The actual cash received on account of this loan appears, though the Committee’s figures are difficult to follow, to have come to just over half a million.  Out of the half million L16,850 went in cash commission, and L106,000 in interest and sinking fund, leaving about L380,000 for the railway contractors and the Government.  On this loan the Committee observes that the commission paid, of L108,500 bonds, and L16,850 in cash was “greatly in excess of what is usually charged by contractors for loans.”

So far it was only a case of a thoroughly speculative transaction carried through by means of the usual accompaniments.  A defaulting State believed to be possessed of great potential wealth, thought, or was induced to think, that by building a railway it could tap that wealth.  The whole thing was a pure possibility.  If the loan had been successfully placed at the issue price it would have sufficed to build the first section (fifty-three miles) of railway, and to leave something over for work in the mahogany forests.  It is barely possible that in time the railway might have enabled the Government to produce enough stuff out of its forests to meet the charges of the loan.  But the possibility was so remote that the terms offered had to be so liberal that they frightened the public, which happened to be in a sensible mood, until it was induced to buy by the creation of a market on the Stock Exchange; the employment of intermediaries on disastrous terms, and finally default, as soon as the loan charge could no longer be paid out of the proceeds of the loan, completed the tale.

In May, 1869, the Minister for Honduras in Paris, M. H——­, “took steps” to issue a loan for 62,250,060 francs, or L2,490,000.  Out of it a small sum (about L62,000) was paid to the railway contractors in London, but little of it seems to have been genuinely placed, since, when the Franco-German war broke out in July, 1870, M. H——­ sent 2,500,000 francs in cash (L100,000), and 39,000,000 francs in bonds, to Messrs. B——­ and G——­ in London.  Messrs. B——­ and others made an agreement with Mr. C. L——­, presumably the gentleman who had taken over and dealt with the unplaced balance of the First London Loan.  By its terms the net price to be paid by him for each 300 francs (L12) bond issued originally at 225 francs (L9), was 124 francs (not quite L5).  He succeeded in selling bonds enough to realize L408,460, and he, together with Messrs. B——­ and G——­, received L51,852 in commission for so doing.

In the spring of 1870, the Honduras Government, still hankering after its railway and the wealth that it was to open up, determined to try again with another loan.  Something had to be done to encourage investors to take it.  A few days before the prospectus appeared a statement was published in a London newspaper to the effect that two ships had arrived in the West India Docks from Truxillo (Honduras) with cargoes of mahogany and fustic consigned to Messrs. B——­