The Washington times., 1922-09-05
MEXICAN BOND
TO GET.
S25,O00,0O0
Will Set Aside OIL and Rail
Revenue to Pay
Investors.
BY MUNROE ROBERTS.
Copyright, 1922, BY cOsmOpolitan News

tcopyrignt. 1922, by Cosmopolitan News
NEW YORK, Sept. 5.-Foreign
holders of Mexican bonds will, In
the next five years, receive about
$25. 100000 In gold, under the agree
ment made between the internation-
al bankers committee and Finance
Minister de la Huerta Of Mexico, ac-
cording to the published reports of
the acceptance or that agreement by
the Mexican President, and pre-
sumdbly also by the Mexican Con-
gress. Under the terms Of the agree
ment, investors waive all claims to
interest on defaulted interest. and
the Mexican government agrees to
provide a fund from which the prin-
cipal sum and the interest coupons
can in time be paid In full.
There are three sources OF this
income: First, the entire proceeds OF
the oil export tax; second, 10 per
cent of the gross income of the ma
tional railways of Mexico; and, third,
the entire net operating revenue Of
those. railroads. The Mexican Presi-
dent announces qualification with
the final solution of an important
problem affecting Mexico's standing,
not only ~as a creditor, but as ma
ton desiring American Government
recognition.
While the bondholders made con-
cessions in the agreement arrived at,
they also have reason for gratifica-
tiop. A good many or them were We
cent purchasers of the bonds, and,
II conditions are carried out, will
receive more than the regular invest.
ment rate on their money.
American investors are naturally
interested in the cabled reports that
a new international debt conference
will be held in the near future. espc-
cially in view of the fact that the
American Government may partici-
pate in that conference. Belgium,
being greatly in need of funds, Is
anxious to have such a guarantee of
Germany's six.months notes that she
can cash in some OF these notes at
once. without recourse.
Our interest In the matter Is the
desire that all classes of government
bonds, listed on our exchange, should
remain in the investment, rather
than deteriorate to the speculative
class. The rating of foreign bonds
depends upon the financial stability
of the governments behind them,
and It would be extremely unfortu-
nate IL such developments took
place with French. Belgian, Italian
or any other European bonds which
should cause them to have a mar
ket course similar to the Mexican
bonds, which only now are beginning
TO be placed on a more substantial
basis.
The s per cent obligation of a first
rate European power should com.
mand a better-than-par price, and
the fact that 1t Is not doing so at the
present time is ample evidences of
the insecurity that our investors feel
in purchasing these bonds. II is to
be hoped that this condition will be
removed in time.
Investment bankers report q con-
siderable selling on profit taking in
recent weeks. There has also been
selling of bonds by investors who
look for a firmer money market in
the near future, a condition which
would operate against a higher price
trend in the bond market. Liquida-
ton by private investors Is not suf.
ficient to adversely affect prices of
prime bonds. especially OF Liberty
bonds. The heaviest purchases of
these bonds have been by banks and
fiduciary institutions. which are pur-
chasing them not for temporary fluc-
tuations, but for long-term invest.
ments.