exchange control which may prevent you from bringing back your money once you have invested it abroad. The above publications should aid you in forecasting exchange controls and warn you of approaching danger.

The third problem is expropriation. This danger can often be seen in advance, as the Cuban hotel owner saw it when he tried to palm off his hotel on me. In a similar way the threat of a revolt in Venezuela has been seen well in advance of any trouble in that country.

For these reasons short term loans and deposits are to be preferred, and in­vestments for a maximum of one year are desirable. In very stable countries longer terms are possible.

The great advantage in oreign investment is that the rates are higher than in the United States for comparable risks and opportunities are more readily avail­able. In this country it requires digging and study to secure high rate invest­ments, and in the Spring of 1961 we were faced with the situation of the building and loan associations being advised by the government that they should pay their depositors less than 4% in order to stimulate home building. This advice is all right, to a limited degree, for the home builder, but disastrous for the person who has saved a small sum of money and who wants to get a reasonable return on it in terms of what business loans can, do, and should bring.