The New York herald., 1921-11-20
Many Bond Issues, Especial
ly of States and Cities,
Are Looked For.
TRANQUILITY rs NEEDED
All Sources Of Revenue Show
Heavy Decline, Except for
Alcoholic Beverages.

beecfdI Despatch to THE NEW York HERALD.
MEXICO CRY, Mexico. Nov. 19.-Al-
though Mexico's national treasury is
threatened with deficit of 121 ,000, 900
pesos, or s60500.0 900, and the Mexican
Government may not be in a position
to begin to pay the foreign debt for
several years, great numbers Of Ameri-
can bankers continue to come to this
capital for the purpose of making con-
nections through which they may OBJ
tain the handling Of some of the fu-
ture bond issues. Among the visiting
financiers are also bankers from Can
ada and some Of the countries of
Europe.
All seem to be convinced that Mexico
Ii potentially great investment field.
despite the threatened deficit and the
present quotations on Mexican securi-
ties in the stock markets Of the world
One Of the visiting bankers deried
that he or others like him were roed-
d ding with international or national
financing. . He said that most Of the
officers Of banks who have come to Mex
leo are interested in the prospect of
handling smaller issues Of bonds by the
States of Mexico or the more important
cities. He admitted that in the th-ong
of financiers there probably were some
bankers or brokers who were afflicted
with exaggerated ego or a foolish desire
to pose in Mexico as Of great Importance.
Bankers Quietly Investigate.
These men. he said, might at times
meddle with financial problems too great
for them or the interests they represent.
but he declared that most Of the bankers
fn1I nv,1 n In
course, making their Investigations
quietly and without inviting attention
here. He criticised those bankers who
made a pretence OF negotiating with
Adolfo de la Huerta, Secretary Of the
Treasury. saying that the only possible
financing at present would call for the
attention Of powerful groups of bankers
such as the group recently represented
here by Thomas w. Lamont OF j. p.
Morgan & Co. in his conferences with
President Obregon and Mr.. de la Huerta.
Bankers believe that in time there will
be, a great number Of bond issues in
Mexico similar to the flood Of State,
county and city bonds I'm recent years
In the United States and Canada. But
as Mexico's national securities are sell
ing at 80 or 40 cents on the dollar par
value and the securities Of the States
Of Mexico are selling at 20 or 80 cents
70
But as Mexico is country with great
potential wealth, the banker said, there
Is little doubt that. with continued in
ternal tranquility, conditions will soon
invite the investor, especially as Mexico
greatly needs money for development
and probably will pay a high rate of
interest.
Money is in such demand in Mexico
that In many sections as high as 12 and
fo Axv 49,
er. This high interest is exacted in
many cases by banking institutions that
are reputable What the Shylocks and
harpies of finance charge is not known.
But the high rates paid, the banker said,
show that legitimate bankers could make
great profits in Mexico by cutting exist
ing interest rates In half II convinced
that their investments would be safe.
Bankers in the field can watch their
loans. These financicrs know the men
with whom they are dealing and can
keep In touch with them, ready to act to
protect themselves at any turn. But the
foreign banker must devote his atten-
ton to loans that do not call for con-
stant watchfulness.
Where Foreign Bankers Look.
For this reason. most bankers coming
to Mexico arc Interested In future issues
Of State and municipal bonds. Every
State and every city in Mexico would
borrow II It could to carry on public
improvements There arc twenty-nine
States and moro than fifty prosperous
cities and towns In Mexico which need
financing.
The States need money with which "a
extend school systems, to build good
roads connecting cities and to carry out
other public improvements.
Tho cities need money for street paw.
ing. new water systems, new lightins
systerns and 0eaer purposes.
Road improvements ey States and
street paving improvements BY cities
aye insistently needed Bad roads con-
stituta ono Of tho greaA barriers "a
progress in Mexico.
But Mexico's unpaid loans are stfr,
as red nag Of warning to bankers and
investors. The Mexican national Gov
ornment owes certain definite amounts
represented by bond Issues. and certain
Indefinite amounts. represented by claims
OF foreigners because of damage suf-
fered during the revolutions and from
other obligations. Outstanding bonds
and unpaid interest amount TO about
s25o.000.000.
Tho amount 10 be paid for damage
done IN the revolution may be e300, ,000,-
z 900 or s4oo, 100000. Mexican Govern
rnent officials think That the total will
not exceed $75.000.0oo. But the claims
filed here and in Washington. London.
Paris and other capitals must be cut 75
pcr cent. or more II the amount to be
paid 10 kept at SIS. 100000
Mexico has also guaranteed the pay
ment Of various bond issues. These in
ci,ide 100000. 900 securities. with in
tcrcst, of the railroads. end bond issues
by States aggregating about $500. .o00.-
900.
Government TO Prod states.
II Is understood that the Mexican
Government will insist that the State
Governments take early steps toward
payment of debts, as the national treas
ury 10 too burdened to help the States
20 any great extent. In fact Mexico
roeds a loan as badly as any OF its
states or of any city within its borders.
This national loan probably will pre-
code any other loan in Mexico. Before
bankers would send their money here for
t1e use of States and cities, II Is said.
Mexicp's national credit must be recs-
tsblished on a solid basis. When loan
is granted by the great banking groups
Of New York, the nations credit may be
considered as recstablishcd, but before