In many cases these negotiations are spread over many years, and the expenses involved are often very heavy, especially in instances like that of Virginia, where costly and complicated legal proceedings were undertaken on behalf of the Bondholders against the State, and case after case was carried up to the Supreme Court of the United States. Apart from the outlays involved in such negotiations and litigation, the ordinary expenditure of the Corporation averages between £8,000 and £9,000 a year. In accordance with the provisions of the Act of Parliament, the President receives £1,000, the Vice-President £500, and the other members of the Council £100 each.

The members of the Bondholders' Committees affiliated Fees. to the Council act gratuitously, but on the other hand they incur no pecuniary responsibility, and if a settlement is arrived at the Council is authorised to pay the members of the Committee concerned in such settlement a moderate fee for each attendance. No such fees are, however, paid to the President or Vice-President of the Council, and as regards other members of the Council who serve on the Bondholders' Committees, the amount received by them on this account is quite insignificant. For instance, during the last ten years, the members of the Council received on an average less than £5 per annum over and above the fixed fee of £100.

The invested funds of the Corporation, apart from the Funds. sum set aside for the acquisition of new premises when the lease of the present offices falls in, amount to £115,000, and yield a revenue of about £3,700 a year.

Any surplus remaining, after defraying the expenses, becomes part of the General Fund of the Corporation, which is held by the Council as trustees for the benefit of British investors, and neither the President nor the members of the Council have any personal interest in them beyond the sums fixed for their remuneration by Act of Parliament, as mentioned above.

It has always been the hope of the Council that the incoine derived from the invested funds of the Corporation would some day be sufficient to cover all expenses, so that they would not have to make any charge whatever for

Results.

their services. In most cases, however, the expenses have been borne by the Governments concerned, and no charge has fallen on the Rondholders.

When it is borne in mind that the Corporation has been concerned in the settlement of Debts aggregating not much short of the gigantic sum of £1,000,000,000, it is evident that even had the whole of the charges fallen on the Bondholders, the percentage of cost on this account would have been exceedingly light in view of the labour expended and the results achieved.

Resolutions expressing cordial appreciation of the services of the Council, and thanking them for their support and assistance, have been passed at Public Meetings of the holders of the Debts of Spain, Portugal, Turkey, Colombia, Costa Rica, Ecuador, Guatemala, Nicaragua, Paraguay, Venezuela, etc.

THIRTY-FIRST ANNUAL REPORT

OF THE

CORPORATION OF FOREIGN BONDHOLDERS.

As there appears to be a certain amount of misconception with regard to the objects for which the Corporation of Foreign Bondholders exists, and its method of working it has been thought desirable to prefix to this and to future Reports a short statement on the subject.

The Council are glad to be able to state that during the past year considerable progress has been made in the settlement of several of the Debts with which the Corporation has been called upon to deal.

ITUANA RAILWAY.

A satisfactory arrangement has been made. with the Brazilian Government for the payment at par of the principal of the Ituana Debentures deposited with the Council, while the arrears of interest are also to be paid off at their full rate of 6 per cent., with compound interest reckoned up to 30th April last, equivalent, after providing for the expenses, to £128. 10s. per £100 Debenture. Seventy-five per cent. of the total sum due has already

been remitted and distributed to the Bondholders, and the Brazilian Government have undertaken to discharge the remaining 25 per cent. on or before the 30th October

next.

The Committee are to be cordially congratulated on the successful result of their labours, extending over some ten years, whilst the thanks of all concerned are due to Lord Rothschild for his valuable assistance, and to Dr. Brandão, the Agent of the Council at Rio, for his efficient representation of the Bondholders' interests.

The settlement of this troublesome question also reflects great credit on the Brazilian Government, who have given a solid proof of their desire to maintain the honour and good name of their country.

After a default extending over five years, GUATEMALA. the Government of Guatemala, in July last, re-opened negotiations with the Committee, with the result that an ad referendum Agreement has been entered into with Dr. Juan Padilla, the Agent of the Government. As soon as this Agreement has been approved by the Executive Government it will be submitted to a General Meeting of the Bondholders. It is proposed that the whole of the interest in arrear and to mature up to 31st December, 1904, including the Certificates issued in respect of 50 per cent. of the Coupons of 31st December, 1898, and 30th June, 1899, shall be exchanged at par for New Bonds. The rate of interest on the Debt is to be 1 per cent. for the first year, 2 per cent. for the second year, and 3 per cent. thereafter. The security offered for the due fulfilment of the Contract may afford some compensation for the reduction of interest to which the Bondholders are asked to consent. The

Committee did their utmost to obtain more favourable terms, but Dr. Padilla insisted that he had already exceeded his instructions in the concessions he had made. The Committee were strongly of opinion (1) that if the financial condition of the Republic exhibited a marked change for the better in the future the Bondholders should participate in the improvement, and that the rate of interest should be increased to 4 per cent., as fixed by the previous Agreements, and also (2) that the interest accrued on the Certificates issued in respect of the unpaid half of the Coupons in 1898-99 should be recognised and funded into New Bonds. The Committee did not, however, feel justified in upsetting the whole arrangement on account of these two points, and it was accordingly agreed that they should set forth their views with regard to them in a letter which Dr. Padilla has undertaken to lay before the Government with the recommendation that they should be included in the Agreement. The Council agree with the Committee that the Government of Guatemala, for the sake of their own credit, should have no hesitation in consenting to these demands, which are as reasonable as they are equitable.

MIDLAND
RAILWAY.

After long delays and wearisome negotiaNEW ZEALAND tions it was arranged in December last that the Government of New Zealand should hand over £150,000 in 3 per cent. Government Debentures. A further delay then took place, as a form of receipt was demanded to which the Council and Committee could not possibly. agree. An understanding was at last arrived at, and in February the Debentures were handed over to the Receiver of the Railway in London. These Debentures were at