He knows it is all right.
Alluring as is the possibility of profit in the new French Rente at the
present abnormal exchange basis, it fades before the prospects for
similar profit that lie in some of the Russian Government Bonds
available in the United States. The Imperial Russian Internal Five and a
Half Per Cent Loan of 1916 amounting to 2,000,000,000 roubles will
illustrate.
Ordinarily the Russian rouble is worth 51.45 cents in American money. It
has gone down to 32 cents. At this rate of exchange a thousand rouble
bond bearing interest at 51/2 per cent would only cost $320.00. Based on
the normal value of the rouble this bond would be worth $514.60 or
$194.60 above the present price of the bond--an increase of about 60.8
per cent on the investment. Figuring roubles at the normal rate of
exchange the yearly yield would be $28.28 or 8.8 per cent on the
investment.
The fact that roubles are down so low is evidence that Russian credit at
the moment is not as high as it might be. The principal equity behind
this bond, as well as most other Russian securities available in
America, is the fact that Russia has immense post-war possibilities. She
will emerge from the conflict like a giant awakened and with the first
realisation of her enormous undeveloped resources. To offset this,
however, is the lack of stability of Russian Government as compared with
the other Allies which makes all Russian Bonds speculative.
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