Evening star., 1933-02-27
ADMITS BOND SALE
DESPITE DEFAULT
Baker, Head of National City,
Questioned on Peru
Wan Issue.
BY the Associated Press.

BY the Associated Press.
Eviderce that the National City Co.
had participated in a S15,000,000 Pc
ruvian loan in 1927. when it had on file
communications from its representa-
tives of Peru, saying several bond is
sues of that government were in de-
fault. was presented today to the Sem
ate Banking Committee.
Hugh B. Baker, president of the COM
pany said in response to questions OF
Ferdinand Pecora, the committee coun-
sci, that there was nothing in COM
munications to encourage loan
He testified that the National City
Co. the stock affiliate of the National
City Bank, handled S5,O00,000 of the
Peruvian bonds. which were sold to the
public at around S96 and now .~e sell
ling for ST and So share.
designations Announced.
Baker was testifying when his resig-
nation as president of the company was
announced in New York. Charles S.
Mitchell. chairman Of the board of
National City Bank, whose resignation
was accepted today, was waiting to
testify.
The start of the hearing was delayed
members of the complittee and Pecora
in Chairman Norbeck's Office. The con-
ferees would not disclose the nature of
the discussion.
Questioned on Procedure.
Pecora began questioning Baker
about the procedure of his company
in floating security issues, particularly
foreign bonds.
Baker said he could not recall the
total of South American bonds sold by
the National City Co.. adding that
Ronald Byrns and Victor Schoeppele
were the vice presidents in charge of
South American issues. Schoeppele
was expected to testify later today
The issues always were approved
unanimously by the officers, Baker
said
Pecora asked about an issue of SIS
100000 bonds for Peru, March /, 1927,
participated in by the National City
Co.
Baker said the National City Co.
had an original participation of So
100000 which later was increased to
SIS 900 900.
The bonds were issued at 96l2 witc
a profit to the seller of about points.
The bonds are now selling between
81 and So, Baker said.
Reported Peru Was Flat"
Pecora asked about letter written
to the company in 1921 by Claude w.
Calvin, a National City Co representa-
tive in Peru. The letter said the
Peruvian treasury was fiat on its
back and gasping for breath"
Baker said he did not remember
whether the letter was considered by
the company executives in approving
the Peruvian bond issue.
AS Pecora cited a number of men,
oranda from representatives in Peru
about 1923, advising against loans in
that country, Baker said he did not re-
member specifically whether they were
considered when the 1927 issue was
approved.
Finds No Encouragement.
"If this memorandum was discussed
Pecora said at one point, there was
nothing to encourage the officers in
floating loan?"
Certainly not" Baker replied.
Pecora read other communications.
One, dated July II, 1928, was signed by
the manager of the National City Co.
foreign company.
1t quoted a cablegram from Schocpple
in London which said several issues Of
11e PERUVIAN government we're lIleIl III
default. Among them was mentioned
an issue of 1920.
I'm determining an issue of foreign
securities to the investing public"
Pecora inquired. were the past records
of the nations taken into account?"
Yes" Baker answered.
Did the fact that Peruvian loans
we're in default in 1923 commend loan
to that government"
Not at that time"
Another communication in 1928 said
the Peruvian Congress was slow in
carrying out proposed reforms.
Senator Reynolds CDemocrat) of
North Carolina asked if Mitchell was an