The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-04-09
FOREIGN BOND
GROUP SPLITS
WITH BANKERS
Protective Council Returns
Check for Part Payment
of Expenses.
By Times Speciai

By Times Speciul
NEW YORK. April s-On omen
breach has developed between
Speyer d Co. and the Foreign
Bondholders Protective Council. Inc,
as a result of the method by which
the latter negotiated a plan for the
settlement Of Brazl's 100000 600
bond debt to this country.
The dispute was brought to ligilt
today when it was learned that the
council had returned the check
which the Speyer bank sent in full
f1lment of its commitment to pay a
proportionate share of the councils
expenses. Unofficial reports place
the amount of the check at $500.
Speyer & Co confirmed that it
had withdrawn" from the council.
Partners of the bank. which Is one
OF the oldest in Wall Street, pre-
ferred not 10 discuss the affair. 1t
was learned elsewhere, however.
that the banks position was that it
had not been consulted with respect
to the terms of the Brazilian agree
ment in so far as it affected bonds
underwritten by it in this country.
FlOated S1O,OOO,O 900 Issue
In 1921 the bank offered S1O.000,-
900 in 8 per cent State of Sac Paulo
bonds. due in 1886. At the same
time sterling issue was offered in
London, due in 1851.
TOU-ard tho Of vrI,av,
Brazilian bonds were in default as a
result of the collapse in coffee and
other world trade which afforded
the country the foreign exchange
necessary to service the bonds-a
plan for resuming interest payments
was drawn up by Sir Otto Niemeyer,
representing British holders. In
this plan the bonds originally Of
fered by Speyer were ranked fourth
among all classes of Brazilian ex-
ternal debt and we're to receive 25
to 40 per cent Of their interest in
dollars.
Bonds Position Reduced
j. Reuben Clark Jr.. president
of Foreign Bondholders' Protective
Council, was successful in getting
the Niemeyer plan altered in jan
uary, 1884. The alteration placed
the Speyer bonds two grades lower
than they had been originally. This
resulted in the bonds being paid
only 20 to IS per cent of their in
terest in dollars.
Mr.. Clark is at present in Salt
Lake City, representatives of the
council stated here today. Accord
ingly no official comment could be
obtained on the councils position in
the disputed matter. Nevertheless,
it is understood that the council
explains the revision of the Me
meyer plan as an attempt to get
better terms for all types of Amer
ican-owned bonds.
The fall of the Speyer bonds to
lower rating was a necessary but
unfortunate consequence of this re-
vision, which in total effect resulted
in American bondholders being less
Disseminated against than previ-
ously, it was said.
Protest Accompanied Check
Speyer & Co., protested the ar
rangement last October when it sent
its check to the council, and APP
parently let it be understood that if
such we're to be the results of the
councils efforts it was not working
as we'll as had been expected.
The break-of of Speyer from the
council which includes among its
members practically every impor-
tant bank and issuing house in Wall
Street, is especially significant in
view of the White House statement
made in October, 1888, when the
council was formed. That state
ment said that one of the main du-
ties of the council would be ito
keep intimate contact with all
American interests concerned lin
foreign bonds and to unity as far
as possible all American groups that
seek to act in protection of Ameri-