Evening star., 1932-02-07
US. Billions i'm Latin America
Continued From First Page)

the postwar years with a view to
avoiding political complications, has
itself been subjected to unfriendly
analysis Government officials abroad
have testified they were told to write
optimisticaIly about loans, and other
efforts have been made to smoke out
plots against the investors pocket
books.
Testimony has been presented that
tSe half of l per cent of the foreign
had .issues-wnica somebody always
gets as a promotion fee-had gone to
offCaa sSkase influence, if not the de-
terrnining factor IE she loan, at least
hXd been potentially negative until the
commission was arranged. There have
been charges that loans granted by i'm
portant financial institutions IN eX-
change for favors to private companies;
and in direct contrast, there have been
assertions chat many of the Latin
American loans were forced on unWlll-
ing governments and that the ultimate
sale price of the bonds was raised un-
iustifiably by the expensive efforts put
forth to induce the governments to ac-
cept the money.
Two major problems stand out. One
Is that of the investor. The other is
the future of our lending to Latin
America. a duty we must face as the
financial leader of the world
The problem of the investor comes
first. Indeed. it is upon recovery Of his
investments that the outlook for future
lending depends. Definite moves are
being made in various directions to
bring the bondholders together so that
they may present a united front IN the
discussions of debt rearrangementS
that must be made in the next lew
years.
Big Job Lies Ahead
Two general bondhoIders' committees
have been chartered, and one, the
Iatin-American Bondholders' AsSOcia-
tion is now functioning, taking men,
berships and issuing reports. The In
vestment Bankers Association has
taken no public steps toward organlz-
ing its own Latin American bond
holders committee. The bankers feel
that the investors interest is closely
tied in with their own, and that their
more intimate knowledge puts them in
a strategic position to represent the
bondholders. but as yet their plan Tor
organizing such a group has not been
made public.
Whatever NAV come of these organi-
zstions. a tremendous job lies ahead in
Strengthening out the tangled SkeinS
of a hundred investment units depend
ing upon a thousand economic and pO-
litiCal factors
Yet the nations whose credit is un-
der this close scrutiny, and the tlnanc-
ing methods of whose bankers here have
been so bitterly assailed in the public
hearings in Washington. are admittedly
the richest in potentialltles. IN the
world today: their future is the most
assured; their progress, step by step
through the centuries. has been the
sort of advance which makes optimism
as to their future inevitable.
The disclosures of the Senate inveS-
legations reflect in a number Of Spe-
cific instances on the methods follow
ed by investment bankers in arrang-
ing for loans and in floating them on
the market here Yet at least one gov
eminent in Latin America-and that
the most seriously questioned of all in
the bond situation-has had the good
sense to protest against the gratu1touS
reflections on its national credit as
brought out in the testimony. Bolivia,
whose bond issues of some S6000000O
are declared to have been unjustified
and perhaps even corrupt has pointed
out that the loans were made in good
faith and so used. and that the gov
eminent intends and expects to resume
full payment of interest and sinking
fund when commodities Cmeaning tin,
the great export item of Bolivia re-
turn to normal.
Still It is probable that Bolivia is
one of the two or three countries which
were loaned more than they could
handle. BY actual estimate of poten-
tlal revenue, at the time the loans
were made, virtually every couatry in
Latin America which borrowed in the
New York market between 1928 and
1929 was able to handle the interest
and sinking fund of the loans they is
sued. In some cases (like Bolivia at
least 25 per cent might have been
questionable property, but in the world
crisis which has followed the orgy of
lending, not only the 25 per cent but
much of the rest has gone into de-
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