The evening times. [volume] (Washington, D.C.) 1895-1902, 1901-12-26
Causes Of the KaiSGr'S War
Like Movements.
SAD FLIGHT Of The REPUBLIC
Obligations Due to Banks the Rea-
son Why Emperor William is
Now Displaying Activity in
South America.

by the debt owed by the Venezuelan Gov
eminent to several German banks for the
construction OF the Gran Ferrocarrl de
Venezuela (Grand Railroad of VenezueIa).
IN 1889 or 1890 the Norddeutscher Bank
and the Disconto GeselIschaft financed
the construction of this railroad, whose
promoters, am ing whom was reported to
be the house of Krupp, which was inter
ested in unloading large amount OF sur
plus material at high prices, obtained a
concession from the Venezuelan Govern
ment for the construction of railroad
from Caracas. the capital Of the country,
TO Valencia. the next largest city. The
distance was about 10 miles
Under the terms Of the concession the
Government guaranteed : per cent inter
est on the bonds of the road, which were
supposed to cover the cost Of construc-
Jion only. This guarantee meant that If
the road did not earn sufficient to pay
per cent Of its bonds the Government
would make good the balance.
Great Extravaganza Displayed.
The read was built in an extravagant
manner and the total cost was said to be
nearly $16.Oe0,0o6. though the Venezuelan
Government alleged it was not liable on
more than S1e.O00, eco. The cost Of con
struction. though the read was only three
feet six inches gauge and single track,
figured out at something like sI45,0Co a
mile
Il Tuas fer some distance. it is true,
through mountainous country, but pre-
sents no such extraordinary difficulties as
20 Justify such an expenditure IN fact
any American contractor would probably
be glad to take a contract 10 duplicate it
al considerably less than half this figure
Certain il Is that some of the contractors
retired with comfortable fortunes. It is
needless to say that they were mostly
Germans.
Is soon as the read was opened for
traffic the inevitable followed. So far
from making money il barely paid run
ming expenses. which amounted to some
81, 500 q mile Or a total of $7G0 coo per
aHnuri fer the whole 10 miles, thus show
ins by comparison with any other rail
read statistics in the world, that the man
agement was no more inclined to consider
economy in maintenance than 1t had done
in construction Consequently the Govern
meut was called upon TO make good the
guarantee of per cent
Borrowed From Germany.
A great deal OF pickering ensusd. and
finally, in 1888, during the regime Of Presj-
dent Crespo. an arrangement was made
with BruzuaI Sierra, Minister Of Finance,
whereby the Government obtained, with
the assistance Of the railroad syndicate,
a lean il Germany Of $10,000,G eco at per
cent issued through the DiseontO Gesell-
scIafl L is alleged that the bank lmnc-
fiately proceeded TO appropriate S2,ZeeV9u
in part payment of the debt 10 Ijseit. be
sides exacting q commission OF 70 per
cent for its services in arranging the lean
The balance was destined TO repay TO
other foreign railroad companies the Va
rious sums owing 70 them for similar
guarantees The story told by the Ven
eZueIans Is that the $J,zo0. 800, together
with the s.. coo 600 commission Ice, was
merely transferred from the right hahd
pocket OF the DiscCntO to the left, that
the balance 10 be divided among the ether
railroad companies was not IN cash. but
in bonds which the DiscCaJO absolutely
refused 10 redeem IL cash or create 4
market Tor thus practically making them
negotiable securities OF 20 dXed
value: and that the result was that the !
Disconto saddIed upon the country an
extra interest charge Q: s500,00G without
expcRding one cent in cash
The Cause OF Soreness.
The pavmeut OF these guarantees has al (
ways been sore point with the Govern
ment OF Venezuela, not only in The case OF |
the German road. but also in that OF the /
ether reads whose concessions grant them 4
similar guarantees. In the case Of the j
German read the PIN has been all the more /
bitter because the company has never yet, |
or had rot when the writer was in Nene- /
zuela some little time ago. been organized /
as a commercial corporation. The German |
syndicate has always declared that the /
tine was not yet ripe fer Incorporation
and for placing the securities on the mar
Eet, and therefore the Government has TO
acc5Et the aggregation Of so-cailed expen-
ditUres issued by the syndicate as the
bonded indebtedness OF the road.
From the Venezuelan point Of view it
is rGt surprising that the Government
SHOULD object to the payment of guarantees
on what is manifestly an enormously in
faIed construction account. This has been
the custom. and the curse, OF the country |
in the matter OF railroad enterprise,
though the German road has achieved 4
proud pre-eHinence in the exorbiSance Of
its figures. The la CUayra and Caracas
Railroad Company (23 niles Is bonded for
SO 900 d mile; the Puerto CSbeIIo and Val
cacia Railroad Company (53 miles) for
$50 .GGG a mile. Can 1t be wondered 1t that
the Government is unwilling TO raE gJIav-
aGtees en- such excessive capitalization
Etnnco's Great For3Enc.
Before the time CT Guzman Blaaco a
President counted himself lucky II he left
the Presidency with fortune OF S250, Geo
1T 5000 Coo. Guzman. after several terms
Of Office. retired to Paris with. it is popu-
arly declared. seine so. coo, 900, and ever
since his time each official has done Lis
BEST to initiate this brilliant example
One instance Of the methods pursued IS
sufficient: The writer was requested |
10 interest himself in the financing N the
United States OF a railroad which would
actually have cost S2.5GG, coo or $. coo. zoe.
lie found that 20 obtain the concession,
and before a sod was turned, he would
nave 10 pay out some s3e0, 900 in cash and
Il ,5e90 ,e60 in bonds and stock for assist
lace" in obtaining the concession.
Il stands to reason that II road costs.
say $1,Gee,eG0 to build, and, before the
concession for its construction can be OBJ
aimed, the promoters are called upon to
asv cut another 81 zoe 0o0 or so for as
stance. they are naturally obliged to
a0nd for S2.o0G eco or more, and it IS to
has notorious fact in regard 80 the pub
a. works carried out By foreigners II
senezuela that President Castro referred |
Flen ne declared. as reported in TIE cable |
iespatches not long ago. that ne was not
,csponsibie for the obligations Of bis pre-
iecessors
A further consequences Of this system, |
$ found in tie enormous freight charge
IA all Venezuelan railroads. This amounts
q about 80 CENTS a TON a mill N, mar