The Minister in Bolivia (Cottrell) to the Secretary of State
[Received May 3—3:20 p.m.]
15. Your telegram no. 4, of April 29, 4 p.m. The Railway Works Company, London, that built 50 miles of railroad on the Patino properties at Uncia last year, are acting as agents for the Ethelburga Syndicate, Ltd., London, in offering the Bolivian Government a loan of £4,000,000 sterling. C. T. Sheppard and Hugh Gibson are local agents for the company, the latter being now in Chile bidding on a railroad contract near Santiago. The offer of the British company is general, making no provision as to supervision of the revenues in Bolivia, and stipulating only that the loan shall be made at 8% interest and at 10% discount, and shall run for 25 years, redemption to be at 105. … The administration is not carrying on negotiations with the British Minister but is endeavoring to place a loan in New York. The agreement that the Bolivian Government shall not negotiate a foreign loan without consent of the bankers until after June 5 next is thoroughly understood here, but the agents of the Railway Works Company insist that advantageous terms offered by the British company would offset the forfeiture to the Equitable Trust Company incident to contracting a loan in London. The new enabling bill for a loan as required by the Equitable Trust Company faces a long and bitter fight in the Chamber of Deputies, where it has passed only one reading. The present bill is opposed by the Liberal members of the Congress, who insist that only $16,000,000 should be borrowed, and that it should be used, not for paying existing deficits, but for public improvements. The opposition is filibustering in order to defeat the loan, for they know that if they succeed the present fiscal year will end with a deficit of 12,000,000 bolivianos and in consequence the Government will be materially weakened. The Ethelburga Syndicate has already placed loans in [Page 643] South America and owns the bonds of a chain of [match?] factories throughout the continent, but is more of a promoting than a banking organization. The British Minister, with whom I have discussed the situation tactfully, asserts that his only interest in the British offer is to see that it contains a clause providing that a British commission shall have detailed control of the revenues.