File No. 815.51/328 a.

The Acting Secretary of State to the Chairman of the Senate Committee on Foreign Relations .

Sir: Referring to the Department’s letter to you of the 6th ultimo relative to the United States-Honduras Convention now awaiting consideration by the Senate, I have the honor to inform you that negotiations with the Government of Honduras for a Government loan have now been commenced by the Whitney Central Trust and Savings Bank of New Orleans, with which the firm of Messrs. Wm. C. Sheldon and Company, Bankers, of 62 Cedar Street, New York, is associated.

The proposed loan is to be based upon the following terms:

1.
The total authorized issue is not to exceed $10,000,000 of bonds, payable in forty years, with interest at the rate of five per cent, per annum, payable semi-annually, and with a sinking fund after five years of one per cent, per annum sufficient to redeem the bonds before maturity;
2.
Of these bonds not exceeding $6,000,000 are to be issued at once, and the bonds or their proceeds are to be used for the purpose of retiring (a) the outstanding funded debt of the Republic, amounting with interest at the present time to Ł23,933,156; and (b) a temporary loan of $500,000, made to meet the immediate pressing needs of the Republic, which was approved by the Congress of Honduras on February 26th last;
3.
The bonds are to be secured by the customs duties and revenues of the Republic from exports and imports, from which an amount sufficient to meet the monthly instalments of the interest and sinking fund is to be paid over monthly to the fiscal agent of the loan by the Collector to be appointed pursuant to the provisions of the Convention between Honduras and the United States of America, now pending before the Senate for ratification.

The contract does not deal with questions of disputed claims or with the internal debt, and matters of railroad, wharf or other concessions are not touched upon. Since those features of the previous contract, which gave rise to a certain amount of doubt and discussion, are thus eliminated, and since the amount required for the service of the loan is reduced from $150,000 per annum to $300,000—a sum which would seem to be well within the resources of Honduras—it is believed that the contract will meet with favorable consideration by the Government of Honduras to whom it has already been submitted.

It is therefore sincerely hoped that the Convention may again be favorably reported out by your Committee and brought to the earnest attention of the Senate.

I have [etc.]

Huntington Wilson.