Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-02-01

proposition that the government of Hon
tduras should purchase in instailments.
through the Bondholders' Association, all
of the bonds now on the market begin
ming at the price of per cent on their
market value, the highest quotation at
that time. and increasing the price one
half per cent every year until the maxi
mum of II per cent is reached, and thus
redeem the entire amount in twenty-five
Years or less for total sum of about
three million dollars.
A third proposition was that the gov
eminent of Honduras would grant 100000
acres of land to be selected by the bond
holders in any part of the republic in
small or large tracts in exchange for
Icanceling the debt.
But the Bondholders' Association re-
jected all three of the propositions and
then appealed to the British government,
but the Earl of Lansdowne, who was
then at the head of the foreign Office, de-
Iclined to have anything to do with the
matter.
Some time ago Secretary Knox au-
thorized Mr.. Frederick Beach Jennings
of the firm of Stetson. Jennings & Rus
sell, among the leading lawyers of New
York. to undertake the negotiations where
Mr.. Buchanan left off, and he has
succeeded in persuading the Bondhold-
ers' Association to accept a COM
promise on bases similar to those pro-
posed by Mr.. Buchanan. The exact terms
have not been disclosed but 1t is under
| stood that they are reasonable and they
| will probably be accepted by Honduras.
Secretary Is Hopeful.
Secretary Knox is SO hopeful of the
| situation that he issued the following
statement yesterday:
For some years the large foreign debt
of Honduras and the chaotic condition
OF Honduran finance, have been known to
be the principal factor in the weakness
Of that republic. which has made IT a
| frequent battle-ground in the tumultuous
course OF Central American affairs. 1t
has been recognized that to have an
| American syndicate fund to hold the
| Honduran debt upon just basis and to
make provision for railway extension and
other progressive improvements would
| be as great a factor could be found
| in the search of means to insure tran
guilty to these republics. The depart
ment has now ELECTED Honduras APP
probation of these facts"
This somewhat indefinite statement
means, however, that Mr.. Jennings has
succeeded in securing fair basis of
| compromise; that the government of
that a syndicate of New York bankers
will furnish the money to buy all of the
outstanding bonds and accept in place Of
| them between six and seven million dol
lars of new per cent bonds, running
| thirty years.
The government of Honduras will I'M
dertake the construction of certain rail-
roads and other public improvements.
which will not only serve to develop the
marvellous resources OF that country, but
will also go far to prevent future revolu-
tons by enabling the authorities to move
| troops rapidly to places where dis
turbances may break out.
REGARDED as Specific.
| Railroads are an absolute specific for
revolutions. Whenever a country is sup
piled with transportation facilities. as
| Mexico has been, political disturbances
cease. In countries where there are no
| railroads a band of conspirators can
organize revolution and seize a custom
| house and shake the foundations of the
government at some distant port, where
the authorities cannot send troops to
restore order. That has been one of the
greatest troubles in Central America, and
there can be no hope OF peace or pros
perity without transportation facilities.
1t is understood that the same meth
DDS that have been introduced by our
government into Santo Domingo will be
adopted In Honduras. The United States
will furnish a corps of cashiers and
clerks to take charge of the receipts at
the various custom houses and deposit
them in a New York bank to meet the
d
the payment of the bonds at maturity.
This will require about million dollars
a year, and the revenues OF Honduras at
present are about three and a half mil
lions. Whatever funds there may be col
lected in excess of the requirements will
be turned over to the treasury at Teguct->
galpa. That method has proved entirely
satisfactory in Santo Domingo. There We
negotiated a settlement between the gov
eminent and its creditors in Europe, and
Secretary Root persuaded q New York
syndicate to furnish the money and ac-
cept a new loan on the condition that the
United States should stand by and collect
the customs revenues, which has been
done up to this date.
Secretary Knox has recently transfer
red Fenton r. McCreery, the United
States minister at Santo Domingo. to
Honduras. in order that he may have
Creery has shown great tact and discre
ton in handling the situation In Santo
Domingo, and, although he deserves pro-
motion to more conspicuous post, Sec
rotary Knox pays him an unusual COM
pliment by asking him to take charge of
affairs at Tegucigalpa.
Classed as Extraordinary Swindle.
The history of the public debt of Hon
duras involves one of the most extra
ordinary and audacious swindles ever de-
yised, and there is no evidence that the
government OF that country ever received
more than small percentage of the pro-
ceeds.
Upon the breaking up of the Central
American federation in 1927 it's foreign
debt was divided between the five coun-
tries, and the share of Honduras was
f27, 200 Neither principal nor interest
was ever paid until 1867, when both OBJ
legations, which then represented about
SEQ, Goo were funded into new 5 per cent
bonds, secured by the customs dues of
the port of Amapala, and the holders of
the old bonds exchanged them for e55.-
600 of new bonds in full satisfaction of
their claims. There was never any ques-
ton about the authorization or the le-
gality Of this loan.
The same year the government of Hon
duras, through its diplomatic agents in
London, entered into a contract with
Messrs Bischoffsheim and Goldschmidt
for the construction of a railway across
the republic, from ocean to ocean, and
authorized that firm to issue series of
loans to pay the cost of construction as
follows: equivalent to about twenty
seven millions.
Messrs Bischoffsheim and Goldschmidt
claim to have acted under instruction
from Carlos Gutierrez, minister from Hon.
duras to England. and Victor Herran,
minister to France. but there is no evil
dence that those persons were authorized
to make such contracts or assume such
responsibilities.