Japan Pays Off

Five days after Pearl Harbor, the SEC banned all trading in Japanese bonds and the Commissioner of Internal Revenue ruled such issues to be worthless. Many U.S. investors who held 14 issues of Japanese dollar bonds with a face value of $76 million lost hope of ever being repaid; some wrote them off as losses in tax returns. But in November 1950, SEC permitted trading to resume. Speculators drove up the prices. One issue (1930 dollar 5 1/2%) rose from 60 on the opening day to 95 1/2 last July (v. 70 in 1941).

Last week, after two months of negotiations with bondholders' protective committees, the Japanese government agreed to make good on its bonds almost at face value. Late this month it will pay in full all coupons which matured before 1943. The Japanese will still owe close to $44 million in past-due interest. This interest will be paid ten years after the original due dates on the coupons. At the news, the Japanese 1930 5 1/2% issue rose to III, and other issues staged similar rises.

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