Felix Somary’s closing intervention in a scholarly debate moves from clarifying a proposed German debt-consolidation loan to restating his central diagnosis of international capital markets: the widening divergence between exceptionally low equity yields and the interest required on fixed-income investments. Published originally in 1929, the address preserves the exchanges and interruptions of discussion. Its two parts connect uncertainty over international debt settlements with a deeper transformation in investors’ expectations and the distribution of income.
Somary first corrects Hahn’s understanding of his proposed ten-billion loan: the figure refers to Germany alone, is denominated in Swiss francs, and does not encompass the debts of all the countries concerned. German consolidation would prepare the ground for subsequent settlements, particularly of Britain’s debt to the United States. His argument turns on the consequences of unresolved obligations for financial planning:
Solange wir nicht wissen, ob im nächsten Jahr oder in fünf Jahren eine Anleihe kommen wird, die einen Umfang von einigen Milliarden haben muß, können wir den Geldmarkt nur auf kurze Sicht beurteilen.
English translation: So long as we do not know whether in the next year or in five years a loan will come which must have a volume of several billions, we can judge the money market only in the short term.
Uncertainty about a large future issue, Somary argues, encourages short-term lending and obstructs long-term commitments, including agricultural credit. Consolidation is therefore not merely a rearrangement of public obligations; it is a condition for a more intelligible international money market. He rejects mixed arrangements that would perpetuate uncertainty and insists on consolidation through bond issues. Although he believes the market can absorb ten billion Swiss francs, he anticipates transitional support from central banks until speculative capital moves into bonds. Those bonds must themselves offer forms attractive to speculation.
The second part returns to a thesis that, in Somary’s judgment, the discussion has largely neglected:
Als Grundfrage sehe ich es an, daß die Spannung zwischen der Rentabilität der Effekten der führenden Industrieländer auf der einen Seite und zwischen dem Rentenzinsfuß auf der anderen Seite nicht geringer, sondern immer größer wird.
English translation: I regard it as the fundamental question that the tension between the yield of the securities of the leading industrial countries on the one hand and the rate of interest on fixed-interest bonds on the other is becoming not smaller, but ever greater.
He accepts Prion’s observation that such divergences accompany speculative periods, but maintains that their present magnitude is unprecedented and determines the intensity of the economic cycle. His claim concerns international markets, not primarily Germany. A crucial conceptual correction follows an interruption citing a company’s twelve-percent dividend:
Ja, wir dürfen für unsere Betrachtung doch die Verzinsung nicht vom Nominalwert nehmen, der in ferner Vergangenheit liegt, sondern nur vom Kurswert.
English translation: Indeed, for our consideration we must after all take the yield not from the nominal value, which lies in the distant past, but only from the market price.
The distinction between nominal dividend rates and yields at current prices makes the apparent paradox visible. Somary’s leading example is Sofina, the Brussels holding company with predominantly South American interests: its shares stand at approximately 85,000 Belgian francs while paying 250 francs. Subscription rights must be counted, but even then the contrast remains striking. European capital finances such enterprises at very low effective yields while agricultural borrowers cannot obtain funds at seven or eight percent. Meanwhile, fixed-income securities decline in price. The problem is thus not simply a general scarcity of capital, but its sharply unequal allocation.
Somary finally asks why investors tolerate such low distributions. Shareholders had little managerial influence before the war as well, so their exclusion from control cannot by itself explain the change. His explanation shifts from corporate governance to the social composition of income:
Und ich habe geglaubt, diese Erscheinung darauf zurückführen zu können, daß die Umschichtung der Einkommen von den älteren zu den jüngeren, von Rentnern zu Spekulanten, teilweise von Europäern zu Amerikanern durchgeführt wurde.
English translation: And I have believed that I could trace this phenomenon back to the fact that the redistribution of incomes was carried out from the older to the younger, from rentiers to speculators, in part from Europeans to Americans.
He connects this redistribution to inflation-era fluctuations in value and an extraordinary period of invention. The address offers this as an explanatory hypothesis rather than a fully developed demonstration. Its relevance lies in linking postwar financial stabilization to persistent changes in who holds income and what investors seek from securities. Somary closes with disappointment that the debate has bypassed what he regards as the central question of foreign capital investment—one that will shape the coming years—and asks that it be taken up again.
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