German City Bonds

The city of Cologne recently obtained $10,000,000 through a 6 1/2% twenty-five year bond issue, floated by a New York banking syndicate headed by Blair & Co. Principal and interest are payable in New York City in U. S. gold coin. The issue in regular course was listed on the New York Curb Market.

Mr. Zimmerman of Zimmerman & Forshay, who is Chairman of the American Association of Holders of German Mark Securities, at once wrote a letter of protest to the Curb Association about the matter. He and his fellow members of the A. A. H. G. M. S. have by no means forgotten their mark securities, fallen to worthlessness almost by the recent devaluation of the War mark. Mr. Zimmerman declares that this devaluation has amounted to repudiation, that in effect Cologne and other German cities are in default on their mark bonds, and that therefore no German city should be permitted in the future to borrow here without discharging their former indebtedness in a just and equitable way.

Unfortunately for the A. A. H. G. M. S., however, the original mark bonds were payable in German marks, and the debtors are therefore able to fulfill their literal contract by paying them with this now worthless currency. The new bonds are in terms of U. S. gold dollars and in this respect at least stand on a different financial basis. Morally Mr. Zimmerman's protest is well taken, but legally it is fatally weak. The effect of. his action, however, is important, not only with the new Cologne dollar loan, but with a number of other dollar loans sought at the present time in Wall Street by various German municipalities.