Pope on S. A. Bonds

Emperor Dom Pedro II of Brazil lost his throne in 1889. Extravagant and profligate, royalty disappeared from the new world but the finances of Brazil in particular and South America in general failed to improve. In the 1890's every South American country except Chile defaulted on its government bonds and on most subdivision issues as well. Last week in Manhattan Allan Melville Pope recalled these trials of the past generation in a speech before the British Empire Chamber of Commerce. President of Investment Bankers Association of America and executive vice president of Boston's First National Old Colony Corp., Col. Pope reviewed the past, gave some advice on how to look at the present.

On Dec.1 South American governments and their subdivisions had outstanding about $1,500,000,000 of dollar bonds. Of these $476,000,000 were in default, $414,000,000 were on the verge of default, but the Colonel was not discouraged. English investors were worse off in the '90s than Americans in the '30s. But no British investor in Argentine securities lost a penny by the government's default. Brazil repaid its principal and funded the arrears of interest just as it is planned to do today.

Bondholders protective committees just turn into expensive junkets for bankers, said Col. Pope, who has figured out that 20 U. S. bankers trips in the last few months have cost bondholders $225,000. He recommended that bondholders turn their troubles over to American Institute of Finance which is backed by I. B. A. and has been reorganized to do this work.

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