The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1913-01-28
CENTRAL AMERICA HAS
IMMENSE INDEBTEDNESS
Tens of Millions of Dollars Represented in Bonds, But
Can Be Compromised at a Few Cents on the Dol
lar-Honduras Has Interest Debt of Eighty-fve
Millions-Where Uncle Sam Comes In

get back the money they have loaned.
h foreign bondholder in many cases
principal. lacking the interest. but
they say the United States should
make the credit of Central America
good. This can only be done by treaty
arrangements which will give us the
supervision n application to the for
eign debts Of the customs collections,
as was dom in the case OF Santo
Domingo. resulting in the wiping out
Of revolution and the putting OF thai
country on q good business basis.
This. in short, is the proposition Of
the United States government.
With a view to this end conventions
are now pending or have been entered
into with several Of the governments,
and. based upon them, new loans
amounting to millions Of dollars are
ready for USE. 1t was to further this
movement that Secretary Knox made |
his trip to Central America He came
n contact with the presidents Of the
republics and told them that they
ought to observe the obligations OF
the Washington conventions, which
they had entered into through their
representatives. He demanded that
proper economic conditions be estab-
lished. n here in Guatemala he prac-
tically told President Cabrera that the
currency must be reformed and the
obligations provided for.
The Honduras Debt.
For the ordinary man to understand
the financial situation in these Gen.
trail American republics is not easy.
Take this matter of Honduras, where
a country about as big as New York,
with a population Of about half g.
million. owes $126. 600. 900. The loans
were made between 1867 and 1870,
and upon them for forty no
Yntayn0t hoe hAAn Mold Nh
l have said. are altogether about $27,-
600. 600, and fifteen millions Of this
bears interest at 10 per cent per an
mum. while On over ten millions the
interest rate is between 6 and Z per
cent. The bonds are largely owned
in England. and the British bond
holders proposed an arrangement
certain conditions. Among these was
provision that the debt was to
be a lien on the customs, and another
was that the tariffs were to be raised.
They also proposed to bring the chief
3 railroads under foreign control and to
do other things which would serious
4 ly affect certain American invest
: ments.
! To this the United States objected,
e and Honduras then asked our state
department to arrang for a loan
This was provided for in connection
, with ]. p. Morgan & Co. It was pro.
!. posed to settle with the foreign bond
holders at Is cents On the dollar, and
! to this they agreed. The security fol
: the loan was to be the customs receipt.
a or n government, and the loan wa.
to be big enough to settle the for
: eign debt. adjust the domestic deb
: and to give funds for railroad con.
Struction and other internal improye
= ments as soon as the country was il
V 0nEA 4~~ - VI
consist OF bonds which were to b,
) sold at 81 cents on the dollar. Thi
= arrangement was made at Washing
y ton. but It failed to be ratified by tn,
Honduras government. and since the1
- arrangements have been made witt
New Orleans bankers who are asso
9. ciated with the bankers OF New York
- One reason for the rejection OF tn
IS Morgan proposition was the selling o
,. the bonds at So. which the fnancief
q here say was a very fair deal an
more than Is usually paid for Centra
g American bonds.
n The Assets OF Honduras.
n The question al to the payment @
any debt depends on the assets of tn
4 debtor. / am told here that Hon
ts duras has which will enabl
~ it to pay any debt OF this kind
might contract. If the customs re
,e ceipts be properly handled and tn
people kept free from revolutions til
= country will develop rapidly. an.
ID with funds for internal improvement
ca and railroads, will soon be about til
richest OF all Central American n
publics.
Honduras is rich in timber, inclul
Is, Ing mahogany and dye woods, and
as has great agricultural possibilitie
IN Cacao. cotton. sugar ane coffee. tt
bacco and other tropical and sui
MS tropical products can be grown on tt
1owlandS. while farther up there al
is immense pastures fit for grain
With rapid transit to New Oriean
there Is no reaso why Hondur,
m should not be one of the fruit ga:
dens OF the United States. tt
banana is said to row wild In a
We parts of it below three thousand Zee
r. and the banana shipments now ave
tn age about a million dollars a year.
NO There aRa 0nnd Coffee lam