As early as March, we reported that the Prussian tax authorities had recently developed more need for money, especially for their participation in state and semi-state buildings, and that they were also considering the expenditure of a calian bond to cover this, i.e. a loan which was not intended for the potash works, nor was it directly linked to the potash works by granting liability, rather, its Reichsmark valuation of sales price, interest and repayment should be based on the respective price of a part of the products of the state-owned potash works.
The realization of the idea, apart from some considerations connected with the type and its downside, was stopped by the preparation of the dollar treasury bond of the empire at that time. In addition, the price of potash salts was not certain; a reduction that would follow on from the reduction in the price of coal in the course of the Ruhr defence and in connection with the pressure on foreign exchange was also in sight for potash prices. In the meantime, despite the elimination of this competition, the imperial issue has been concluded with a temporary failure, and the price level for coal and potash has continued to stabilize for the time being. At least the granting of summer rebates, which has just taken place in the style of earlier models, cannot be described as an actual price reduction.
Novel type of bond
As has already been briefly announced, the bond will be issued at a round price of 23,000 marks per quintal, in sections of 100 to 10,000 kilograms. Similar to the recently issued Mark Treasury Bond of Prussia, which, by the way, delivered the relatively significant total result of 8.15 billion marks, the Kalian bond will also be repayable – and this, of course, with special reason – from 1928 onwards with an annual increase of one percent. The repayment period may then be 33 to 35 years; however, the state reserves the right to terminate the contract altogether from 1930 onwards.
Interest is paid on 1 January and 1 July, converted at the average of the salt price of the first two months of the previous quarter, i.e. for the January coupon according to the prices of October and November of the previous year, and for the July coupon according to the prices of April and May. The subscription period is set for 11 to 18 May, and payments must be made in full by 28 May. Assuming that all 50,000 tons were to be purchased, a money movement of over 11 billion marks would have to be expected during this time.
The type of Kalian bond is novel, the substance chosen as the unit of account is not familiar to everyone, but nevertheless, for example, not only familiar to the whole of German agriculture and the very extensive circle of potash works and potash shareholders, i.e. also to a considerable part of the German bank commission business and securities proprietary trading, but undoubtedly also sympathetic. Agriculture, especially the peasant circles, will have the opportunity to use the bonds as an elastic hedge for their fertilizer purchases in the same way as, for example, grain importers have tried to do with rye bonds and, in some cases, coal consumers with some coal bonds.
The apprehension will fall silent
Compared to the foundation that the Prussian state has in the production of its various potash plants, which can be estimated at 560,000 tons per year of the most diverse types of salt, an emission of 50,000 tons does not mean too much of a budgetary burden. In view of this ratio of 10 to 1, the concern coming from the others, especially the private calipers, that the Prussian treasury could push for low domestic prices out of consideration for the movable potash burden of its interest budget, will probably fall silent again.