Evening star., 1932-06-19
CHILEAN DEFAULTS
CAUSE LARGE LOSS
T0U. s. INVESTORS
Total Stake of $780, 600, 900
Has Shrunk to About
$15,0OO,0OO.
EXTENSION OF CREDITS
GRANTED AT RAPID RATE
Debt Accumulated in the New York
Market at Annual Figure
of $36, 100000.
BY DR.. MAX WINKLER.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, June 18.-The Chilean
situation continues to cause appre-
hension to foreign interests in respect
to their investments in the southern
republic
Investors in the United States have
especial cause for worry, because their
stake in the country is very much
larger than that of other creditors. A
total of about s3O0.0OO,O0O has been
invested by Americans in the Cbliga-
tions of the Chilean government, NUM-
cipalities and government-guaranteed
bonds.
At prevailing prices, the aggregate
market of 100000 900 investment is
hardly in excess of $15,000,000. In
other words, almost a complete loss.
American investors paid rather dear
price for the dubious privilege Of play
ing the role Of Chile's banker!
Ranked Highly by Bankers.
OF foreign countries whose credit
standing was very much overrated,
Chile ranked first When the nation
first appeared in the American market
for funds, bankers identified with the
financing pointed to the perfect fiscal
record of the republic. Chile. SO at
least the investor was told. obtained her
first external loan in London century
ago. and, throughout that entire
period. the country has promptly and
faithfully met all its engagements.
This was contrary to the facts. Dur
ing that period. Chile defaulted twice,
one with respect to interest. and one
with respect to sinking fund payments.
The American investor was told moth
ing about these irregularities in the
country's fiscal record. 1t is difficult
to state whether he would not have
been just as eager for Chilean bonds
even If he had been told Of the ma
tons defaults
Be that es it may, United States in
vestors hold today Chilean bonds to
an amount of $3.50, ,921 900, the result of
l6 years Of borrowing. Exclusive Of a
privately-placed municipal loan Of only
1929 900, Chilean bonds outstanding at
present in the American market total
$3.50 ,692 900, equivalent to an average
annual rate OF we'll over $4,000, 900.
This compares with an annual average
OF only s3,662,500 for Chilean loans
outstanding in the European markets,
which hold today bonds to an amount
Of sl6S,477, 500. the result Of borrow
ing over a period Of 46 years 1885,
1880.
Within nine years the Chilean gov
ernment was permitted to accumulate
a debt in the United States of more
than one and one-half times the debt
created in Europe over period Of IS
years. Reduced to a per annum basis.
the rate at which the debt accumulated
on the New York stock market was
about nine times that of ChileS ac-
commodations in Europe
The borrowing rate for Chilean mu
inequalities amounts to less than ST.
100000 for the United States, against
less than 100000 for Europe Amer
lean investors are now being called
upon to pay dearly for the feverish
haste with which their Southern neigh
Dor was being accommodated
Chilean bonds are in complete de-
fault and the outlook Is anything but
promising.
Private Investments.
The above refers exclusively to the
obligations of the Chilean government
and political subdivisions. The status
OF private investments is not much diff
ferent. What measures foreign powers
will take to protect the investments OF
their nationals in the Southern republic
is too early to state. although it is worth
calling attention to the fact that Great
Britain, although her stake in Chile Is
smaller than that of the United States,
has given specific instructions that "a
warship be prepared in case of need for
protection of British interests In Chile"
The French, whose investments in
Chile are merely nominal, compared
with those of the United States and
Great Britain. have lodged a protest
with the new Chilean government
against measures affecting French in
terests. The protest was laid before
the new Chilean administration by the
French Ambassador to Chile. The Bel
gians and the Swiss have formed pro-
tecttve committees which have the sup
port of the governments.
The official attitude of the United
States is awaited with a considerable
degree of interest.
(Copyright. 1882. by the North American
Newspaper Alliance, Inc)