Evening star., 1908-01-15
A GIGANTIC SW|NDLE
Bio Honduran Debt Has Grown
Like a SNOWFALL.
IS NOW OVER 100000, 900
Annual Interest Charge More Than
Yearly Revenue.
HUGE INCUBUS ON COUNTRY
Creditors Oppose the Grant of Con-
cessions to Those Who Would
Develop Lands Resources.
BY WILLIAM E. CURTIS.

| bility. The condition of the country
may be indicated by the fact that only
3O.O25 pupils are enrolled in the schools
"a less number than in the city of
Washington. The annual revenues of
the country amount to about St.550,O0O.
| of which about S2JOOO0 is expended for
| education and about $685. for police
debt amounting to $1O6,OO0.OOO is hang
| ing over that country, with an annual
interest charge Of $3,47S.5OO, which is
more than the total revenues CT the
government. This is an average of
| $424 for every man, woman and child
among the civilized portion of the pop
| ulation. and. il they had nothing else
| to pay for, each man, woman anu child
in taxes to meet. the interest charge
| alone. And, what is worse than all, the
Englishmen who hold these bonds claim
a lien upon the entire republic, so
not give a concession to any company
or make any contracts for internal
| improvements or borrow q dollar for
any purpose. The development of the
country is simply paralyzed and must
remain so until this enormous burden
is removed.
Most Audacious Swindle.
The true history OF the public debt
| of Honduras will rival any romance of
frenzied finance that was ever written.
| 1t involves the most audacious swindle
| that was ever carried out in interna-
tional relations. The details are al
most beyond belief, and nobody, SO far
| as l have ever heard. has con-
tended that the government cf that
| republic received the actual benefit Of
| any part Of the loan excepting the own
| ership OF "a railway ffty-three miles
| long. which cost about $7JO,oJO. and
l 0f, o.,f caG
| foreign bondholders In London. how
ever, holds the republic morally and
legally responsible for E2685,OoO. ana
will not settle upon any other basis. ,
American Federation in 1927 Its for
| eign debt was divided between the five
| countries. and the share Of Honduras
was E27,20O. Neither principal nor in
both obligations. which then repre-
| sented about $50. 900, were funded into
| new S per cent bonds. secured by the
| customs dues of the port Of Amapala,
changed them for s55.oOO Of new bonds
| in full satisfaction OF their claims
| There was never any question about
| the authorization or the legality of
| this loan.
| The same year the government of
Honduras, through it's diplomatic
agents in Europe, entered into con-
tract with Messrs. Bischonsneim ana
Goldschmidt Of London for the con-
| struction of a railway across the re-
| public from ocean to ocean. and au-
| thorized that firm to issue series or
loans to pay the cost of construction,
as follows soo
] Ten uer cent loan Of 1857. 9OV.1OO
| six per cent loan Of 1863. ......... .I6310
| Ten per cent loan Of 1870. 2.-42''oo
| Total face value Of loans. e SO
| This is equivalent to about twenty
seven millions Of dollars.
| Messrs. Bischoffsheim g. Goidschmidt
| claim to have acted under instruction
from carlos Gutierrez minister from
| Honduras to England, and Victor Her
| ran. minister to France. but there IS no
| evidence that those persons were author
| ized by their government TO MAKE such
a contract or assume such resoonsipii-
| ties. .,
| The ostensible purpose of raising the
money was to construct an interocean!c
| railway from Puerto Cortes. on the At
| lantic. go miles across the country to
| Amapala, on the Pacific, which would
save l.1O3 miles OF travel between New
| York and San Francisco and 66O miles
between LIVERPOOL and San Francisco, as
compared with the Panama route. 1t was
also represented in the prospectus issued
| BY the bankers and promoters that the
d
| a vast tract of country abounding IN ma
| hoRany forests and mineral wealth. which
| IL was claimed the government had grant
| ed as security for the loan. The govern
| ment Of Honduras was naturally very
desirous Of promoting this enterprise. and
| il is entirely probable that Its admins
tration may have given its diplomatic
| representatives. In Europe free hand to
do anything. to make any sacr1nces or
any arrangements necessary to accom-
plish it. The railroad was actually COM
| menced and comDleted for fifty-three
miles under contract with Messrs. War
ing Bros. McCandlish. who undoubtedly
received So 800. .OO more or less, In bonds
as their compensation. and disposed of
them in their own way to the best ad-
vantage possible.
The loans however. were frauds upon
their face The public was swindled as
well as the government Of Honduras. 1t
IS scarcely reasonable to suppose that
any investor would have purchased the
bonds at any price II he had accurate In
formation Of the condition or the coun-
try At that time Honduras had poDu-
, lat.on Of 100000. more than oae-half OF
whom were non-producing Indians. The
total revenues of the government varied
between sc5OOOO and 100000 year. and
vet the loans involved an annual pay
rnent OF nearly $500 600 When the con-
: tractors advertised the loan 1t Is said
, that only one application was received
which was for 2100OO. and that It came
!
CATION in 1875 showed that only the nomi-
nal sum Of f40,SDO OF the first loan vas
actually taken up by the public. although
Messrs. Bischoffshcim & Goldschmidt GER
! tffied that applications had been received
for fsIS.7OO. Of which the G5O1.1 100 had
, been allotted in England and the balance
, on the continent.
Proceeds Pocketed.
The disposition OF the proceeds OF the
bonds that were not given to the railway
{ contractors Is not made clear in the many
published statements concerning the mat
, ter. The British parliament made .
. thorough investigation OF the history OF
, the loan at one time and brought out
some amazing facts. The report was aft.
erward published. II would appear thai
, through an agent named Lefevre ths
: house OF BiSchoffsheim & Goldschmid,
were able to dispose of about three mil
{ lions Of these bonds by manufacturing a
MARKET for them Lefevre was evidently
. a clever speculator. and by buying from
! ana selling to himself en- the London stocl
I exchange by issuing plausible statement:
: and prospectuses he Was able to Goa,
: and tempt innocent investors to purchase
a few thousand pounds OF these allegee