Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-02-01
BIG PUBLIC DEBTS
Central American States Un-
der Heavy Financial Strain.
UNABLE TO PAY INTEREST
Secretary Knox Starts Movement for
Relief Of the Republics.
WORK IN HONDURAS BEHALF
New York Syndicate to Take Up
Outstanding Obligations, Accept
ing 4 Per Cent Bonds.
WORK IN HONDURAS BEHALF
By WILLIAM T.. CURTIS.

b1 WILLIAM CURTIS.
written for The Star and the Chicago Record
Herald.
One of the principal policies of the De-
partment of State under the present ad-
ministration is to readjust and reduce
the public debts of the five Central
American republics, as has been done
with Santo Domingo. and place them on
financial basis which will enable them
TO reduce taxation and secure money at
reasonable rates, to make much-needed
public improvements. The credit of all
the countries is very low, and their for
eign debts have accrued gradually from
year to year, representing money that
has been borrowed to build railroads and
other public works, but which has usually
been spent in buying arms and ammuni
ton and paying other expenses of put
ting down revolutions.
Secretary Knox has an idea that finan-
clal reform and reimbursement is vital to
the progress of those particular coun-
tries, and has undertaken to assist them
in negotiations with the Foreign Bond
holders Association in London, which has
charge OF the interests of the creditor
of many different nations, including all
of the American republics He has been
at work for several months and has had
the assistance and encoura cement of J.
z. Morgan & Co., the City National
Bank OF New York and other large
a Willingness to manage the financial
part Of the undertaking while Secretary
Knox looks after the diplomatic negotia-
tons.
Liberian Reform in View.
The Secretary hopes to carry out SIM
liar reforms in Liberia and to fund the
debt of that republic upon such a basis
that taxation will be easier and it's credit
improved. The foreign debt of Liberia is
9ls9,O97, and there is an internal debt
equivalent to about s, 10000, a very
heavy burden for a half-civilized nation
of a million and a half population. Of
whom less thin fifty thousand can read
and write.
nc foreign debt OF Guatemala is S12,-
o6o,o32 gold. for population Of million
and half, about 81 per cent of whom
are semi-civilized Indians
The foreign debt of Nicaragua is about
*S,615,OOO. and the internal debt is about
SlO,O0,GOO. which represents an irredeem-
dollar.
The foreign debt of Salvador. is about
S5,OO0.OOO. and that of Costa Rioa is near
ly $15,00O,oOO of which one-third is arrears
of interest
Hard to Pay the Interest.
AS you can imagine. 1t is difficult for
Costa Rica or either of the other coun-
tries to raise enough money by taxation
to pay even the interest on these debts,
and it is impossible for them to carry on
any important public improvements with
out borrowing money. That cannot be
done as long as their finances remain in
the present condition. Secretary Knox be-
lieves he can help them out, and has
begun with Honduras. which is in the
worst shape of all, with a national debt
amounting to $1o6OOO.OOO hanging over
the country. with an annual interest
charge of STATS. 500. which is more than
the revenues of the country. That is an
and child of the civilized population of
the country. If they had nothing else to
pay for, no other expenses of administra-
ton, each would have to be assessed S14
year In order to pay the interest upon
the national debt. And, what Is worst of
ALL the Englishmen who hold these bonds
claim lien upon the entire republic SO
that the government OF Honduras cannot
give concession to any company or make
any contracts for internal improvements
or borrow dollar for any purpose. The
development of the country is thus para
lyZed and must remain SO until this ire
mendous burden is removed.
Various attempts have been made to
ODldlfl d SeIIltHleHt ana TelleVe honduras
from this incubus. BY direction Of Secre-
tary Root about two years ago the late
William !. Buchanan undertook negotia-
tons. with the assistance of Senior
Ugarte. representing the government of
Honduras. and offered to fund the out
standing bonds. which are now quoted
from az to per cent on the dollar. on a
8 per cent basis into a new loan OF So
10000, payable in twenty-eight years at
per cent interest.
Submits Proposition.
Mr.. Buchanan submitted an alternate