THE BUBBLE BURSTS

Evening Star, Issue 18144, 7 December 1922, Page 6

THE BUBBLE BURSTS

EASY-MONEY LURE. BUYING GERMAN MARKS. [From the Sydney ' Sun '—a Message from its New York Correspondent.] People of the United States and Canada have invested nearly £200,000,000 sinco the war in German paper money, now almost worthless, according to an investigation by the 'New York World.' They paid 10 eents, 5 cents. 1 cent a mark, buying altogether 80,000,000,000 paper marks, at nn average of 1£ cents i\ mark, or £2 8s a thousand. Today paper marks sell below Is 9d ft thousand. The 'World' says that the buyers of marks and German marks bomls are the victims of a stupendous folly, the* moat gigantic financial delusion in history. About one-third of the loss is represented by stocks and bonds 'bought in Germany with murks.

The buyers have given to Germany morn Mian twice as much gold as Germany has paid in gold in war reparation pavmont? to date—£73,127,100. They h.-ivo paid Germany a, sum equal to one-third i.'ho total of the American Civil War debt uf £569.181,525 in August-, 1365. Victors over Goimany in the Great War have paid her, through their mark "investments," as much as Germany in victory collected front defeated France ;i5 indemnity after the Franco-Prussian War of 1871"—£195,600,000.

FRENZIED [FINANCE. Tlio story of this frenzied buyinz of Germain marks never lias been told. Unly fragmentary disconnected reports have appeared from time to time. The ' World's' estimates .ire based on Berlin official statistics of September 9, 1922, a.nd latest records of German mark distributors in. this country. London reports that British losses in German marta speculation amounts to £154,400,000—an even greater loss per capita than tho loss of tlus continent. Germany up to September 9 had circulated 243,000,000,000 paper marks, the unguaranteed currency of a war-beaten, practically insolvent Government. But the crash has not -come, poi-imps because foreign gold, the gold of England as well ss of America, bought half of Germany's bubble currency. Tho 'World' estimates that American buyers of German pa[>or marks hold j 30,000,000,000 in America, own 20,000,000,000 held in Germany, 5,000,000,000 held in Amsterdam, and other places, and have invested 25,000,000,000 of the marks they bought in buying German bonds and stocks. LOSS IN NEW YORK CITY. New York City has lost alone, sunk without trace of recovery, £4,500,000 of the £4,800,000 she paid for German paper marks.

The ‘ World: ’ reckons the total number in individual investors on this continent at 1.0,000,000, based on actual record's of sales of paper marks imported in currency from 1319 to 1922. Famous financial bubbles _ of _ history show nothing to compare with the German mark craze. John Law’s French company bank crashed and ruined a million Frenchmen overnight when its paper currency inflation reached 12,000,000,000 francs on an original capital of 1,677,000 francs. France, the homeland, suffered. Buying in America began with those who 'speak German, and they remained the bulk of the market. The millions of American dollars they poured into paper marks purchasing as soon as the Versailles Peace Treaty was signed in midsummer, 1919, attracted the notice first, and soon aroused the cupidity of non-Germanic observers. The banters, brokers, foreign exchange dealers here and throughout the country state that German-speaking buyers' took 80 per cent, of the German marks bought for America. Easy money! The lure of speculation made successful business men here gel German paper manta quickly, paying big premiums, fearing they would be too late for the groat garnering of dream profits. Right after the signing of the Versailles Peace Treaty in July, 1919, they paid for German paper marks ae high as half their par value (Is), wiiioh the paper mark Commanded before Jhe war They paid,

more til an paper marks were selling' for in Gormans’ neighbor countries. FOLLOWED THE MIRAGE. This easy-money mirage made millions of Americans, men of large salaries, take their savings out of the banks and buy Germany's paper promises. Emptied the little iron safes in 100,000 cupboard's, bent millions of dollars in Liberty bonds to market hero to get money to invest in German paper marks. And it still is taking its toll—in pennies to-day where it was £2 bills yesterday. Germanv sold her paper money not at home to the loyal ana those familiar with that financial medium. She sold it abroad. She sold it where it never had been seen before, except in the hands of tourists—-in America. Sho sold it so fast that the outside world took all she printed during one period of months, February to July, 1921. At the same, time the mad millions of foreign buyers pulled out of Germany billions of marks which had circulated there. This was because Government printing presses could not supply the demand abroad from America and elsewhere.