Evening star., 1932-05-01
BY GASTONs NERVAL.

TN view OF adverse economic con-
ditions in the world at large. and
of unveiled facts surrounding the
4 methods employed ia bEinging
them about. it is to b regretted
that such harsh and unwarranted
comment should be current in the
United States in regard to Latin
American loans contracted in Wall
Street.
The more so, If one remembers that
the southern governments have eul-
phatiCally stated-once and again
their fixed purpose to fulfill their
financial obligations to the last dollar,
as soon as the severity Of the present
crisis has disappeared.
The proposed establishment Of an
organization to control foreign loans
has brought again, to the limelight,
the question of Latin America defaults.
And the misunderstanding Of the
situation not only by the public, but
also by some editors and Congressman,
has appeared evident, once more, from
the latter's utterances in the press
and at the Capitol.
Must Correct Impression.
I have had occasion, in previous
articles to comment favorably upon
the organization of some kind OF
foreign loans control. For the sake
OF both the American investor and the
Latin American borrower. such control
is advisable, although to be really
beneficial it should be independent OF
government influence.
But the setting up Of a special
board to supervise foreign loans from
now on Is not the only problem. II
inter- American financial relations are
to be continued successfully in the
future, the wrong impression created
here by the Latin American defaults
Of last year must be done away with.
The harsh and exaggerated comments
made in this country in reference to
those defaults may, otherwise, cause
considerable harm. Not only in
destroying, for many years to come,
the confidence Of the American public
in Latin American bonds, but also
in alternating the good will Of the Latin
Americans toward their creditors.
There are three fundamental reasons
why such unjustified comments should
be stopped
In the first place, the Latin American
countries are the victims OF situation
for which they cannot be made re-
sponsible. The main cause Of their
financial difficulties is to be found in
the enormous decline in the prices OF
commodities and raw materials, on
which their whole economic life was
centered.
With a few exceptions, the Latin
! American are countries depending
entirely on one or two single products,
The extraordinary fall in prices which
| has been the major characteristic OF
| the present crisis, therefore
by the evils of overproduction-has
upset the economic structure Of nearly
every one Of them, by cutting down tc
| half. or a third. the price of the
| particular commodity which constt-
! tuted the bulk of its exports.
Prices on coffee have affected Brazil
| Colombia. Nicaragua, Costa Rica
Venezuela, Guatemala and Haiti, some
of these countries being dependent
almost exclusively on their coffee
exports. Sharp declines in sugar prices
have been felt in Cuba, the Dominican
Republic, Brazil, Colombia and Peru
Cuba practically Elves" on sugar.
Chile, Mexico and Peru have suffered
drop in copper prices. The decline
| in the price of tin has injured par
| ticularly Bolivia, where about 80 pei
| cent OF all exports is tin Even more
pointed declines have been registered
in wheat, corn, and other agriculture
products which, though primarily
affecting Argentina, are also reflected
| in conditions in Uruguay, Chile, Brazil
| Colombia, Mexico, Peru. And SO on
The blame for the crisis cannot be
laid upon the governments Of thoSe
| countries. Depending largely on their
exports to cover their expenditures and
| meet their foreign obligations, they
| have been forced. by this uncomfortable
decline in values. to cut down theiI
| budgets TO minimum, to create new
taxes, to compromise their credit, and
to face the worst general economic
| depression they have experienced il
| years.
| Foreign Debts Increased.
| In other words, the Latin American
governments have seen their foreign
| debts suddenly doubled, or tripled, a:
result of this decline in the price Of
| their major exporting products. Fol
| they are compelled, today, to sell two
| or three times as much OF those
products as they did three years ago
| to get the money required to hquidate
their financial obligations abroad. And
still the worst OF it, they cannot sell
that much, because there Is no demand
that large.
| IL Is OBVIOUS that the governments
themselves cannot be blamed for 6
crisis Of this kind. Truly, governmental
inefhciency and eXtravagances have
added to the seriousness Of the situation
in certain specific cases, but in thu
main 1t is clear that the Latin American
countries are the victims Of an economic
phenomenon beyond their control.
A recent statement issued by the
Committee on Inter- American Relation:
Of New York. discussing the effects oi
this rapid and extreme fall in the
prices Of commodities upon the ca
pacity of Latin American countries tC
fulfill their foreign obligations, sum-
marizes the situation IN the following
words:
mo matter how strong Is the will o.
a people TO meet all of their obligation:
fully and promptly. it may, OF
occasion, be beyond their power to d'