Evening star., 1932-01-12

The Senate Finance Committee had
before it today the full text of memo
randum prepared by Oliver G. Town
send, former commercial sstache at
Lima, which shed further light on con-
ditions under investigation, involving
Perus huge bond issues, now IN default.
Townsend, who was at Lima from De-
cember, 1926, to December, 1929, told
the committee yesterday that he had
been instructed by the Bureau of For
eign and Domestic Commerce to send
favorable" reports after he had warned
the Commerce Department that he felt
the bonds were unsound.
Senator johnson of California read
ToWnsend's memorandum, prepared
when the latter was in Peru. saying
that Juan Leguia, son of the then Presi-
dent of Peru, takes his share Of the
swag." The committee was told last
week that Leguia received $415,000 for
helping arrange the loans.
The memorandum described dinner
given to Leguia and other Peruvians by
S. A. Maginnis, former American Minis
ter to Bolivia, who was in Peru to nego-
tiate the bond issue.
The full text follows:
Tuesday nights dinner-given at the
Hotel Bolivar by S. A. MacGinniss to
so odd guests, was fair sample of
what the local society folk are treated
to at rather close intervals-namely-
entertainment by promoters seeking
faVors of one sort or another from the
Government.
Our host-who was Minister to
Bolivia during the Wilson administra-
ton, is here with big entertainment
fund in the interest of (J. & w. Selig-
mani a New York banking firm, to bid
on the securities shortly to be issued
as part of big refunding loan.
THE ex-Minister is big chap of
about Sex man-probably
lawyer by present professionalism
voiced-glad-hand little short
of being offensive in his jovial famili-
arity. One wonders how and why such
a persnS, + selected as a representative
of important Latin American interests
A reasonable guess is that the bankers
are led to believe that person having
intimate knowledge of what is repre-
Sented to them as a delicate but we'll
| organized graft system, of which the
President and high officials of the local
Government form a parts the only
agency through which they can accom-
plish their objective.
1T would bel suspect-a revela-
ton of gullibility to listen in on the
confidential talks between the bankers
and MacGinniss as he outlined to them
his particularly unique fitness for the
game of getting the best of all COM
petitors on this job of securing the
coveted securities to be resold to Amer
ican investors.
Being an ex-Minister,' I can hear
him say, I naturally have an already
established entree to the President.
This game of fixing Presidents and off,
cials of South America republics is one
in which I am expert. Sure, they all
take graft-but it must be handed over
in just the right way SO that no evi-
dence is left upon which a future
scandal can be built-and it must be
done with delicacy to avoid hurting the
peculiar type of sensibility common to
Latin American President
| The bankers swallow it-line the
promoters pocket with expense money
agree to pay him a commission if he
succeeds and pass unquestioned what
sums he says he paid out to state Off
cials who are of the system. If he
brings home the contract he's great
negotiator-if he doesn't he manufac-
| lures an alibi as specious and untrue as
was his original representation. It's a
great life-the promoters.
However, his dinner was picturesque.
Our Ambassador his lady, the secre-
taries and attaches represented our en-
bassy force. Col Juan Leguia was
asked so that the home folk might have
evidence of the negotiator's familiarity
with the family of the President. Don
Juan plays his part well, even, it is said,
to the point of going $3.50 with the
promoters who charge their clients with
certain round sums as paid out for
graft.
Those who have watched the part
played by the Presidents son say that
| he is clever-takes his share of the swag
never bothers father by asking favors
in behalf of his promoter friends. and is
always willing to serve as blind tiger TO
ambitious negotiators who know the