The collapse of the extraordinary rise in prices for German Government internal bonds, long predicted by Wall Street, has at this writing apparently occurred.
When the German mark descended to practical worthlessness, German national and municipal mark bonds naturally went down with it. In almost all financial centers they were considered merely amusing souvenirs. Bond dealers, when selling them, would count them very carelessly, and sometimes throw in 1,000,000 marks in bonds for good measure.
Suddenly last summer, a powerful buying movement set in, under which the worthless securities rose amazingly in price. German speculators were apparently responsible. Stories of redemption on a 1% and 2% basis began to appear. Most American holders are believed to have sold the bonds to Germans at a handsome rise in price, while the excitement lasted, thus reversing the role which they had played when speculating in German marks.
At length it became obvious, even in Germany, that after the Experts’ plan provisions, there would be no money left over to indemnify mark bond holders. Accordingly a terrific smash in these securities followed on the Berlin Boerse, in which some prominent firms were hard hit. The panic was quickly communicated to other continental centers, to London and then to New York. Now there are many mark bonds ready for sale, but buyers are scarce. The aircastle has vanished, apparently forever.
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