Evening star., 1932-01-28
MELLON D!SC[A|MS
PART IN BOND DEAL
Denies Interest in Colombia
Concession and Loan
FIoated in U. S.
By the Associated Press.

BY the Associated Press.
Extended echoes Of sensational
charges made in the Senate investiga-
ton of foreign bond sales have drawn
from Secretary of the Treasury Mellon
a direct denial that he had anything
whatever to do with restoration of the
Barco oil concession in Colombia to the
Gulf Oil Co.
Because this enormously valuable
oil field was opened again to the COM
panv of which Mellon is a stockholder
about the time that S4,000,000 loan
long held up-Was made to Colombia by
an American banking house under some
State Department pressure, the case
became the most conspicuous in the in
vestigation.
The hearing, conducted by the Senate
Finance Committee, is now closed. AS
its result the group turned today to
study of legislation designed to put a
strong curb on future international
loans.
Large Profits Shown.
Through several weeks the committee
has piled up a record showing profits of
millions were made by American bank
ing houses on sale of foreign bonds to
American investors. These have lost
enormously through the general shrink
age in market values. accentuated in
some cases by the poor condition of the
borrowing nations and by default on
some issues. The total of foreign bonds
f1oated in this country since the World
War has been estimated at $4,000, ,000,-
900, but the committee has not estab-
lished the figures definitely.
The record bulgeS with intimations
of bribery; improved charges linking
valuable concessions to the making OF
loans: assertions that bonds f1oated in
this country served to maintain Latin
American relationships. 1t has been
testified some bankers ignored warnings
against making unsound loans.
What finally persuaded Mellon to
issue a statement was a recent broad
cast by Senator Capper, Republican, of
Kansas, who said some people in high
places in this Government appear to
have betrayed their trust" in connection
with the Latin American deals He
showed definitely he was speaking of
the B3rcO case, making one reference
which was clearly to Mellon.
Johnson Sponsors Bill.
The measures for control Of further
foreign loans which we're before the
Finance Committee today, are the offer
lngs of Senator Johnson, Republican,
of California, the man responsible for
the entire investigation.
In one he proposed creating a for
eign Ian board" composed of the Sec
retaries Of State and Commerce and
the governor of the Federal Reserve
Board, to pass on all loans to other
countries.
The second would require public re-
ports to the Secretary Of Commerc on
the terms of the loans and the esti-
mated profits
The Mellon statement follows:
"A persistent effort has been made to
connect the granting of the Barco Oil
concession by the government Of Co.
lOmbia with the granting of loan by
American bankers to that government
and to imply that improper influence
was exercised in order to bring about
the granting of the concession.
These indirect charges and innu-
endoeS have recently received wide
spread publicity through speech
broadcast by United States Senator
InasmuCh as I am stockholder in one
of the companies interested in the con-
cssSion and I have been definitely
drawn into this matter, more particu-
~
proper to state the facts.
II had no knowledge of the granting
OF the Barco concession. which, it is
said, was coincident with the fulfill
ment Of credit obligation. I had no
knowledge at any time Of any contract
by bankers to grant a credit to the Co.
lombian government. I never knew
that such a credit had been granted or
fulfilled until the Senate hearings.
Denies implications.
The record before the Senate Com
mittee indicates that the Barco con-
and that the S4000,000 credit obliga-
ton was met on June 80. 1881. I left
Washington on my way to Europe on
June 5, 1881, and did not return to
this country until the end of August.
All of these transactions took place dur
ing my absence. 1 had no knowledge
before I left Of any negotiations then
pending, If they were then pending,
relating either to a bank credit or to
the Barco concession. did not discuss
this loan with the Secretary of State,
any official Of the State Department or
any one else.
THE suggestion that I participated
in or in any way concerned myself, di-
rectly or indirectly. with these trans
actions is entirely without foundation
in fact, and the Senator was evidently
misinformed.
1T may be observed that Assistant
Secretary White in his testimony before
the Senate Finance Committee def
nitely established the fact that the
agreements by the bankers to open the
credit were made in June and october,
1880, several months before the granting
of the concession. The only question
involved in June, 1881. was the fulfill
ment of a definite obligation previously
made"