or, if and to the extent that the fiscal agents shall previously request, in English pound sterling to the subfiscal agents at London. In lieu of making all or any part of any sinking-fund payment in cash, the Republic may deliver to the fiscal agents for surrender to the sinking fund any bonds, with all unmatured coupons attached, purchased by the Republic at a price not exceeding par, exclusive of accrued interest and commissions, accompanied by certificates of the Republic stating at what prices such bonds were so purchased, and such bonds shall be accepted in lieu of cash in an amount equal to the purchase price (exclusive of accrued interest and commissions) plus the amount of the coupons due on said next interest date.

(b) At least 10 days prior to each semiannual interest payment date the Republic shall pay the semiannual interest payment in gold coin of the United States to the fiscal agents at their offices in New York City, or, if and to the extent that the fiscal agents shall previously request, in English pounds sterling to the subfiscal agents at London.

Fifteenth. Except as hereinafter provided, upon the receipt of each such ⚫ semiannual sinking-fund payment, the fiscal agents shall apply that part of the same paid in cash to the redemption of bonds on the next semiannual interest payment date; provided, however, that if such moneys shall amount to less than $5,000 such sum may be carried forward and added to the next sinking-fund payment. Such redemption shall be effected in the following manner: The particular bonds to be redeemed on each occasion shall be determined by lot by drawings conducted by the fiscal agents in New York at which a representative of the Republic may be present if the Republic so requests. Drawings shall be held not later than the twelfth day immediately preceding the next semiannual interest payment date. Notice of such redemption shall be published at least twice in one or more newspapers of general circulation in New York City, selected in each instance by the fiscal agents, and shall also be given and published in such manner, either in New York or elsewhere, as the fiscal agents may prescribe. The first publication shall be made at least 10 days immediately preceding the next semiannual interest payment date. Such notice shall state the numbers of the bonds to be redeemed (unless all outstanding bonds are to be redeemed), the date (which shall be the next semiannual interest payment date) and the places in New York City and London (which shall be designated by the fiscal agents) for surrender and payment. On the date and at the place so specified, the holder of each bond thus called for redemption shall surrender the same, with all coupons maturing after such date. Upon such surrender the fiscal agents or the London subfiscal agents shall cause to be paid to the holder of each such bond, out of the funds provided for that purpose by the Republic, the principal amount of such bond. Any bond thus called for redemption and not so surrendered shall cease to bear interest after said redemption date, and all coupons for subsequent interest shall be void.

Sixteenth. All bonds tendered for or redeemed by the sinking fund, and the coupons thereto appertaining, shall be canceled and returned to the Republic, and no bonds shall be issued in lieu thereof.

Seventeenth. The Republic, at its option, may increase the amount of any semiannual sinking-fund payment. In that event it shall notify the fiscal agents at least 60 days prior to the next succeeding interest date, specifying the amount by which such semiannual sinking-fund payment is to be increased, and shall pay the entire sinking-fund payment as so increased at least 30 days prior to such interest date.

Whenever any semiannual sinking-fund payment, whether increased or not, is made wholly or partly in cash to the fiscal agents prior to the fifteenth day preceding the next semiannual interest payment date, the Republic may instruct them to apply such cash at any time prior to the fifteenth day preceding the next semiannual interest payment date to the purchase of bonds for the account of the Republic at the lowest prices obtainable in the judgment of the fiscal agents not exceeding principal amount exclusive of accrued interest. All bonds 80 purchased shall be surrendered and credited to the sinking fund as hereinbefore provided. Any such cash remaining unexpended in the hands of the fiscal agents on the fifteenth day preceding the next semiannual interest payment date shall be applied to the redemption of bonds for the sinking fund as above provided. The bonds shall not be redeemable except through the sinking fund.

Eighteenth. Nothing in this agreement contained shall be construed to impose any obligation on the fiscal agents or the London subfiscal agents to redeem

any bonds or to make any payments of principal or interest or otherwise with respect to the bonds or the interest coupons except out of funds previously received from the Republic for such purpose.

Nineteenth. With each semiannual sinking-fund and/or interest payment the Republic shall pay, in United States of America gold coin, to the fiscal agents in New York City a sum sufficient to pay the compensation payable to the fiscal agents with respect thereto.

ARTICLE 5.-THE FISCAL AGENTS

Twentieth. The Republic hereby appoints Kissel, Kinnicutt & Co. and Hallgarten & Co., and their respective successors in business (subject to the ap proval by the Republic of such successors), the fiscal agents for all purposes relating to the bonds and the service of the loan represented thereby; and said firms hereby accept such fiscal agency, subject to the provisions of this agreement. Such appointment shall continue while any of the bonds remain outstanding unless sooner terminated as hereinafter provided.

Twenty-first. The Republic hereby consents that the fiscal agents may represent the holders of the bonds in all matters, but this provision shall not impose any trust or duty in favor of the bondholders upon the fiscal agents or either of them.

Twenty-second. As compensation for their services hereunder, the fiscal agents shall receive from the Republic one-eighth of 1 per cent of all amounts paid on account of interest on bonds, and one-eighth of 1 per cent on the face amount of all bonds redeemed for the sinking fund or otherwise retired or paid. The fiscal agents shall be entitled also to receive the usual brokerage commission on all bonds purchased by them for account of the Republic for surrender to the sinking fund or otherwise.

Twenty-third. The Republic shall pay the usual charges for registering the expenses in connection with the redemption of bonds, including publication of notice, and all other expenses incurred by the fiscal agents in good faith in connection with their agency. Such payments shall be made with interest at 5 per cent upon the rendering of an account in reasonable detail to the Republic. Any such account shall be considered accepted by the Republic unless objection thereto be made by the Republic in writing and received by the fiscal agents within 90 days from the mailing of the account in question.

Twenty-fourth. The Republic may pay any service moneys payable to the fiscal agents in pursuance of this agreement, to the fiscal agents jointly, or to either of them. The fiscal agents and the London subfiscal agents may ar range between themselves as to the proportions in which such moneys or any other sums shall be held on deposit by them respectively for the account of the Republic.

Twenty-fifth. The Republic shall at all times indemnify and protect each of the fiscal agents and the London subfiscal agents against all claims, demands and actions which may be instituted in behalf of any bondholder, whether in respect of moneys at any time in the hands of the fiscal agents or otherwise, subject only to the responsibility expressed in paragraph 26 hereof. Twenty-sixth. Each of the fiscal agents and the London subfiscal agents shall be answerable to the Republic or to the bondholders only for its own failure to exercise good faith or for gross negligence. Neither of the fiscal agents nor the London subfiscal agents shall be responsible to the Republic or to the bondholders for any sums paid to or deposited with others nor for the act or omission of others. The fiscal agents, or either of them, or the London subfiscal agents, may consult counsel in regard to their duties under this agree ment, and shall be fully protected in relying and acting upon the advice of counsel of recognized standing selected by them or any of them.

Twenty-seventh. The fiscal agents may designate any financial institutions of good standing in the city of New York or elsewhere as the registrars of the bonds. The fiscal agents may appoint financial institutions to authenticate the bonds as hereinbefore provided as agents for both of them, or each of them may appoint agents to act in its own behalf for such purpose. In both cases the fiscal agents shall submit such appointments for the approval of the Republic.

Twenty-eighth. The fiscal agents may appoint (on their own responsibility, unless such appointment be approved by the Republic) one or more additional subfiscal agents in the United States of America or Europe as paying agents for the principal and interest of the bonds and with whom the fiscal

agents may deposit funds of the Republic designated for the payment of principal or interest on the bonds and whose names may appear on the bonds and coupons; it being understood that payments other than in United States of America dollars or pounds sterling made at the offices of such subfiscal agents other than those in the United States of America or Great Britain shall be made in any other currency only at the then current buying rate for dollars or sterling. The fiscal agents and subfiscal agents may make such arrangements between themselves as they may deem appropriate for the interchange of funds and for the drawing by one fiscal agent or subfiscal agent against funds of the Republic held by another fiscal agent or subfiscal agent and in general for facilitating the payment of bonds and coupons which may be presented to any of them. The Republic shall be credited or debited as the case may be with any net profit or net loss or cost which may result from the conversion of dollars to pounds or pounds to dollars in connection with the remittance or exchange of funds necessary for service payments. The compensation of all subfiscal agents shall be paid by the fiscal agents.

Twenty-ninth. Either of the fiscal agents or the London subfiscal agents may act in reliance upon any instructions or advices, received by cable or otherwise as purporting to come from the Minister of Finance of the Republic or from the Chilean Ambassador in the United States of America, or from the Chilean Minister in Great Britain, or in default of these, from the chargé d'affaires in either country, and shall incur no responsibility by so doing.

Thirtieth. Either of the fiscal agents or the London subfiscal agents may at any time resign from the agency by giving notice of such intention to the Republic, specifying the date on which such resignation shall become effective, provided that such notice shall not be less than 30 days, unless the Republic agrees to accept less notice. Upon the resignation or failure to act from any cause of either of the fiscal agents hereunder, the remaining fiscal agent shall act as sole fiscal agent and may exercise all powers of the fiscal agents. Upon the resignation or failure to act from any cause, of both of the fiscal agents, the financial institution which shall theretofore have been designated for the registration of bonds in the city of New York shall act as sole fiscal agent. In the event that at any time there shall be no fiscal agent in office, the Republic shall provide at least one fiscal agent in the city of New York to attend to the services of the loan. Upon the resignation or failure to act of the London subfiscal agents the fiscal agents may, with the consent of the Republic, appoint their successors.

Thirty-first. Neither of the fiscal agents nor the London subfiscal agents shall incur any liability whatsoever to the Republic or to the bondholders or to anyone else in acting in reliance upon any bond, coupon, or other instrument believed to be genuine.

Thirty-second. All moneys received by either of the fiscal agents for the service of the loan may be held until paid out in accordance with the terms of this agreement, as a general deposit, and the fiscal agents agree to pay interest at a rate of 2 per cent below the discount rate fixed by the New York Federal Reserve Bank.

Thirty-third. Either of the fiscal agents or the London subfiscal agents may purchase or otherwise deal in any of the bonds, with the same rights as though not acting as such.

ARTICLE VI.-MISCELLANEOUS PROVISIONS

Thirtyfourth. Any notices, requests, or instructions, or orders for the payment of money or the delivery of securities which may be required to be given by one party to the other, shall be deemed sufficient (unless herein otherwise expressly provided), if given in writing in English as follows:

(a) If from the fiscal agents to the Republic, over the signature of either of the fiscal agents by any member of the firm, delivered to the Chilean Ambassador in Washington, or by cable addressed to the Minister of the Treasury of the Republic, provided that a copy of such cable is delivered on the day it is sent or on the following business day at the Chilean Embassy in Washington.

(b) If from the Republic to the fiscal agents, then by delivery at the office of either of the fiscal agents in New York either over the signature of the Chilean Ambassador in Washington, or by cable addressed to either of the fiscal agents at its office in the city of New York by any duly authorized official of the Republic and confirmed in writing to the fiscal agents by the Chilean Ambassador in Washington.

Thirty-fifth. In case the Republic should be unable to make the payments herein contemplated in New York City, on account of a state of war or otherwise, the Republic shall deposit all such payments in a bank designated by the fiscal agents in any neutral country.

Thirty-sixth. At the request of the fiscal agents, made at any time, the Republic will furnish all information and sign all applications and other documents necessary or suitable for procuring the listing of the bonds upon the New York Stock Exchange and/or any other like institution.

Thirty-seventh. In compliance with any reasonable request made by the fiscal agents at any time, the Republic will furnish them with all information in regard to its revenues, expenses, financial affairs, and general condition.

Thirty-eighth. This agreement shall inure to the benefit of and be binding on the Republic on the one hand and on the other hand Kissel, Kinnicutt & Co. and Hallgarten & Co. and their respective successors in business as fiscal agents of the bonds.

In witness whereof, the above-mentioned parties have executed this agreement in triplicate in the manner hereinabove recited.

REPUBLIC OF CHILE,

By MIGUEL CRUCHAGA TOCORNAL,

Ambassador of the Republic of Chile to the United States of America.

On the 18th day of October, 1926, before me personally appeared Miguel Cruchaga Tocornal, to me known and known to me to be the person who is described in and who executed the foregoing instrument as ambassador of the Republic of Chile to the United States of America, and he acknowledged to me that he executed the same as such ambassador, thereunto duly authorized on behalf of said Republic of Chile, as its act and deed. [SEAL.]

LAURENCE ALDEN CROSBY, Notary Public, Westchester County. Certificate filed in New York County. New York County clerk's No. 478, registration No. 8364. Commission expires March 30, 1928.

STATE OF NEW YORK,

County of New York, 88:

On this 18th day of October, 1926, before me personally appeared William Ferguson, to me known to be a member of the firm of Kissel, Kinnicutt & Co., and the person described in and who executed the foregoing instrument in the firm name of Kissel, Kinnicutt & Co., and acknowledged that he executed the same as the act and deed of said firm of Kissel, Kinnicutt & Co. [SEAL.]

LAURENCE ALDEN CROSBY, Notary Public, Westchester County. Certificate filed in New York County. New York County clerk's No. 478, registration No. 8364. Commission expires March 30, 1928.

STATE OF NEW YORK,

County of New York, 88:

On this 18th day of October, 1926, before me personally appeared Max Horwitz, to me known to be a member of the firm of Hallgarten & Co., and the person described in and who executed the foregoing instrument in the firm name of Hallgarten & Co., and acknowledged that he executed the same as the act and deed of said firm of Hallgarten & Co.

[SEAL.]

LAURENCE ALDEN CROSBY,

Notary Public, Westchester County. Certificate filed in New York County. New York County clerk's No. 478, registration No. 8364. Commission expires March 30, 1928.

TESTIMONY OF H. FREEMAN MATTHEWS, ASSISTANT CHIEF OF THE DIVISION OF LATIN AMERICAN AFFAIRS, STATE DEPARTMENT, WASHINGTON, D. C.

(The witness was duly sworn by the chairman of the committee.) The CHAIRMAN. Whom do you represent?

Mr. MATTHEWs. The State Department, sir.

The CHAIRMAN. How long have you been with the State Department?

Mr. MATTHEWS. I entered the Foreign Service in the beginning of 1924. My immediate assignment to the State Department began on April 4, 1930, I believe.

The CHAIRMAN. What is the immediate work that you are required to do?

Mr. MATTHEWS. I am Assistant Chief of the Division of Latin American Affairs.

The CHAIRMAN. And have been so for how many years?

Mr. MATTHEWS. Since, I believe, November 1, 1930. I came into the division before that, but I have been assistant chief only since that date.

Senator JOHNSON. How long have you been in the division, if you please?

Mr. MATTHEWS. Since April 4, 1930.

Senator JOHNSON. Then you have occupied your present position since November, 1930?

Mr. MATTHEWs. Yes, sir.

Senator JOHNSON. You have been connected with the State Department for how long a period?

Mr. MATTHEWS. Since the beginning of 1924.

Senator JOHNSON. Have you devoted yourself to Latin American affairs during that period?

Mr. MATTHEWS. During a part of the period. I was secretary of legation in Bogota, Colombia, from January, 1927, until January, 1930, three years, sir.

Senator JOHNSON. Three years you were secretary to the legation at Bogota?

Mr. MATTHEWS. Yes, Senator. Prior to that I was in Budapest, Hungary.

Senator JOHNSON. Who was the minister to Colombia during that period?

Mr. MATTHEWs. The Hon. Samuel H. Piles was minister during a part of that period. During the last year, the Hon. Jefferson Caffery was minister.

Senator JOHNSON. Mr. Caffery is at present in this country, is he

not?

Mr. MATTHEWs. He is in New York.

Senator JOHNSON. And he can respond to a call of this committee at any time, can he not?

Mr. MATTHEWS. Yes; as far as I know, sir.

Senator JOHNSON. Have you the report of the congressional committee of Chile?

Mr. MATTHEWS. No, sir.

Senator JOHNSON. Has Mr. White the report there, who sits by you?