Evening star., 1932-01-12
Peru Bond Deals Told
Full Text of Former u. S. attaches Memorandum
on Colorfnl Dinners Promoters Held at
Lima Barred in Probe.

ropes-and he's doing a good business
these days. There were present dozen
Peruvians representing the official and
social life, but no cabinet members-the
rest just plain society folks recruited
from all ionalities-younger married
people OF the dancing set mostly-and
they danced until 2, when the orchestra
folded its various types OF noises for
the night.
The host took advantage of the oc-
casion to make speech expressing his
Joy in meeting his Latin American
friends again His face beamed, his
voice rolled in what were meant to be
emotional cadences but weren't, his
arms waved in an attempt at unison
with the voice, and he looked the part
of ward politician at a Fourth of July
picnic. Col. Juan Leguia responded on
behalf of the Peruvians, saying he
didn't know what his host had come to
Peru for, but he was glad to welcome
him, particularly as he had succeeded
in gathering so many attractive ladies'
about his table and he had displayed a
discriminating taste in his selection of
champagne-that he hoped his stay
would last as long as his money did,
and that in the end he would leave, If
leave he must, feeling that both his time
and money had been well spent.
Ambassador PeZet peru to the
United States) also spoke some digni-
fed words of welcome to the Americans
in Peru, after persistent urgings by the
host of the ,evening, but the American
Ambassador steadfastly declined to rise
from his seat.
THE puzzle suggested to my mind Is:
Why has all this undignified scramble
and promotion atmosphere become an
accepted feature of the program for
disposing of an issue of government
bonds? There is something about
scrambling that is highly appealing to
Latin American officials-Who encour-
age the intrigue and delays accompany
ing thenl-as coy maiden f1irts with q
group of suitors-not in any spirit OF
indication, but for the long -drawn-out
pleasure afforded by the game.
"One would think that more satisfac-
tory results might be achieved by the
government If it were itself to first fix
the terms of its loans in accord with
international usage, and call for bids
for the issues of which it desired to dis
pose. Not only would 1t secure all OF
the advantages of competitive bidding
but it would conceivably save itself
something of the time and annoyance
which its representatives must suffer at
the hands of the importunate salesmen
promoters by whom it is beset, under
the system now followed, and the dig
nifty of the proceedings would be vastly
greater.
South American officials must realize
that their methods of procedure In
negotiating public contracts gives color
eigners-that graft really is an inherent
factor IN, oil official nepofjatiooc
James Brown, senior partner OF
Brown Bros & Co.-New York and Lon
don-passing through on the Lacania
Tour Thursday, talked about bond buy
ing in South America-in which he has
had a large experience. His attitude
is that the antiquated methods of ne
gotiation take so much time and effort
that his policy has become one of Let
George do it. On occasions his firm
participates in such loans after they
have been negotiated by other bank
ers-but he regards the actual nego-
tiations as undignified and the costs
which intertwine themselves into them
as unnecessary burdens upon the bor-
rowing peoples.
"Mr. Brown further explained that In
his opinion bankers should avoid the
practice of Offering such bonds to the
general public because of the uncertain
ties of interest and principal pay
ments. As investments they belong In
the safe deposit boxes of the rich who
make yearly investments in diversified
lists of securities from excess incomes
On the theory that even South Amer.
| lean states do not go permanently
| bankrupt, such investors are secure In
the ultimate recovery of both principa
and interest, but the small investor
who buys for income and is forced tc
take loss when interest is defaultec
should not be advised by bankers tt
buy such issues. The experience o.
English investors In Argentine bond.
sponsored by Barring Bros. in 1896
was cited to illustrate the uncertain.
ties from which investors for income
! should be protected by bankers"