Evening star., 1932-04-10
Economist Presents Plan for
Payments Based on Pres
ent Financial Status.
EXCHANGE OF SECURITIES
FOR NEW LOAN is URGED
Clearing Up of Defaults and Re.
sumption of Services Would
Be Assured.
BY DIR. MAX WINKLER.
Special Dispatch to The Star.

NEW YORK, April 9-Latin Ameri-
ca continues to be misunderstood
Anglo-Saxons almost always have
looked upon the republics south of the
Rio Grande with certain feeling of
superiority.
Nothing has been more distasteful
than this to these Latin American
countries, which, like the rest of the
world, find themselves in the midst of
crisis, the like of which they have
never witnessed before Their plight
is rendered even worse by propaganda
malevolently spread, or by the sudden
rise of friends and allies who, beyond
handing out platitudes, do nothing on
behalf OF Latin Americans.
For the time being their credit is
gone. They were permitted to accumu-
late debt far beyond their CAPACITY
to meet unless commodity prices again
reach abSurdly inflated levels. Even
then, it would be difficult for some of
the nations to meet obligations in ac
cordance with the terms of the proyi
Sions of original contracts.
Why Latin Americans were permitted
to overborrow, or why they were in
duced to pawn with feverish haste all
their assets, the bankers may be able
10 tell Holders of Latin American
DonoS are entitled to know What do
they learn? Committees inform them
calmly to retain their bonds and not
TO sacrifice them. What splendid ad-
vice after bonds have reached levels
where they represent hardly more than
souvenir value
Loans Were Large.
American bankers are partly to
ELAINE. If there are among them such
experts as can tell in advance what
one may do with securities, why did
they remain silent when millions, tens
and hundreds of millions of dollars,
were poured into Latin America? Why
olo they remain silent when they saw
these bankers permitting Peru to bor-
row In two years, two and a half times
as much as the republic had borrowed
IN London within So years? Why did
they REMAIN silent when Bolivia was
borrowing, IN IL years more than three
times as much as Bolivia could borrow
In Great Britain and France over a
period of Al years? Is there any won
der that these two republics are hope
leSsly insolvent?
Latin Americans never have been. or
at least rarely, willful repudiators of
contractual obligations. They have as
high a regard for contract debts as
their Anglo-Saxon friends. They have,
however, the misfortune of succumbing
more readily to the pretense that, in
extending loans and credits, only the
welfare Of Latin America is what the
lenders are aiming at. Fundamentally
honest, they accept at face value what
ever Is laid before them Herein lies
the tragedy of the southern half of the
Western Hemisphere and of 10000, 900
people who, too, have desires and
ambitions like unto their more powerful
brethren north of the Rio Grande.
The stigma of default must at all
cost be removed from these nations.
This must be done speedily. 1t must
be done by those who are partly
responsible for the present state of
aHairs. The task is a hard one, but
the results should make worth while
whatever labors it may entail The
1t Is somewhat along the lines proposed
oy the writer in the course of an
address last Summer at the Institute of
Politics of Williamstown.
Plan Is Suggested.
Latin Americas creditors must face
conditions and not theories. 1t is not a
question of what Americas southern
neighbors must pay, but what they can
pay today. Each country represents a
problem in itself. A careful examination
should, therefore, be made as to the
amount which each government could
pay ana transfer annually, without any
Undue hardship
Assuming the no,,,,tr,, L., .,,,ur4;a-. 4.
IN default with respect to an external
debt totaling 100000, ,0O0-assuming
further that the nation could create Tor
debt service 81 100000 yearly-this is 5
per cent on $20,000,000. Let this sum
constitute the total debt of the republic.
into which would be EXCHANGED existing
obligations
Special consideration might be given
to bonds enjoying the benefit of specific
security and guarantees. These would
have to be waived in favor of the new
loan. For the balance of the debt, let
there be issued income bonds, bearing
interest on graduating scale, beginning
at one-hah of per cent and rising to a
maximum of per cent.
The amount of interest to be maid
will be determined by so-called pros
perity index, to be constructed by who
ever will be charged with working out
the above problems. In each case a
genuine representative of the country
In question should participate in the
discussions and the working out of the
plans.
Debt service could then immediately
be resumed, the default cleared up, the
stigma of repudiation removed, the
credit restored, and each country in
turn could once again enter the So
ciety Of nations. Thus, and thus alone,
will the United States be able to de-
rive all the advantages from IT'S con-
tact with the southern republics. at
the same time enabling the latter to
regain the position in the world which
is fully warranted by their resources
and the industry of their people
tcopyright. 1892. by the North American
Newspaper Alliance, Inc.)