The San Francisco call., 1909-03-15


then having Cabrera pay it in full is
one of his simpler devices.
STOLL LINING
HIS OWN POCKETS
Recently some one began buying UP
the bonds of a certain internal loan
which had long been repudiated. When
I spoke to Stoll about this. he said
ii was strange He had heard the same
news. He wondered who was respon-
sible. AS he had sbeen eXtolling Presi-
dent Cabrera so ardently as a patriot
and himself as the original simon pure
friend of Guatemala, l could not help
saying
Why. YOU have been buying them
yourself all the way from 16 to 40, and
in March it will be announced that they
viii be paid at par out Of still another
loan fastened on coffee expectation
at an extortionate rate of interest. You
are making a good profit, Mr. Stoll''-
not that he is to receive all himself
when he is in partnership with Cabrera.
Then Mr.. Stoll admitted he was not
in business for his health; and, besides.
ne was as good an American as any
body. I saw that he had not regarded
me as rude. but as mysteriously well
Informed. When we write and speak
Of the Monroe doctrine and our duties
TO weak sister nations it is well to
consider the effect on any people who
receive their economic teachings from
such type of American as Mr.. Stoll.
He does not play with Peter and
Paul liquidation Of foreign debts,
which would attract attention; but he
chooses certain internal loan-there
was no reason why it should be chosen
IN preference to any other internal
loan-and sticks to his running ac-
count" with Cabrera, a triumph which
has brought all other Central Ameri-
can fpanciers to his feet in admira-
tion of the master.
The running account" is one of the
secrets of state. No banker with
whom I talked quite grasped its
method in detail But from what I
could learn Stoll is in the position of
one who is receiving about II per
cent per annum on his bank balance
de loans Cabrera sums aga .s the
collection of the annual exf,o.4 dutv
on coffee in gold, which is perfectly
good security, as the collection is
practically in his hands.
LOANS NET
GOVERNMENT LITTLE
Mr. Bloom, in Salvador. has no .r,n-
nlng account" but he does all the gov
~-t-AS+-~ JVAA0 DuSiiltSS, ana IN lHUS he
actually succeeded in floating a per
cent foreign loan for S5.OOO.0OO at "a
to the agents and rs to the public
Al first II was poorly subscribed but
was taken up finally in London. where
per cent interest is attractive 10
later generations of investors unfa-
mlilar with Central American financial
history. 1t is not for an outsider to
estimate. Mr.. Blooms total pro1ts
A part OF the sum received went tn tl,e
payment OF old loans, and the govern
ment received actually about $500 600
which went mostly to paying arrears
of salaries and contracts on the new
palace. Already the sum is gore
Pretty soon salaries will again be in
arrears, and what then?
" ME Mexico spends her loans on
railroads and bridges and other nub-
nc works that win be an Investment
ia developing resources, this is not SO
IN central America. where all goes
INTO the pockets of statesmen ar n
pay the ordinary government EXPENSES
laAlng the production Of coffee. as
nave already pointed out means 20
central America much the same thinp
as placing a tax on the export az
wheat or steel in our own country. Tbere
Is bankruptcy for the plante,
= ["hlch even the best coffee lands in
the world can not bear; limit when
no more money can be borrowed evn
on that security
There remains the recourse -
voluntary loans and internal loans
voluntary loans" of one tvpe SinnIv
represent demand Of the dictator foy
certain sum Of money which an in
dlVidual must pay or go to jail. The
formal internal loans are taken un by
bankers and individuals under govern.
ment pressure. or they are issued and
must be accepted through force ma
jeure in payment of debts
GIVE BONDS
As SOUVENIRS
When ! told a certain businessman
that ] would like to see one Of these
bonds he put his hand in drawer and
said: Certainly. III make you a pres
ent OF this. You can see for yourself
what it is nominalIy worth. with in
terest accrued. OF course. no interest
has been paid. I'd like to sell you a
bale OF them for cents apiece"
The issuing of such d piece of paper
is only a form. In making up sta
tistics the habits of Central American
governments are not accurate enough
to include the detail of all such loans
But If the governments--which may
give in face value FIVE times the
amount received--ever had to liuuidats
the problem would equal that of the
average brakeman having to assume
the bonded Indebtedness OF the. Gnior
Pacific railway system.
The financial responsibility of the
president consists of making I'D 2
form of budget which is submitted tc
congress. with congress having nc
real power of audit, let alone OF appro-
priation. II is largely hctitious-sc
much for the army and the other de-
partments, which may have gone into
the pockets of the president and his
cabinet or to the maintenance of his
4 expensive spy system.
loans and irresponsible finance rests
on luctuating currency. Panama
has the gold standard. by our direc-
ton; Mexico and Costa Rica, both OF
which are prosperous, by choice. Ir
the other countries the value OF q
native dollar depends wholly on how
a 10.