Arizona republican., 1922-06-17
MEXICO DEBT.
Adjust MEN I
PACT SIGNED
IN new YORK
Finance Treaty Drafted
Covering Securities Hav-
ing A Face Value Of
S500,000,000 Gold

NEW YORK, June ia plan for
adjusting the entire external debt
of the Mexican government. the ma
tfonal railroads debt of that country
and certain so-called internal debts
held largely outside Of Mexico, was
agreed upon today by the interna-
tional committee of bankers on Mex
ico and Adolfo de la Huerta. finance
minister of the republic below the Rio
Grande.
The agreement, which is subject to
the approval of President Obregon
covers securities with a face value
exceeding $500. 100000 in gold on
which the interest in arrears approx
mates 5000 100000
Under the agreement cash pay
ments on current interest are to be-
gin after January 2. 1928, out of a
special fund into which will be paid
the oil export taxes and surcharge
on railway gross receipts.
All cash payments as to back inter-
est are to be waived. Overdue cou-
pons will be deposited with a trustee,
and the receipts for the coupons will
be amortized without interest over a
period of time. this arrangement in
effect, being a cancellation of part of
the back interest.
Govt To Release Railroads
The railroads of Mexico are to be
returned to private management
promptly The government will as
sumo by endorsement all railway debt
notes already guaranteed by it.
Iil order TO give time for full re-
sumption Of all cash obligations. all
classes of bond holders are to agree
TO a temporary suspension of sink
ing fund rights etc. during a five
year period
After the. agreement had been
signed tonight by Mr.. de la Huerta
on behalf of the Obregon administra-
tion and Thomas Lamont on behalf
of the bankers the international COM
mittee issued. the following state
Eaept;
Finance Commissioner de Ia
Huerta and the international commit
tee of bankers on Mexico. this after
noon signed a comprehensive agree
m6flt 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 to the approval of
President Obregon.
AS preliminary. the agreement
recites the determination of the
Mexican government to fulfill It's OBJ
legations to the full extent of its ca
pacity and states that the interna-
tional committee recognizing the diff
ficulties of the situation, caused by
the revolution and desiring to CO.
operate with the government in pro-
noting the full economic restorat tion
of Mexico as rapidly as possible Will
recommend that the bondholders
make substantial adjustments of their
rights.
..The more important points COW
cred in the agreement relate TO the
handling Of current interest, arrears
Of interest and the railroads. The
plan OF adjustment relates to all ex-
ternal Mexican government debt di-
rect or guaranteed the National rail-
way debt and certain so-called inter-
nal government debt, largely held
outside Mexico. The face value of
the securities covered being over
$500 100000 gold on which the inter-
lest in arrears amounts to approx
mately 200,000,000.
"As to current interest cash pay
ing proportions among the different
bond issues are to begin after jan
Iary 2. 1928 out of a special fund as
provided for in the agreement; the
schedule of disbursements in gen.
cral to be based on the relative val
ues and rriorities of the different
isues of bonds. For each part OF
current interest as is not met in cash,
scrip will be issued and redeemed
in due course, certain funds being
made available for this purpose.
sThe special funds for current in
terests, etc, will be increased each
year until January 1, 1928. when full
service of the debt will be resumed.
The oil export taxes and a surcharge
on railroad gross receipts viii be
paid into this special fund.
Waive Cash Payments
"As to back interest, all cash pay
ments. are to be waived. The mat
ter will be arranged by the deposit
of overdue coupons with a trustee
Against these coupons receipts will
be issued, to be amortized without
interest over a period of time. This
arrangement is in effect equivalent
TO cancellation of part of the back
interest.
las to the railroads they are to be
operated by private management as
before the revolution. The govern.
ment will assume by endorsement
all railway debt not previously guar
anteed. The right of foreclosure
hitherto held by the bonds. will be
suspended so long as the plan is
being carried out, thereby protect
ing both the stock ownership of the
Mexican government and other
shareholders, as well as the ultimate
rights of the bond holders.
In general, in order to give time
for full resumption of all cash obliga-
tions, all classes of bond holders are
TO agree to temporary suspension of
sinking fund rights, ETC.. during a
five-year period, after which all con-
tract clauses will again become ef-
fectiye. Full details of the plan will
he submitted TO the bondholders by
the committee as soon as possible and
deposits will be invited by the bank
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