Evening star., 1932-07-04
BOLIVIA CREDITS
IN i. S. S59,425,O(1)
American Investors Lose
Nearly $6, 900, 900 Annual
Interest on Loans,
Note: This is the last in a series OF
articles on South and Central American
loans foated in the United States.
BY DIR. MAX wINKLER.

BY DIR. MAX wINKLER.
Special Dispatch to The Star.
NEW YORK, July 4-within the
relatively short period of IL years, the
South American republic of Bolivia
succeeded in accumulating debt in the
United States amounting to $50, ,425 500
This is the outstanding amount OF
original issues with a par value OF
S79 $50 900 contracted during the period
1e17-1928, equivalent to an auual rate
of almost $6,000,000.
It is needless to point out that the
improvement in the country'S economic
conditions never justified so rapid an
increase in its funded debt, which, due
to the almost complete dependence fol-
its prosperity upon tin, constitutes
real burden upon the nations treasury
unless tin commands a high price IN
the world markets.
AS a result of the collapse in the
price of the metal, together with 9
decline in the price OF practically all
commodities, the situation in Bolivia
turned definitely for the worse. The
inevitable happened. Interest and
sinking fund payments on external OBJ
legations were suspended and. judging
by the prevailing conditions in the re-
public, the outlook for an adjustment
at an early date does not mold a great
deal Of promise.
Current Prices OF Bonds.
This is also adequately brought out
by the current prices OF Bolivian bonds,
which have q market value of less than
81, 900 900, as compared with a nominal
or par value of well over $53 ,000, 900. A
rather dear price which American in
vestors are being called upon to pay
for the privilege of placing their funds
in bonds Of Bolivia.
To the student of international finance
a peculiar question presents itself, espe-
cially when he compares Bolivian
financial transactions in the United
States with the country's borrowings In
European markets prior to its appear
ance in this market for financial ac-
ccmmodations.
Over a period of So years, Bolivia
contracted leans in the London and
Paris markets to an amount Of less
than S25 900 900, or at an annual rate
of only $469, 500. The period Of Euro
pean borrowings covers the years 1872
1924. and 1t is significant tnat all these
loans have been retired or redeemed
In other words, the complete collapse
of Bolivia's credit does not affect
British investors, either individuals OF
institutions; whereas the nations de-
fault affects most seriously the Ameri-
can investing public, which holds today
rather large amount of Bolivian OBJ
legations
A table presenting salient features
regarding Bolivia's borrowing in the
United States, compared with that ef-
fected on the continent, is presented
hereunder:
Little announcement can be held out
for American investors who have stakec
their funds in Bolivian issues. The
principal source of revenue is tin, which
has declined in price to level where
the cost of production, low though II
is, is insufficient to warrant the con-
tinued operations of Bolivian tin mines
In consequence, the income from the
tin mining, at best, will be very ma
terially reduced, if not altogether elimi-
mated.
One of the most important invest
ments in the republic is that of the
National Lead Co. This company has
acquired a controlling interest in the
Patino' mines. which own and operate
the largest tin properties in Bolivia
The Guggenheim concern controls the
Caracoles tin properties, through cor
poration formed in 1922 under the laws
of Bolivia, with capitalization of S40,-
100000, Of which $16,00o,000 are under
stood to have been issued and fully
paid. Through this concern the Gug-
genheims own a substantial interest ir
the British-American Tin Corporation
capitalized at S5,000,000.
Other Investments.
American capital is also interested ir
the Bolivian Power Co., organized under
the laws of Nova Scotia to operate light
and tramway undertakings in La PaZ
under concession from the Bolivian
government. The concession expires ir
1850 and includes, among others, q
contract to supply all public lighting
In the city. The Standard Oil inter-
ests own the Standard OIL Co. of Bo-
livia, formed in 1921 as a subsidiary OF
cessions, for approximately 100000
acres Of oil-bearing lands, the conces-
sion covering period Of 55 years
capitalization is given as $5,000,000.
There is also American capital in
vested in the Bolivia Railway Co.. built
originally by Connecticut corporation
but taken over later by British inter-
ests. Some of the corporations securi-
ties were marketed in the United States
through American banking houses.
Given peace and tranquility, the re-
sources Of the republic could be de-
veloped to the great advantage of Bo-
livia as well as to that of foreign in
tereSts. Further influx of capital, how
ever, is dependent upon the attitude
which the present Bolivian administra-
ton will take toward its existing obi
cations. Including the bonds referred
to above, United States investments In
Bolivia at the beginning of this veal
amounted to 1922, ,723,0 900, of which
SCI $4,000 represented so-called direct
investments. Prior to the war Amer
! ica's stake in the republic was esti-
mated at about S10,000,000.
Analysis of the growth of American
Investments in Bolivia reveals conclu-
sively that capital was poured into the
country much faster than was war
| ranted by the development OF the coun.
try's resources. American investors are
now called upon to pay for the speed
with which loans were sold on behalf
OF their southern neighbor.
copyright, 1892, by the North American