Last of the Bad Debts

In the heyday of foreign bond speculations in the '20s, Latin American governments floated ever larger issues at interest as high as 8% on the U.S. market, and many banks turned to cajolery and a few even to bribes to handle the business. With the Depression, Latin countries defaulted to the tune of $1.3 billion. Last week the dance of the millions came to a slow-beat and reasonably happy end.

In 1933 a nonprofit corporation, the Foreign Bondholders Protective Council, began working out agreements with the Latin Americans, cutting interest rates drastically and accepting token settlements on back interest. Bolivia, the 15th and last of the governments involved, announced last week that it will resume interest payments this summer on $56 million in old bonds. Rates will start at 2% and move up gradually to 3% by 1964. A sinking fund will be started to buy up the bonds in the free market or pay them off by lots at par--$1,000 plus $100 settlement on back interest. It was a lean agreement--the leanest yet in the Council's history--but the council told bondholders it was the best they could expect from sorely strained Bolivia.

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