The herald., 1898-11-16
JOHN BULLS BAD DEBTS
Many Millions That he Will Never,
Never See Again

It is given to few countries to be able to
borrow ad libitum without provision for
paying off the principal, and only when the
bondholders are perfectly assured that they
will receive the interest regularly as it falls
due, and that the bonds are always salable
in open market.
With certain proportion of state bor-
rowers it is requisite that they should tempt
the lender by an offer of extravagant inter-
est, and should agree to redeem the bonds
pt the expiration of stipulated period.
With others, their high-handed treatment
of investors in times past has induced most
people to beware of the risks incurred OF
further reputation, and for such states to
obtain money is at all times matter of ex
trcme difficulty, and involves the exercise
of financial subtlety of high order.
To illustrate this, it might be remarked
that Great Britain can instantly raise ETC
on bond for that sum, bearing interest at
8 per cent or less, while with some Central
American states it might barely be feasible
to obtain ESQ on bond for fl00, and even
then the rate of annual interest would have
to be unquestionably alluring.
Greek bonds nominally worth fl00 now
change hands at prices varying, according to
character and the interest they are declared
to bear, between G32 and f43.
The foreign debt of Greece is about $685.
100000 sterling, and unless the holders o
this stock desire to sell it at current market
rates it is scarcely too much to assert that
they will never see their principal again.
Greece began in 1924 as Independent power
by incurring debt OF 100000. This was a
trihe to the sum it has since grown to be,
and the sore point is that the accruing in
terest has never been regularly and fully
paid.
Spain's debt is over $4,000, 900, and ETA,
600, 600 are annually required to defray the
interest thereon. Spanish stock carrying 1
per cent is now selling at third of its face
value. How it will be affected by the war
cannot be estimated at present.
Turkey has engulfed a formidable amount
of British capital, and perhaps we are COM
PEELED to deal tenderly with the unspeakabl
for that reason.
Roughly, the commander Of the faithful
ewes f132,000,000 apart from Russsia's un
paid bill of G3l ,2500 900 for the war indem-
nifty. 1t would be, indeed cold day for
many British investors were the Ottoman
empire to be wiped out entirely from the
map Of Europe, though probably the most
sanguine among them never expects to get
back his principal in full Turkish &c" and
I'D" stock are speculated in still, but at les
than one-fourth the nominal amount of the
bonds.
There are some OF the small states of the
chronically perturbed Central American re-
gion whose very names are suggestive to the
average bondholder Of ruin and disaster.
No one dares to mention Honduras in the
presence of choleric investor, and only in
less degree is it advisable to avoid refere-
ence to Colombia Ecuador and San Do
mingo The price OF a Honduras fl00 bond
is somewhere about fS-when an investor
can be met with. Precisely how much Brit
ish money has been sunk in the effort to boil
ster up these minor republics is a grave ques-
tion, but Colomba's external indebtedness
alone, and which is mainly due to British
creditors, amounts to E3,500,0G0.
Spain and Austria are countries with
chronic deficits, and the national debts are
in both cases large, yet the investors feel Sc
cure. British capital is largely employed
in this bolstering and the interest consti-
tntes heavy yearly tax upon the borrowing
EOS, 100000 in the case OF Russia,
f20,000,000 on Italy, f0,500,000 on Spain
and over f3,oO0,O00 upon Portugal. But
these are all instances in which, while the
interest is punctually paid, no one ever ex-
poets that the principal in the aggregate
would be forthcoming on demand, though
isolated bonds, or parcels thereof, are al
ways salable on the stock cychange.-An.
swers