Out of the Grave

The first news of Stalin's illness knocked some wind out of the market last week, but only for a day. Then stocks made up their losses and took the change in power in Russia in their stride.

But there was plenty of excitement in "graveyard" bond issues, i.e., defaulted bonds of satellite countries. A flurry of trading sent Polish bonds scampering from 8 to 13, the highest price since 1949. Estonian issues jumped from 11 7/8 to 15, the highest they had climbed since 1947. Overnight, an issue of Kreuger & Toll bonds, backed by assets frozen in Hungary, more than doubled in price from 3/4 to 1 3/4. None of them had an apparent value. But speculators were hoping that Stalin's death might shake satellite countries loose from Russia, and that they might pay off the bonds.

On the even longer chance that the $75 million worth of Russian Imperial bonds sold in the U.S. before the revolution might also be redeemed eventually, speculators sent them scooting up too. Even Russian dollar bonds, which the Soviets had repudiated in 1919, joined in the advance; one issue which had been due in 1919 rose 18% (to $40 for a $1,000 face-value bond), while another rose 33%, also to $40.

The play in Russian and satellite bonds was not quite as fantastic as it looked. Bonds of the Axis countries, which the U.S. had officially declared worthless, are now near par because of repayment agreements. Germany's Hugo Stinnes Corp. bonds, which sold at 12 1/4 during the war, last week were back to 140. As if to prove that the financially dead sometimes do rise, even in satellite countries. Poland agreed a fortnight ago to pay an installment of interest to French (but not American) holders of its bonds, which have been in default since 1940.

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