Contract of May 31, 1922, between the Republic of Bolivia and the American Bankers
Agreement made at the City of New York on the thirty-first day of May, one thousand nine hundred and twenty-two, between the Republic of Bolivia (hereinafter called the “Republic”), party of the first part, and Stifel-Nicolaus Investment Company, a corporation organized under the laws of the State of Missouri, Spencer Trask & Co., a copartnership doing business in the City of New York, and The Equitable Trust Company of New York (hereinafter collectively called the “Bankers”), parties of the second part:
Whereas, the Republic has executed and is about to deliver simultaneously herewith a Trust Contract with The Equitable Trust Company of New York, as Trustee, providing for the issue of Bonds aggregating Thirty-three Million Dollars ($33,000,000), a copy of which Trust Contract is hereto annexed as “Appendix 2”;7 and
Whereas, the Republic has agreed to sell Nineteen Million Dollars ($19,000,000) par value of said Bonds to the Bankers, and the Bankers have agreed to purchase the same upon the terms and conditions hereinafter set forth,
Now, Therefore, in consideration of the premises and of the mutual covenants and undertakings hereinafter contained, it is hereby agreed as follows:[Page 647]
Article First: The Republic declares and represents that the statements, representations and statistics contained in the document annexed hereto entitled “Additional Statistical Information” and made a part hereof as “Appendix 1”8 are true and correct in every particular.
Article Second: The Republic agrees to sell to the Bankers Nineteen Million Dollars ($19,000,000) principal amount of the Bonds referred to in the Trust Contract (“Appendix 2”), and the Bankers agree to purchase the same for ninety-two per cent. (92%) of their par value, plus interest accrued thereon to the date of delivery. Said Bonds shall be delivered and paid for as follows:
(a) Upon the delivery by The Equitable Trust Company of New York of the Trust Contract (“Appendix 2”) as above provided, the Bankers shall pay to The Equitable Trust Company of New York for account of the Republic the sum of Five hundred thousand Dollars ($500,000), and the Republic shall thereupon deliver to the Bankers such amount of Bonds as at ninety-two per cent. (92%) of their par value and accrued interest shall represent said sum of Five hundred thousand Dollars ($500,000). The Five hundred thousand Dollars ($500,000) paid as aforesaid shall be subject to the written or cabled order of the President or of the Minister of Finance of the Republic.
(b) Upon such date and at such hour as the Bankers may designate, which, however, shall not be later than thirty days after the delivery of the Trust Contract (“Appendix 2”) as above provided, the Republic shall deliver to the Bankers the balance of said Nineteen Million Dollars ($19,000,000) of Bonds, and the Bankers shall thereupon pay the balance of the purchase price as follows:
1. They shall pay to the Trustee One Million two hundred thousand Dollars ($1,200,000) to be dealt with as provided in Section 1 of Article Sixth of the Trust Contract.
2. They shall pay to the Trustee the sum of Ten Million six hundred thousand Dollars ($10,600,000), to be dealt with as provided in Section 4 Article Eighth of the Trust Contract. Any unexpended balance of this sum not required for the purposes stated in said Trust Contract shall be applied to the purposes stated under subdivision (c) of this article.
3. They shall pay to themselves the sum of Nine hundred twenty-one thousand eight hundred eleven Dollars and seventy-six cents ($921,811.76), being the balance still owing of the loan made by them to the Republic under the contract of December 5, 1921, and in addition thereto they shall pay to themselves interest upon said loan to the date of payment.
4. They shall retain the sum of One hundred and twenty-five thousand Dollars ($125,000) to be applied by them in payment of the Trustee’s fees for authenticating the entire authorized issue of $33,000,000 of Bonds in both temporary and definitive form, the printing of the provisional bonds, the [Page 648] engraving and printing of the entire issue of definitive bonds, the listing of the bonds on the New York Stock Exchange, the fees and disbursements of their counsel and their own expenses. If said sum of One hundred and twenty-five thousand Dollars ($125,000) should not be sufficient for the purposes aforesaid, the Bankers shall pay any deficit for their own account.
(c) The balance of the purchase price of Nineteen Million Dollars ($19,000,000) of bonds shall be deposited in the banking department of The Equitable Trust Company of New York to the credit of the Minister of Finance of the Republic who will apply said funds to the purposes set forth in Article First of the law of February 10, 1922 (Appendix 39), beginning with subdivision (5) thereof, and in the law of May 20, 1922 (Appendix 59) amendatory thereof, and to the purposes mentioned in the law of May 24, 1922, (Appendix 49); that is to say
(1) That the sum of Nine hundred and twenty thousand Dollars ($920,000), plus accrued interest on One Million Dollars ($1,000,000) of Bonds shall be applied exclusively to the construction of the Potosi-Sucre Railroad.
(2) That Fourteen Million Bolivianos (Bs. 14,000,000), or such part thereof as may be necessary, shall be applied to the payment of the floating debt of the Republic consisting of
|a. Bank’s various accounts||500,000||Bs|
|b. Time obligations||5,836,321||“|
|c. Foreign bankers||49,125||“|
|d. Bank’s current accounts||7,318,163||“|
(3) That the balance shall be applied to the construction of railroads and highways as provided by said law of February 10th and the amendment thereto of May 20th and as provided by said law of May 24th, 1922, and to other requirements of the administration, including the payment of special railroad guarantees.
As soon as practicable after the termination of each fiscal year the Permanent Fiscal Commission, referred to in the Trust Contract, shall file with the Trustee for the information of the Bankers a report showing the Republic’s revenues and expenditures during the preceding fiscal year and especially the income derived from the taxes and revenues pledged hereunder, and also a detailed statement of the Republic’s internal and external debt, both floating and funded, as of the close of the said fiscal year. Also a statement showing any contingent liabilities of the Republic at the close of said fiscal year.
Article Third: If and when the Republic shall require to sell any or all of the Four Million Dollars ($4,000,000) of Bonds mentioned in paragraph (b) of Section 2 of Article Eighth of the Trust Contract (“Appendix 2”), it shall, by letter addressed to the Bankers and delivered as provided under “Fourth” below, offer the same [Page 649] to the Bankers as and when the Republic shall propose to make such sales, and the Bankers shall have the right at their option to purchase the same at ninety-three per cent (93%) of their par value, plus accrued interest, at any time within ten days following the respective offers. If the Bankers shall elect to purchase as aforesaid, the Republic shall sell Bonds to them upon the terms above stated. Said option is intended for the joint benefit of the parties hereto of the second part and shall be exercised jointly by them, except that if any one or more of them should not avail themselves of the said right, the option referred to may be exercised by and shall inure to the benefit of the other banker or bankers who may elect to exercise said right.
Article Fourth: It having been left to the Republic and the Bankers to agree upon the compensation to be paid to the Commissioners constituting the Permanent Fiscal Commission referred to in Section 2 of Article Fifth of the Trust Contract (“Appendix 2”), the parties hereto agree that the Chairman and Chief Executive of said Commission shall receive a salary of Nine thousand Dollars ($9,000) United States gold per annum; that the other Commissioner recommended by the Bankers shall receive a salary of Six thousand Dollars ($6,000) United States gold per annum; and that the third Commissioner shall receive such compensation as the Government may determine, all of said salaries to be paid in equal monthly instalments. In addition to said compensation each of the Commissioners recommended by the Bankers shall be allowed the sum of Five thousand Dollars ($5,000) United States gold per annum for living expenses at La Paz, also payable in equal monthly instalments.
The Commissioners shall be reimbursed their necessary traveling expenses when away from La Paz, including traveling expenses of the American Commissioners from New York to La Paz on their initial trip and their traveling expenses between the United States and Bolivia, not however exceeding one trip for each Commissioner every two years. All of these expenses shall be paid monthly upon presentation of accounts approved by the Permanent Fiscal Commission. While in the United States, the Commissioners shall pay their own expenses, except in so far as these may be incurred in the discharge of their duties.
Article Fifth: The Bankers shall be under no obligation or liability with respect to the application of the proceeds of this loan, except as to such payments as by the terms of this Agreement shall be made by them directly.
Article Sixth: Any statement, notice, request, or other communication under this Contract from the Bankers to the Republic shall be [Page 650] in writing addressed to “El Ministro de Hacienda de Bolivia”, and to the Minister of Bolivia in Washington and to the Consul General of Bolivia, and shall be deemed to have been duly made or given if delivered at the Legation of the Republic in the City of Washington, or at the Consulate General of the Republic at the City of New York. Service of such notice or other communication shall be deemed complete as of the date of such delivery.
Any notice to the Bankers shall be given in writing addressed to Stifel-Nicolaus Investment Company, Spencer Trask & Company and The Equitable Trust Company of New York, and delivered at their offices or at the offices of the two last mentioned in the City of New York.
Article Seventh: The provisions of this Agreement shall apply to and in respect of the firm of Spencer Trask & Company, one of the Bankers herein mentioned, as such firm shall from time to time be constituted, without reference to any change of membership.
In all matters in which the Bankers shall be called upon to act, the concurrent action of any two of them shall be binding upon all three.
In Witness Whereof, the Republic has caused this Agreement to be subscribed on its behalf by Señor Don Carlos Gumucio, Consul General of the Republic in New York, thereunto duly authorized; Stifel-Nicolaus Investment Company and The Equitable Trust Company of New York have caused this Agreement to be subscribed in their respective names by one of their respective Vice-Presidents and their respective corporate seals to be hereunto affixed and attested, and Spencer Trask & Co. have hereunto set their hands and seals the day and year first above written.
This agreement is executed in quintuplicate.
|In the presence of
Eli H. Bernheim
Samuel Abbot Maginnis
Republic of Bolivia
By C. Gumucio, Consul General of the Republic of Bolivia
By Louis J. Nicolaus, Vice-President [seal]
Spencer Trask & Co. [seal]
P. F. Farrell, Jr.
The Equitable Trust Company of New
By M. K. Parker, Vice-President [seal]