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AUTHOR : Pawle , Fredevick C.

TITLE : The Council of Foveigw
Bondholders and the Venezuelan

commititee of 1873
PLACE : Lonndown

DATE :188\ VOLUME :

CALL FW#3 M NEG tt a3
NO: FO a63

 
 
 

 

 

 

 

 

 

 

 

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THE COUNCIL

OF

FOREIGN BONDHOLDERS

AND

THE VENEZUELAN COMMITTEE

OF

1873.

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FC. Yaw \e

NNN NNN NNN INN NINE NINN NANI NS Ni

LONDON:

E. COUCHMAN & CO., 14, THROGMORTON STREET.

1881.

 
 

 

PREFACE.

The following pages need no apology. They tell ther
own story. Having appealed in vain to the Council
against the conduct of their Chairman, the publication

of this correspondence is rendered necessary.

F. C. PAWLE.

Northcote, Reigate,
July, 1881.

  

To the Council of Foreign Bondholders,

(GENTLEMEN,

It is with much reluctance, and only after mature
consideration, that I have resolved to bring to the notice of the
Council the conduct of your Chairman, the Right Honourable
E. P. Bouverie, in relation to the Committee of Venezuelan
Bondholders of 1873.

I will endeavour as briefly as possible to lay the facts before
you. The Committee of 1873 was first formed at the instigation
of the Consul for Venezuela, the late Mr. F. Hemming, who
invited a number of Bondholders to meet Sefior Rojas at his
office in Moorgate Street, on the 10th July, 1873, to consider
a proposal from the Government of Venezuela for a settlement
of the Debt. The proposal was unfavourably received, but a
Committee was then and there appointed to confer with Senor
Rojas, and endeavour to find a scheme of settlement that would
satisfy the Bondholders and the Government. The Committee
appointed were Mr. Maxwell G. Turnbull, Chairman, Messrs.
Richardson, Chater, Griffiths, Wright and Pawle, Mr. Albert
Levy being added a few days subsequently. The business of
the Committee was conducted at my office, 6, Warnford Court
until 1877, when it was transferred to our agent, Mr. Haslewood,
Gresham House. Negociations were now actively carried on by
the Committee, assisted by Messrs. Baring Brothers & Co., and
ultimately a settlement was approved at a Public Meeting, held
at the London Tavern on the 7th November, 1873. The contract
was signed by Mr. Turnbull and Sefior Rojas, but unfortunately

the Government refused to ratify it. A second negociation was

   
4

attempted in 1874, but failed. In 1876 another attempt at a
settlement was successfully made, and adopted at a Public
Meeting at the Cannon Street Hotel, on the 16th June. A
temporary agreement was effected, and carried out by the
Government for nearly two years, during which period the
Bondholders received a sum of about £ 75,000. The Government
then stopped payment without any assigned cause.

During 1877 several verbal and written communications
passed between this Committee and the Council of Foreign
Bondholders, represented by Mr. Bouverie, on the subject of our
affiliating ourselves with that body.

The late Mr. Turnbull, Mr. Ingall (who had now become a
Member of the Committee) and I had many interviews with
Mr. Bouverie, and ultimately on February 14th, 1878, a written
Agreement fixing the terms of our junction with the Council was
signed by Mr. Bouverie and Mr. Turnbull. To this Agreement,”
a copy of which must be in the hands of your Secretary, Mr. Clarke,
T desire particularly to direct the attention of the Council,

 

* AGREEMENT.

The present Committee of Venezuelan Bondholders agree to
affiliate on the following conditions :—

I. That only the Chairman of the Council is to be put on the
Committee.

II. That the Rule No. 40 beginning The Council will thereupon,’
and 41 beginning * The Council shall in like manner ”’ are NOT
to apply to this Committee.

+ RuLE 40.— The Council will thereupon determine the number, and
appoint the Members, of such Committee. The number of Mem-
bers of such Commiltees may be increased by the Council, or by
the Committee, with consent of the Council. Whenever it shall
be deemed requisite by the Council oi the Committee to appoint
an acting Sub-Commultee the Council shall determine the number
and appoint the Members of such acting Sub-Committee.

 

+ Extract from the Rules and Regulations of the Corporation of Foreign
Bondholders,

5

From this period the meetings of the Committee were held
at the Council House, Mr. Bouverie, Ex-officio, being present.
In 1879 another proposal from the Venezuelan Government came
before the Committee. It was of a very important character,
involving a Conversion, an issue of New Stock, and an assimilation
of the Home and Foreign Debt, thus making the Home Debt
saleable on the London market. Such a proposal, so novel, and
of so serious a character, was ably criticised and discussed at
many meetings of the Committee. Important modifications
had been and were in progress of discussion, when, on the
97th January, 1880, Mr. Bouverie startled the Committee by
informing them that he had concluded and signed an Agreement

 

 

 

 

Rute 41.—The Council shall in like manner determine the number
and the Members of its own body to serve on such Commattees,
and may from time to time increase or diminish the number. The
Chairman of the Council shall be an ex-officio Member of all
Committees. The Deputy-Chairmen shall be ex-officio Members
of any Committee, if they, or cither of them so desire.

III. That so much of the Rule No. 47 beginning in the second clause
«“ The Council reserves to itself, &e.” is Nor to apply.

Ruse 47.—No Member of a Committee shall take any separate step,
measure, or action, respecting the Functions of the Committee,
without being specially authorised by the Council or Committee
to that effect.

The Council reserves to itself the fuculty of adopting separate
and independent measures for effecting arrangements.

IV. That the Rule No. 56 so far as regards the £ 200,000 Debentures,
is NoT to apply.

Ruse 56.— Whenever any arrangement shall have been effected, and
funds provided by Governments or Bondholders for defraying the
expenses, such sums shall be paid into the account of the Cor
poration, and the Council shall defray all expenses properly
incurred. Out of any surplus the Council may present such
testimonials, gratuities or recompense to Agents, Members of
Committees and other persons for services rendered as they may
deem fit. Any deficiency shall be at the charge of the Cor-
poration, and any surplus shall be passed to the general funds of
the Corporation.

February 14th, 1878.

 
6

with Senor Rojas for the settlement of the debt. In this Agree-
ment he had stipulated the Council were to receive £35,000 in
New Stock,* and that the Committee were to have £5,000 of the
same stock as remuneration for their services. The Committee
felt deeply aggrieved at the manner in which Mr. Bouverie had
behaved towards them, and expressed themselves to that effect.
The unfortunate Chairman, Mr. Turnbull, after the meeting
complained to me most bitterly of the summary way in which
he had been set on one side by Mr. Bouverie, and such was his
excitement, that it caused him to fall dead on the floor.

The following week Mr. Albert Levy and I sent in our
resignations to the Council.

I now call your attention to page 59 in the eighth Annual
Report of the Council, issued in February last. You will there
see “Venezuelan Committees of 1865 and 1873 united,” including
the names of Admiral Wallis, Messrs. Jeggins, Jonas, Obicini,
and General Vaughan. I request respectfully to know who united
these Committees, when were they united, and what have they
done? You will find as a matter of fact that this is a nominal
Committee only, it has never met to this day. But on the first
of this month Mr. Bouverie, Mr. Chater, Mr. Wright, and
Mr. Obicini had a meeting to discuss what was to be done with
the £5,000 stock which Mr. Bouverie had secured to the Com-
mittee as remuneration for their past services. Mr. Bouverie
claimed the power of the Council to distribute as they thought

fit. Mr. Wright informs me that the following was decided on
by Mzr. Bouverie :—
1865 CommrtrEE,

Admiral Wallis ... £1,000 Stock.

General Vaughan... ... ... ... £300 ,
ME ObSEL,. ae a a E00,
Mr. Jonas ..; oi... LE 2500

2)

 

 

* T believe this has been since augmented to £40,000, as well as £ 5,000 for
expenses of the Board.

 

7

1873 COMMITTEE.

Mr. Wright |... ae i en £500 Stock.
Me Chater 0 J tui oath tue wee SHO Gy,
Mr. Field (the late) for 4 years’ service £500
Mr. Turnbull (the late) ... ... ... nil.

Mp, Levy: o.oo wn ae nil.

Mr. Pawle o.. Lo Cae addi and we nil.

Mrs Ingall ...0 civ ci nil.

 

Messrs. Clarke & Schirges (Secretaries) ~~ £500 Stock.

Gentlemen, I most respectfully ask if you will sanction such
proceedings on the part of your Chairman? I have stated the
barest matters of fact, which can be verified at every step by
the records in possession of the Committee and the Council. I
believe such an act as an Ex-officio Member of a Committee
making and signing a contract without the knowledge or sanction
of such Committee to be entirely without precedent. It 1s
certainly in open violation of Mr. Bouverie’s agreement with our
Committee.

Again, on what principles of justice or equity can Mr. Bouverie
reconcile his distribution of the funds entrusted to him for
a special purpose? Why is Admiral Wallis to have £1,000
stock for doing nothing? Why also are Messrs. Vaughan,
Obicini, and Jonas to have £500 stock? They have done
nothing. Why, on the other hand, is the late Mr. Turnbull, who
devoted himself to the affairs of the Bondholders assiduously for
eight years, during which time I believe I am quite correct in

* saying he attended every meeting of the Committee, to have

nothing? Why is Mr. Levy to be left out? he also was a woth
valuable member of the Committee, but he disagreed with
Mr. Bouverie’s policy. On what principle is the late Mr. Field
allotted £500 for four years’ services and the late Mr. Turnbull
nothing for eight? Are my services to be utterly ignored?

 
S

I wish to speak of myself as little as possible, but in justice to
myself I must refer you to any member of the Committee as to
what is my due. The whole business of the Committee was
transacted by me and my clerks at my office for four years.
Nothing can repay me for the great sacrifice of time and labour
spent in those years and afterwards. It is right I should mention
that the actual expenses incurred for public meetings, advertise-
ments, &ec., were repaid to me by the Venezuelan Government,
but not one farthing besides. The Committee or the Bondholders
were never called upon to pay one shilling. I do not want
remuneration for myself, I never take payment for such services ;
but I certainly think I am entitled toa proper share to distribute
amongst my clerks. I therefore call upon the Council not to
sanction Mr. Bouverie’s proposed distribution, but to insist that
the £5,000 stock be devoted to the purpose and the purpose
only for which Mr. Bouverie obtained it, viz., the remuneration
of the Commitee with which he was acting, for their past
services.*

In conclusion, I beg the Council to duly me this serious
charge, and give it that consideration which its importance
demands.

1 am, Gentlemen,
Your obedient Servant,
Freperick C. PawLe,
Northcote, Reigate,
April 12th, 1881.

 

# Mr. Levy, Mr. Ingall and I always refused remuneration for serving on
Committees ; even the claim for my clerks has been withdrawn. This remark
does not imply that other Members should work for nothing. On the contrary,
those Members are most inadequately recompensed for their many years’ labour
and great sacrifice of valuable time by the paltry amount allotted them by the
Council, in striking contrast to the large commission secured to themselves for
a very small amount of work.

 

9

“ Council of Foreign Bondholders,
17, Moorgate Street, London, E.C.,

«21st April, 1881.
“ F. C. Pawrg, Northcote, Reigate.

“ Dear Sir,—I am instructed to acknowledge the receipt of

“your letters of the 12th and 15th* April, and to inform you that

the former will be laid before the Council.
“J am, yours faithfully,
““ Hype CLARKE, Secretary.”

“ Northcote, Reigate,

“ 4th May, 1881.
“ Hype CraArke, Esq.

¢ Dear Sir,— When the Council meet to consider my complaint
against Mr. Bouverie, I shall feel obliged if you will place before
them the Agreement between the Venezuelan Committee of 1873
and Mr. Bouverie when the affiliation took place, and the
extracts from the Rules to which it refers—especially the latter
part of Rule 47. It was the violation of this Agreement by

- Mr. Bouverie that broke up the Committee.

“T also wish to place before the Council the following copy of
letter from Messrs. Tod, Mainwaring and Co., Solicitors to the

late Mr. Turnbull’s estate :—
‘ Edinburgh, 22nd March, 1881.
¢ Dear Sir,—
¢ Turnbull, deceased.
¢ We are favoured with your letter of the 19th inst., and
we shall be very glad if you will attend to the interests of
Mr. Turnbull’s representatives in the matter of the remuneration
to be paid for his services as Chairman of the Committee of
the Venezuelan Bonds, and we shall be glad to hear if you are
successful in getting the remuneration paid.
“ Yours faithfully,
(Signed) ‘Top, MAINWARING & JAMIESON.
‘F. C. Pawrg, Esq.’

 

# The letter of the 15th April was only a request for an acknowledgment
of that of the 12th.

 
10

« T would ask the Council on what grounds Mr. Turnbull was
excluded from remuneration? I also send copy of letter from
Mr. Wright, written immediately after the meeting on April 1st,
when the distribution was arranged.

¢ DEAR PAWLE,
¢ At the meeting to-day, at which only Mr. Chater,

Mr. Obicini, and myself were present, I urged your special.

claims with what earnestness I was capable, but without avail.
All my share will be about £500 Stock ; Admiral Wallis has
£1,000; Mr. Field’s family the same as Mr. Chater and myself.
It would appear that all the several Committees are practically
in the power of the Council.
‘I am, very truly,
(Signed) ¢ EpwarD WRIGHT.

‘F. Pawrg, Esq.’

«I beg you will furnish the Council with the dates (if any) of
the meetings of the so-called United Venezuelan Committees
and the names of those members who attended.

“Also, will you kindly search your records and ascertain what
special services Admiral Wallis, General Vaughan, Messrs. Jonas
and Obicini have rendered to the Venezuelan Bondholders to
entitle them to £2,500 Stock and render them independent of

Rule 83.1

«1 am, &c.,
« Frepk. C. PAwLE.”

 

« Council of Foreign Bondholders,
“17, Moorgate Street, London, E.C.,
¢ July 15th, 1881.
« Sir,—I am directed by the Council of Foreign Bondholders
to say that they have had before them for some time your letters,
dated April 12th and May 4th, complaining of the Chairman of

 

# Mr. Wright has omitted to state that Mr. Bouverie was present and in
the chair.
+ RuLe 53.—The services of Members of Committees shall be honorary
and gratuitous.

 

11

the Council in reference to the proceedings of the Venezuelan
Committee, of which you were formerly a member, and the
arrangement concluded with the Government of that Republic.

“ The Council were in hopes that you would, on further reflec-
tion, have withdrawn those letters; but as you have not thought
fit to do so, they have been fully considered by them.

«T am to inform you that you are in error in supposing that
the Chairman was acting on his own authority in the matter to
which you refer. The representative of the Venezuelan Govern-
ment submitted, through the Chairman, to the Council a proposal
on the part of his Government for the consideration of the
Bondholders of the Republic, which the Council consented to
bring before them. The Committee, of which you were a
member, were informed accordingly. The Council are not aware
that any objection was definitely made by the Committee to the
submission of that proposal to the Bondholders by the Council,
while the records of the Committee show that they themselves
had previously declined to submit this proposal to the Bond-
holders.

“The proposals thus made by the Venezuelan Government
were accepted by the Bondholders, and the Conversion itself has
proceeded rapidly and successfully. It is obviously, therefore,
useless now to discuss it.

“T am to add, further, that you do not seem to be aware that
there was another Committee of the Venezuelan Bondholders,
chosen by the Bondholders themselves in 1863, and holding its
meetings at this office. Previously to the transactions above-
mentioned, it had not had recent occasion to meet and take any
active steps, but it had undergone a large amount of labour on
behalf of the Bondholders in former years; it had continually
existed from its first formation, and had appeared in the Reports
of the Council year after year. This Committee was duly con-
solidated, at their own request, and with the approbation of the

 
12

Council, with the remains of the other Committee, and with
their concurrence, after Mr. Turnbull’s death, and after you and
two other members of the latter Committee had resigned.

“The Venezuelan Government agreed, after such consolidation
had taken place, and at the urgent request of the Council, to set
apart ‘for the remuneration of the Consolidated Committee,
acting in conjunction with the Council in carrying out the con-
version, an amonnt at the discretion of the Council, but not
exceeding £5,000 Bonds.” The distribution of this amount

amongst its members was duly considered by the Consolidated

Committee duly summoned for that purpose, and it has been
distributed according to their unanimous recommendation, which
was ‘duly approved by the Council, in the terms of the agree-
ment above quoted.
« Any complaint you think fit to make of such distribution
should be addressed to the Consolidated Committee.
“1 am, Sir, your obedient servant,
“ Hype CLARKE, Secretary.
« FrepERICK C. PAwLE, Esq.,
‘“ Northcote, Reigate.”

 

The Council has taken more than three months to answer my
letters, which they hoped I would withdraw, though silent as to
their reasons for such a hope.

They acknowledge a violation on their part of the Special
Agreement of Affiliation with the Committee of 1873. They
admit having agreed to. a proposal with the Venezuelan represen-
tative behind our backs, and because the coup d’étdt has been
successful they contend it is useless to discuss it.

The sole object of the Committee was to protect the interests
of the Bondholders confided to their care, without the least
regard to commissions or remuneration. They had had a long
experience of the bad faith of the Venezuelan Government. In

 

   

13

1862 certain - proposals were made through Messrs. Baring
Brothers & Co. The resumption of payment after a long default
was conditional on a New Loan, which was to release the
Import duties pledged to certain parties in Venezuela. These
duties were then solemnly hypothecated for the payment of
the interest and sinking funds of the Old and New Loans. In
1864 another Loan was raised on the security of the Export
duties. The last instalment was hardly paid when the Venezuelan
Government repudiated the 1862 Loan on a flimsy pretext of
legal informality. The next step was to abolish the Export
duties ; thus the payment on the 1864 also came to an end. In
1874 the Government refused to ratify the Agreement concluded
between Messrs. Baring Brothers & Co. and Mr. Turnbull on
behalf of the Bondholders and Sefior Rojas, their own agent.
In 1878 the Government without any assigned cause abruptly
terminated the engagement contracted with our Committee in
1876.

Dealing with such a Government was it not the bounden
duty of the Committee to exercise the utmost vigilance? It
was in no spirit of obstruction to a fair settlement they resisted
the proposed creation of £500,000 Stock, to be sold on the
London Market on account of the Venezuelan Government.
By the action of the Committee this amount was reduced one-
half. Next there was the conversion of the Home into a
Foreign Debt. Probably but few Bondholders are aware of
the remarkable evidence placed before the Committee by
Mr. Haslewood, our agent, who had been to Venezuela, and
the Hon. Robert Bunch, Her Majesty’s Minister at Caracas.
By the testimony of these gentlemen, we learnt that the value
of the Home Debt or Internal 5 per cent. Stock, on which the
interest was regularly paid monthly, was about 124! It was
again the duty of the Committee to exercise the utmost vigilance.
Why should Venezuela propose to exchange the Home dividend

  
14

paying Stock into a Foreign Debt? The object could not
possibly be for the benefit of the English Bondholders. The
Committee were discussing the means of securing the London
Market from the probability of being flooded with the Stock
proposed to be given in exchange for the Internal Debt, when
the Council cut matters short by concluding a separate nego-
ciation with Sefior Rojas, thus violating their Special Agree-
ment with the Committee.

The Council next make the extraordinary assertion ¢ that I
do not seem to be aware of the existence of another Committee.”
As T have mentioned it at very considerable length in my letter
to the Council, this statement is rather amusing. More extra-
ordinary still is the assertion that the two Committees were duly
consolidated with their mutual concurrence. It is certainly rather
singular that Mr. Wright and Mr. Chater know nothing of this
circumstance, and deny ever having met any member of the
1863 (18657) Committee, excepting Mr. Obicini, at the meeting
called on the 1st April, and alluded to in my letter to the Council
(page6). Onno other occasion have the so-called united Committee
ever met or done anything. ¢ But,” says the Secretary, © it had
undergone a large amount of labour on behalf of the Bond-
holders in former years.” This Committee was formed by the
late Mr. Gerstenberg, the former Chairman of the Council. It
had a few meetings, but was eventually utterly ignored, both by
the Government and the Bondholders. This was one reason for
the formation of the Committee of 1873. But there was
another much stronger. The proceedings of the Council in
connection with the conversion of the New Grenada Bonds had
caused so much dissatisfaction, that the Council fell into great
discredit, and a considerable number of its members withdrew
their subscriptions. The service the 1865 Committee and the
Council rendered to the Bondholders was to oppose the arrange-
ment proposed by the Government and the 1873 Committee on

  

15

the 7th November of that year. They did everything in their
power to prevent that settlement. Since that time their existence
has been confined to the pages of the Annual Reports of the
Council, and that is all. Tt is certainly a remarkable fact that
the Council should now reward those so-called services to the
Bondholders with the money obtained by the co-operation of
the 1873 Committee.

The next statement is: “The Venezuelan Government
agreed, after such consolidation had taken place and at the
urgent request of the Council, to set apart for the remuneration
of the Consolidated Committee acting in conjunction with the
Council in carrying out the conversion, an amount at the
discretion of the Council, but not exceeding £5,000 Bonds.
The distribution of this amount amongst its members, was duly
considered by the Consolidated Committee, duly summoned for
that purpose, and it has been distributed according to their
unanimous recommendation.’

Mr. Bouverie must be afflicted with a very imperfect memory.
Surely he cannot forget what I have stated in page 6 that at
the Meeting on the 27th January, 1880, he himself informed the
Committee of 1878 that he had secured £5,000 bonds as
remuneration for their services. Not a word about the 1865
Committee. I do not think it probable that Mr. Bouverie would
admit that when he made that statement to us, he had any
thought of the 1865 Committee. Then again his memory is at
fault when he states the £5,000 has been distributed according
to the unanimous recommendation of the Consolidated Committee,
I must refer him again to Mr. Wright's letter (page 10) written
immediately after the said meeting. Both Mr. Wright and
Mr. Chater inform me they disapproved of this distribution, which
was forced upon the Committee by Mr. Bouverie, who claimed
the right of the Council. Those gentlemen continue to express
themselves most strongly about the injustice done to the late

 

 

  
16

Mr. Turnbull, in excluding him from remuneration. The Council
assign no reason for this, nor do they attempt to reply to any of
my questions on the subject. They cannot do so. It is right the
public should know that a Committee who were independent, and
who strove to do their duty to the Bondholders, were over-ridden
by the Council, their functions usurped, and a large portion of
the emoluments due to them for many years’ service, not only
withheld, but given to the nominees of the Council, whose
services consist in allowing their names to figure as Members of
a Committee which has no other existence than in the pages of
the Annual Reports of the Counectl. |

To this Committee—composed of two members of the 1873
Committee, who have continually protested against the injustice
done to its former members, and of Mr. Bouverie and his four
nominees, but one of whom attended the solitary meeting con-
vened on the 1st April last—I am referred. I prefer to lay my
case before the Bondholders and the public, who will now be-
come acquainted with the fact that the Consolidated Committee
is a sham, and that the whole power of the Council is practically
wielded by the Right Hon. E. P. Bouverie.

How many members of the Council have any cognizance of
this affair I have no means of knowing ; through the agency of
this pamphlet they will now become acquainted with some of its
proceedings, and they will also be able to judge whether the
large commissions made by the Council are in accordance with
the letter or spirit of the licence obtained from the Board of
Trade.

F. C. PAWLE.
Reigate, July, 1881.

 
 

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