Business Notes Debts

The dispute between Britain and the Soviet Union had been unresolved for 68 years. The subject: bonds issued by the Czar before the Bolshevik revolution of 1917. Soon after the Communists took power, they repudiated the debt, including bonds with a face value of $75 million that were held by British investors. The Soviets also nationalized $1.35 billion worth of British property in the U.S.S.R. In retaliation, London seized Soviet assets in Britain with an estimated value of $68 million.

Last week the two countries finally settled their differences. The agreement basically calls for both sides to waive the claims they hold against each other. As part of the deal, Britain will be able to distribute the $68 million in Soviet funds, which have been frozen in British bank accounts since 1917. The recipients: current holders of the czarist bonds as well as the heirs of those who made claims for property seized in 1917. The bonds, which have become collector's items, had been going for about $4.50 for a security with a face value of $150.

The Soviet Union may have wanted to end the dispute because low oil prices have reduced its revenues from petroleum exports. Now the financially squeezed Soviets will be able to issue bonds in London's capital market for the first time since the days of Lenin.