The New York herald., 1922-06-17
Private Ownership Of Rail
roads and Five Years of
Grace on Foreclosures.
SOME INTEREST WAIVED
Result Of lamont and Huerta
Negotiations Is Likely to
Help Recognition.

After months of negotiation, ar
agreement was reached yesterday be-
tween Adolfo de Ia Huerta, Mexican
Finance Minister. representing his
Government, and the international
Committee Of Bankers on Mexico, COW
ering the external debt Of the Mexican
Government. This settlement is con-
sidered in financial circles as a big
step toward restoring to Mexico her
position among nations and toward
her recognition by the United States
Great Britain and other countries
which have so far failed to recognize
the Obregon Government.
The agreement was signed about
o'clock last evening by Mr.. de la
Huerta for his Government and by
Thomas w Lamont, chairman. and
I. Fl. Patchin. secretary, for the COM
rnittee. The agreement was made
subject to approval by President Obre-
gon. but his acceptance Of the docu-
ment is expected at any time.
In announcing that the committee
had reached an agreement with the
Mexican Governments representative
Mr.. Lamont gave out the following
statement:
Finance Minister de Ia Huerta and
tho international committee OF bank
ers on Mexico Yesterday afternoon
signed comprehensive agreement
covering the matter OF the Mexican
Governments external debt. The
settlement arrived at Is. as stated
earlier In the week by the Mexican
Minister, subject 20 the approval OF
President Obregon.
AS preliminary the agreement re-
cites the determination OF the Mexican
Government 70 fulfill its obligations t.
the full extent OF its capacity and
states that the international commit
tee recognizing the difficulties of the
situation caused by the revolution and
desiring to cooperate with the Govern
ment In promoting the full economic
restoration OF Mexico as rapidly as
possible, will recommend that the
bondholders make substantial adjust
ments OF their rights.
Important Points Covered.
The more important points covered
In the agreement relate to the hand
ling Of current interest. arrears of in
terest and the railways. The plan Of
adjustment relates TO all external
Mexican Government debt, direct or
guaranteed. the National Railways
lxtSt rartu IN Internal
Government debt largely held outside
Mexico: the total face value Of the
securities covered being over $780,
o0o. 900 gold, on which the interest In
arrears amounts to approximately
5000, 100000.
AS to current interest. cash pay
rnents. In varying proportions among
the different bond issues. are to be
begun after January 2. 1923. out or
special fund as provided for In the
agreement; the schedule OF disburse-
ments in general to be based on the
relative values and priorities OF the
different issues of bonds. For such
part of current interest as Is not III
cash. scrip will he issued and re
deemed in due course, certain furda
being made available for this purpose.
The special fund for current Inter
est &c will be increased each year
until January /. 1928. when full SER
vice of the debt will be resumed. The
oil export taxes and a surcharge on
railway gross receipts Will be paid
into this special fund.
AS to back interest, all cash pay
rnents are to be waived. The matter
will be arranged by the deposit OF
overdue coupons with trustee.
Against these coupons receipts will be
issued. TO be amortized without In
tercst over n period OF time. This ar
rangement Is. IN effect. equivalent to
cancellation OF part OF the back In
terest
AS to the railways. they are to be
operated by private management as
before the revolution. The Govern
ment will assume by Endorsement all
railway debt not previously guaran-
tied. The rights OF foreclosure hith-
erto held by the bonds will be sus-
pended SO long as the plan Is being
carried out, thereby protecting both
the stock ownership of the Mexican
Government and other shareholders.
as we'll as the ultimate rights of the
bondhoders.
In general, In order TO give time for
full resumption OF all cash obligations
all classes Of bondhoiders are to agree
to temporary suspension OF sinking
fund rights, &C, during five year
period, after which all contract clauses
will again become effective. Full de-
tails OF the plan will be submitted to
the bondholders by the committee as
soon as possible and deposits will be
invited by the banking houses and in
stitutions hitherto identified with
Mexican Government financing.
VIII Hasten Recognition.
IL is the belief in financial circles
here that the agreement will hasten
very materially the recognition by the
United States of the Obregon Govern
ment In Mexico. In England. too. II is
expected to have the same effect, for IL
has been said in Parliament that the
recognition Of Mexico would depend en-
tirely upon her arrangement to take
care of her defaulted debt. The other
Continued on Page Five.