One objection to the average internal bond is that with the exception of
England the native money has greatly depreciated in international value.
Of course, if all these countries finally get back to their old
standards of wealth, these investments will yield a very large profit.
To reap this benefit, however, it will be necessary to hold the
securities for a considerable period because it will take the warring
countries a long time to "come back." Another fact in connection with
internal bonds well worth remembering is that while belligerent
countries will scrupulously respect their obligations held by a great
neutral like the United States whose good will and resources will be
very necessary after the close of hostilities, there is the possibility,
remote though it may be, that repudiation of home issues may come in the
shock of readjustment.
In a word, in purchasing a foreign war bond be sure to get a stable
national name, accumulated wealth, habits of thrift, an ample taxing
power, and a good conversion basis behind the security.
Amid all our war lending lurks a menace to future and necessary American
financing. In flush times like these it is comparatively easy for us to
spare large sums of money, because such capital is available and not
missed at home. If there was the absolute certainty that all the foreign
short term loans would be paid on maturity there would be no reason to
show the red light.
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