Evening star., 1932-07-04
COLOMBIAN DEBTS
TO i. S. ANALYzED
Outstanding Loans of Repub-
lie in This Country Total
$70,419,000.
BY DIR. MAX WINKLER.

SpeClal DlSpaICH 70 AHe StaAs
NEW YORK, July 4-Within four
years the Colombian government was
permitted to accumulate a debt in the
United States almost five times as
large as the debt accumulated by the
republic on the European continent in
over a quarter of century
There are outstanding at present IN
the United States Colombian govern
mert loans to the amount Of $70,-
$4,000, as a result of a borrowing
campaign covering the period 1927
1890. This is equivalent to an aV-
erage annual rate of $17,604,750.
British and French investors hold at
present only $13780,000 par value OF
Colombian government loans, the re-
suit of financial transactions going
back to 1906, representing an annual
average of only Slightly more than
half million.
All Sought Loans in United States.
None of the Colombian departments
or provinces have loans outstanding
abroad They were all accommodated
in the United States. From aggres-
sive Antioquia to tiny Tolima, they
all sought and secured loans in the
American market Almost 60,00000O
are outstanding in the United States,
all the result of only five years OF
borrowing, representing an average
yearly rate of close to $12,00O,OOO. All
are in default and quoted at prices
hardly in excess of what one might
call souvenir values.
Colombian cities also seem to have
preferred the American market. All
their foreign debt is owned by United
States investors. A total Of $22,-
$751; is outstanding at present, the
result of seven years of borrowing,
equivalent to about $3,225. 900 per an
mum. No interest is being paid on
Colombian city loans and none is
! likely to be paid in the near future.
Their debt has grown much faster
than their revenues warranted. To-
day the service on their commitments
is substantially In excess Of their Ca
pacity.
Whether an adjustment will be made
in accordance with the debtors capacity,
as was done with Europe'S obligations
to the United States Government, re-
mains to be seen. One thing Is certain:
Neither the cities nor the departments
are in a position to meet their engage
ments in accordance with the terms OF
the original loan contracts. Those who
have been identified with the origina-
ton and distribution of these bonds
among the American investing pubic
have taken no concrete steps TO assist
those on whom they called, only snort
while ago, to subscribe to issues which
were represented as fundamentally Sc
cure investments.
That an adjustment OF the existing
debts Of the Republic Of Colombia and
the various political subdivisions should
go a long way towards improving the
commercial, financial, as well as polltl-
cal relations between the two republics,
Is apparent. 1t should also greatly i'm
proye the status of American invest
ments in Colombia in general, amount
ing at the beginning of the current year
to almost S341, 100000, OF Wnlcn ABOUT
$40. 500, 900 represents so-called direct
nvestments-that is. plants and proper
flies in Colombia owned by American
Interests. The remainder is represented
bv what is called portfolio investments
that is. bonds and various types. OF
securities publicly sold and privately
placed. Americas present stake IN Co
1ombia compares with only $4,000 600,
which represented pre-war American
interests in Colombia. according TO an
estimate by Prof. j. Fred Rippy OF
Duke University.
U. S. Colombian Commerce.
American Colombian commerce, prior
10 the war, amounted to somewhat more
than $4,000, 900, of which about Sl4,-
700 600 represented American purchases
from the southern republic. In other
words. in her trade with the United
States, Colombia had favorable bal
ance amounting to close to $7,400,0O0.
In l931-admittedly one OF the most
difficult years in the economic history
of NEUTRALITY-SUSPICIOUS. Colombian trade
totaled almost S97, 900, 900, OF which
American purchases represented $75,-
OO0. 900. so that there was balance IN
favor of Colombia amounting to more
than $4,000 900, equivalent to almost
Is per cent on Americas total invest
ments in Colombia.
In other words. under normal condi-
tions, the Republic of Colombia has
sufficiently large commercial balance In
the United States to justify the belief
that American investments in that
country are reasonably protected. How
ever, due to the large foreign stake in
the republic and the correspondingly
large requirements in connection with
interest and dividends on such invest
ments. Colombias fiscal position has
not been what might be desired, with
the result that rigorous exchange re-
strictions were put into effect and pay
ments on many obligations suspended.
An adjustment Of these questions IN
the light of actual developments, rather
than on the basis of theories, would pe
most desirable, especially as FAR as
American holders Of Colombian obnga-
cations are concerned.
(Copyright 1882 by the North American
Newspaper Alliance. 1nc.)