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138 Annals Am. Acad. Pol. & Soc. Sci. 1 (1928)

handle is hein.cow/anamacp0138 and id is 1 raw text is: Government Foreign Loans
By MAX WINKLER
Vice-President, Bertron, Griscom and Company, New York City

ABOUT a quarter of a century ago
the Central American Republic of
Guatemala entered into an agreement
with an American Syndicate under
which, in return for advances made by
the Syndicate, the Government hy-
pothecated the coffee export duty and
the portion of the import duties pay-
able in gold. The contract provided
that signed copies of the documents
relating to the issue were to be depos-
ited in the United States Legation in
Guatemala, and that the holders of the
bonds should have the right to ask the
protection of the United States in case
of any violation of the stipulation of the
arrangement. It is somewhat curious
to note that no protests were lodged by
any of our fellow citizens who have the
welfare of our country at heart, even
though such arrangement between the
United States and Guatemala con-
stituted the alienation to other parties
of a special security pledged to Guate-
mala's foreign creditors under an agree-
ment reached in 1895. There is a
German saying, Wer am Wege baut
hat viele Meister -Whoever builds on
the open highway has many masters,
i.e. advisers. Our foreign policies in
those days were guided by men who
had been charged with guiding them,
men in whom our citizens had implicit
confidence, and who they felt would
not pursue a policy detrimental to our
nation. But today, America builds
openly on the open highway and every-
one feels it incumbent upon him to
raise his voice in protest against every-
thing that is done.

Our loans to foreign nations are
subjected to the most minute exami-
nation and fault is generally found with
everything  relating  to  them. Un-
fortunately, the critics are very often
individuals who are least competent to
criticize.
CRITICIsM OF LOANS
In March, 1924, some of the experts
went so far as to report for examination
by health authorities those who were
recommending foreign bonds in general
and French bonds in particular. One
of these experts had just returned from
an extended trip abroad and after
having spent two full days in Paris, one
of which [days] was taken up by a trip
to the races at Longchamps, he felt he
had become so thoroughly familiarized
with economic, financial and political
conditions in France that he could
intelligently judge for himself as to the
status of French external obligations.
One prominent firm refused to purchase
the City of Carlsbad bonds because
they would as a matter of principle
have nothing whatever to do with loans
to German cities.
American bankers have often been
accused of exacting harsh terms for
loans extended to foreign borrowers.
The English have been held up as
example in according fair treatment to
their debtors, and it has been said that
so long as we refuse to emulate the
English in their foreign loan policy, we
shall never assume the position of a
leading creditor nation. These critics
fail, however, to tell us that the English
have not always been the philanthro-

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