New-York tribune., 1911-01-11
ID. S. STANDS SPONSOR
FOR LOAN TO HONDURAS
Practically Guarantees Payment
but Establishes No Financial
Pr0tectorate.
Mr.. KNOX SIGNS TREATY
Possible Foreign Intervention in
Honduras AvertedI. p.
Morgan & Go. to Fur
nish Money.

Washington. Jan. 1O.-After more than
year OF negotiations, the proposed loan
for the rehabilitation OF the finances of
Honduras was made possible to-day
when Secretary Knox and General Juan
f. Paredes. Minister OF Finance and spe-
cial financial agent OF Honduras, signed
convention binding Honduras to ths
fulfilment Of the obligation TO be i'm
posed by the loan.
The treaty will be submitted by Presi-
dent Taft 10 the Senate within few
days for ratification, and Selor Paredes
declared tonight that within week the
contract between Honduras and J. p.
Morgan & Co. for the proposed loan
would he signed
The state Department did not make
public the text OF the convention, but II
is known that the treaty does not es-
tablish any financial protectorate over
Honduras Ii is not so formidable AS
the Santo Domingo treaty for the collec-
ton of customs through American Off
cials. but it was said the United states
merely guarantees the observance by
Honduras Of the financial contract about
to be made with the Morgan syndicate.
Should any friction arise between the
financial syndicate and the government
tof Honduras, provision is made for the
adjustment Of difficulties by the SUBJ
mission of the question to the heads of
the two governments involved.
The signing of the convention to-day
is in line with the Monroe Doctrine. in
that the United States acts as an inter
mcdiary between the foreign holders Of
Honduran bonds and that country by ar
ranging for the payment of its bonded
debt without foreign Intervention.
The action also is I'm accordance with
the policy announced by President Tart
in his message of 1899, and reiterated IN
his message Of 1910, in which he said.
The Republic of Honduras has for many
Years been burdened with a heavy bonded
deUt held I'm Europe, the Interest on whlch
long fell in arrears Finally condlli' ms
we're such that il became imperative TO re-
fund the debt and place the rnances OF the
republic on a sound basis. Last year
group Of American bankers undertook 10
do this and to advance funds for railway
and other improvements contributing d.
rectly 10 the countrys prosperity ana &C M
merce-an arrangement which mas lons
been desired by this government Negotla-
tions TO this end have been under way Tor
more than a year. and ii is now conn
IDENTIFY believed that short time VIII sur
! fee TO conclude an arrangement which VIII
be satisfactory TO the foreign creditors. cm-
inently advantageous 10 Honduras ana
| highly ereditabe TO the judgment ara
! foresight Of the Honduran government.
! uiZed by the Washington conventions.
strong Honduras would tend Immensely 20
the progress and prosperity OF Centrai
America.
Proposed Terms Of Settlement
The convention signed to-day, it is be-
lleved. will completely reorganizc the
finances of Honduras. The debt Of the
country is estimated at about Sil2,Vp.-
OOO, the accumulation of principal AMI
interest on four loans made since 1861
j. r. Morgan & Co. in August. 1909.
entered into an arrangement with the
holders of Honduran bonds in Europe by
which. il a settlement Of the loan then
proposed was effected through the aus
pices Of the United States. - per cent
OF the value of the bonds would be paid
This contemplated the payment Of So
on every 500 Of existing bonds with un-
paid coupons attached thus making nee
essary the payment by Honduras of
only S4.OoO.O0O. or about IL per cent ~
3d.. .OO0 900 the approximate face value
of the bonds.
loan Of $lOO00OO however, is no.
/ Ing negotiated by Honduras. with View
10 expending about SG.OOO,OOo toward the
completion of the partly CONSTRUCTED in
teroceanic railway joining the Atlantic
! and Pacific seacOasts OF the country at
/ Puerto Cortez and the Bay Of Fonscca.
| The loans procured by Honduras since
! 1861 were TO have been applied to the
construction Of the railway. but the fire.
ouent change Of administration and al
/ legged misappropriation OF funds OBJ
structed its progress.
Senior Paroles said tonight that the
| signing of the convention and the con-
| tract soon 10 be closed with the Morgan
syndicate made possible the completion
of the road within short time.
| Sehor Paredes received full power
from President Davlla to negotiate thu
convention but IT will have TO be rau-
fed bv the Congress of Honduras. Sehor
paredes asserted that such action was
assured because OF the general desire "
the people OF Honduras to have the road
built and the national finances estab-
lished on a sound basis.