Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-02

Defaults In Interest.
The disastrous decline and continued
weakness in the price of the principa,
produces of Central and Sonth Alnerica
made It increasingly difficult I'd con-
tinue the service on foreign loans. And
here, again, method SO well known
throughout the nineteenth century was
reSorted to-suspension of payments or
contractual obligations.
Chile is the latest addition to the
ranks of defaulting Latin American
governments. Not to be outdcne by
the neignboring republics Of Bolivia
and Peru, Chile, too, staged revolu-
ton of its own, overthrow the Ibane2
her foreign debt. The significance to
the United States of developments in
Chile is best evidenced from the fact
that American investments in the
country are larger than those in any
other South American country, with
the exception of Argentina.
At the beginning of the current
year they were placed at $6o7, 1O2. 800
(Chilean sources place Americas stake
in the country at more than $780,
000,000) and compare with only $15,-
100000 in 1913, an increase much more
impressive than that of Americas
commerce with Chile during the same
period, which advanced from $50, SOC, 900
In 1913 to $101 100000 last year.
Distribution Of Investments.
OF Americas total investments in
Chile $311, 1867 900 is represented by
government and municipal issues, while
the remainder represents so-called dl-
rect investmentS-that is, commercial
and industrial properties situated IN
Chile and belonging to residents OF
the United States, and including IN
vestments in mines, manufacturing in
dustries, public utilities, railways, bank
ing and merchandising establishments.
Chile's own trade increased from
$269, 100, 900 in the last pre-war year to
1925, 90O,0 900 in 1880, a. gain of about
% per cent, indicating that American
investments in the country have in
creased somewhat out Of proportion to
the increase in the country'S productlv-
ity. It is Of interest to note that Great
Britain's investments in Chile which
prior to the war, were estimated at
about $685., 100000, amounted, at the
beginning of last year, to about $500,
600 000-a gain OF only II per cent
while Englands trade with Chile de-
clined from $9l, 657 900 in 1918 to $54,-
400, 900 last ysar; a shrinkage Of more
than 40 per cent.
Americas recent experience along
economic and financial lines with her
Southern neighbors may serve as guide
to future transactions. Loans to foreign
countries are highly beneficial, If the
terms on which they are contracted are
reasonable; if they do not infringe upon
the sovereignty of the borrowing coun-
try: If the proceeds from the sale OF
loans are employed productivity; If the
borrowing country Is prevented from
accommodating a debt, the service on
which is not within the nations ca
pacity, and If loan contracts are signed
by governments which are really rep
resentative Of the peoples wishes.
Chilean Attitude Toward Loans.
American holders of Chilean securi-
ties should, however, bear in mind that
Chile's conception of contractual obli-
cations is somewhat different from that
Of some of her neighbors, and that the
nation will do its utmost to remedy the
situation at the earliest possible oppor-
tunity.
(Copyright, 1881. by North American News
paper Alliance, Incl