New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-06-17
Senator Smith Asks Inquiry
Involving Three Firms
of N. Y. Bankers.
CHARGES MARINES
KEEP UP REPUBLIC
Movement Intended to Defeat
Treaty Which Bryan Wishes
Ratified.
From The Tribune Bureau.l

A'Nh' AHN Aibhho toultduI
Washington, June ia general inves-
tlgation into the finances Of the Republic
OF Nicaragua and the part played by the
State Department and American banking
institutions in guaranteeing an alleged
fraudulent bond issue of $4,000 vas de-
manded by Senator Smith, OF Michigan.
to-day I'm resolution introduced in the
Senate. It is proposed that the investIga-
ton be made by the Senate Committee
on Foreign Relations.
The demand is regarded as the first
move in opposition to the proposed Mica
raguan treaty which Secretary Bryan has
said the Senate will be asked to ratlfy.
Senator Smith is opposed to the treaty.
lie alleges that the administration OF
Nicaragua, headed by Adolfo Dlaz, has
been maintained for upward Of two years
by American marines in the capital at
Managua under the guise Of a legation
guard and in defiance Of the wishes Of
the people.
THE American banking houses Of
Brown Brothers and Seligman have I'M
dertaken to finance the affairs of the
Nicaraguan government during this
time" said Senator Smith, "and certain
fraudulent syndicate bonds issued by
President Zelaya. known as the Ethel
burga Syndicate, aggregating S6,250000 in
gold. have been questioned and their val
idity denied by Presidents Estrada and
Diaz. Those bonds were engrafted on
the Nicaraguan republic as bona fide
Indebtedness.
Those bonds were largely deposited
with European bankers for safekeeping
until secured in large part through the
activity of Ernest II. Wands, who had
been designated by the Department OF
State of the United States financial agent
of the Republic OF Nicaragua in the in
terest of Brown Brothers and Seligman
THE bonds were purchased at an aver
age of % per cent Of their face value for
speculative purposes, and were. through
the assistance of the State Department OF
the United States, brought within the
scope of an American guarantee, which
entirely validated the bonds to the detri-
ment of the people and government OF
Nicaragua and TO the advantage Of the
purchasers,
The sole benefciaries were Brown
Brothers. Seligman and Speyer G. Co. and
their allies
1.-The last Presidential election in Mica
ragua was Intentionally influenced by the
presence of marines at Managua, Ora
NADIA Masaya, Corinto and other interior
places, and the presence Of the Ameri-
can naval vessels at Corinto and Blue
fields was I'm violation of the present
treaty between Nicaragua and our gov
eminent.
THE National Railroad of Nicaragua
has been sold much below its actual value
to Brown Brothers and Seligman with
the approval and acquiescence OF the De-
partment Of State. in violation of the
constitution of Nicaragua.
by virtue Of protection granted by the
Department of State, the bankers are able
to secure enormous profits through COM
polling Nicaragua to redeem Ethelburga
Syndicate bonds at par"
Secretary Bryan will send the new Co.
lombian treaty to the Senate for ratifica-
ton tomorrow and will carry a draft
of the proposed treaty with Nicaragua &c
the Senate Committee on Foreign Rela-
tons. II is predicted that he will have a
difficult time with these two measures.
4 member OF the firm of Seligman &
! Co. expressed establishment yesterday
| that Senator Smith had made his Mica
ragua charges without first making ar
investigation, and said that his firm
would welcome an inquiry into its inan.
cal relations with the Central American
republic.
He admitted. having been interested ir
the purchase OF the National Railroad o.
Nicaragua. but said that not a cent OF
profit had been made from its operation
and that the firm participated in the pur-
chase much against its wishes He also
said that Seligman & Co. had bought the
Ethelburga syndicate bonds without com
| missions.
At. the offices OF speyer & Co. it was
said that the firm had never made any
| hoJ hnp