Evening star., 1932-02-07

subsequent splitting up Of Greater CO.
lombia into Venezuela, Colombia and
Ecuador this debt was parceled out and
was lost in maze Of defaults, re-
findings and arrangements. Yet among
! the subsequent debts OF Colombia is
one for 100000, on which interest OF
Is per cent per year was promised and
paid.
The history of the Colombian loans
is typical and yet in the end the losses
to the investors were not heavy, and
since 1925, when the first Blair loan was
tioated in New York, the record has
been excellent
Perhaps most interesting of all is
thel fact that the financial record Of
Chile, whose first bond issue was made
In 1922, at about the same time as Co
lombia'S, is SO good that not one page
Of the annual report of the Council
of the Corporation OF Foreign Bond
holders of London is devoted to it-un-
I'll the report just issued This report
is the factual record OF all defaulted
and repudiated government obligations,
and absence from its pages is the hall
mark Of probity and honor.
Early Period Recalled
The most notorious of all the Latin
American bond f1otations of the early
period was the series of issues brought
out in London and Paris between 1867
and 1870 for the construction of an in
terOceanic railway in Honduras. The
first was for &1,0O0,OOO, issued at 80 and
bearing 10 per cent. The second, is
sued in Paris, was for 50 ,4901O8 at 75
bearing 2-3 per cent interest. The
third, for $500, 600 issued Ostensibly
at 30 and bearing 10 per cent interest
and 3 per cent sinking fund. From
these loans Honduras received sixty
miles OF railway and 81 900 in cash;
all the rest was used up in commissions
for Honduras agents and English and
French brokers. The loan was de-
taulted until 1926 when the interest
then amounted to some f25 900 900, and
all OF the principal, excepting fl 300
OOO were dropped The fl 100000 debt
was accepted by Honduras and pay
mentS arranged over period of sixty
years. No one knows how much the
British buyers paid for these bonds. but
the last issue was certainly haWked
about London at about 90 instead Of
the alleged 80 selling price. The whole
affair was the subject of a lengthy and
rather unlovely parliamentary investi-
CATION.
The first era of Latin American
financing ended in burst of such
scandals through all of which the
Latin American countries were given
to feel that they were both pariahs and
victims OF the SharpeSt sort of dealings
There was little or no industrial de-
VelOpment, even in plantation crops
and mining, through the first period
Mining was primitive and undeyelOped,
Peru, selling guano for fertilizers, was
the only great exporter. Brazil had
begun the production of coffee about
1890. There was little other interna-
tional economic life.
The period from 1880 to 1914 was the
era of the chief British investments in
Latin America, primarily in railways
Secondarily, their money went into
port works, in which the French also
were interested, both obtaining long
and ruinOuS concessions. The third
type Of British investment was in in
duStrial enterprises, chiefly in the ex-
tractlVe industries. Early investments
of United States money. in mines
chiefly, were made during this period
The third era of Latin American
financing begins with the close of the
World War, although even earlier there
had begun the application of modern
methods and Soundly financed enter
priSes to the mining, Oil and sugar in
duStrieS. Immense capital went into
these from the United States in COM
panies owned and controlled here In
this period although it began in Mexi-
co in l906) belonged the first heavy
investments from Canada and the
United States in electric power de-
velopments. To this era belong also the
investments in government bonds be-
tween 1923 and 1923. BY the end of
1880, when all investments dried up in
the great depression, United States in
veStments in Latin America had in
creased 339 per cent over the figure
in 1913, and 1872 per cent over that
of 1870