Evening star., 1932-01-08
Everybody's
Business
Wall Street Financier Insists
American Bankers Exer-
else Same Care IN Max
ing Foreign Loans as They
Do IN Other Similar
Transactions.
BY DIR. MAX WINKLER.

Special Dispatch to The Star.
NEW YORK, January 8.-R. 0. Hay
ward, partner in Dillon, Read g. Co., and
in charge of the firms Latin American
deals, insists that, in general, American
bankers exercise the same care in for
eign business as at home.
Mr.. Hayward was commenting on the
statement made in Washington by
Grosvenor M. Jones, chief OF the finance
division of the Department OF Com
merce. that despite Mr. Jones warning
against Bolivian loans the State Depart
ment had interposed no objection.
Mr.. Hayward went into details regard
ing the loan specifically referred to by
Mr. Jones, the per cent issue OF 1928.
Three-Year Inquiry.
"This loan," he explained, was Of
fered to the public after series OF
studies of the Bolivian situation and
negotiations with Bolivian representa-
tives, who were sent to New York for
the purpose, lasting for three years be-
fore the loan was actually issued.
During this time the Bolivian gov
eminent sent three delegates or repre-
sentatives to New York to supply all
requisite information. The primary pur-
pose Of the loan was to clean UP all
outstanding Bolivian government obli-
cations which had been contracted IN
years past In various countries at var1-
Gus rates of interest and which were
cumbersome to the Bolivian treasury,
because they had been secured by liens
on miscellaneous Bolivian government
revenues.
"Of the total amount of s23 900. 900,
approximately $15,000,000 was devoted
to paying off outstanding loans and to
the funding of the debt of the Bolivian
treasury to the principal bank In La
Paz, Bolivia, that new central bank
might be created along the lines sug-
gested by q commission OF American
economists who had been in Bolivia for
the purpose.
Among these debts was an out
standing obligation to Vickers Ltd, in
England, for supplies for the Bolivian
army In consideration of immediate
payment of this obligation, rather than
its payment over a 10-year period, the
English firm reduced the debt almost
half, effecting a saving Of several mil
lion dollars to the Bolivian Treasury.
"Of the remainder, S4,000,000 were
applied toward the completion Of the
Potosi-Sucre Railroad, which was neces-
sary that Bolivia might obtain the full
benefits OF the considerable sums al
ready invested in the road. Conse-
quently, after deducting the discount
covering the cost of the issue, only ap-
proximately $2,300000 remained free
for the Bolivian treasury to spend, and
in effect the total loan added little, II
any, to the net debt of the treasury"
Seek Up-to- Date Data.
"Why haven't the bankers consulted
the Commerce Department in regard to
the quality of pending loans?" Mr.. Hay
ward was asked.
"Our views regarding the merits OF
issues" replied Mr.. Hayward, were
based exclusively upon the very careful
examination and Interpretation Of what
ever information we were in position
to get. AS a rule, this information is
obtained at q considerable expenditure
and is, as far as we are BILE to judge,
absolutely up-to-date. To certain
extent that Is not true of the statistical
data obtainable at the Commerce De-
partment.
Furthermore, we never consulted
with the Department OF Commerce re-
garding the merits Of proposed loans,
but directed our inquiries to the State
Department. In any event, the sensa-
tional revelations which some had
hoped to obtain as a result Of the
investigation have not been forthcom-
ing, because, by large majority, the
same care was exercised by American
bankers in connection with foreign
deals as they employ with respect to
the domestic situation.
"It is to a certain extent regrettable
that much ado is made out of moth
ing, or, at most, out of very little. It
is likely to react upfavorably in Latin
America, where some minor officials
might be led to believe that, in view
of alleged Irregularities, they would be
justified in adopting an Indifferent
attitude toward their external debts.
This would be most unfortunate.