The W$J has a sad story about the hapless holders of Peruvian Agricultural Bonds (subscription only). These were bonds given to Peruvian land holders back in the Sixties when the leftist military dictatorship of Juan Velasco went on an "agrarian reform" binge. Agrarian reform was the hot progressive thing back then (and most recently reared its head in Zimbabwe and Venezuela). The way it works is this: the government takes land from the rightful owner and turns it over to The People; or, for the sake of administrative convenience, the caudillo's buddies. To give everything the veneer of legal respectability, the Peruvian government would give the owners Peruvian Agricultural Bonds, which could be redeemed for cash over a period of years. Since then the currency has been replaced twice, and then inflated into oblivion by hyper-inflation. Plus, the current (leftist) Peruvian government has disavowed the bonds. Ah, equality! About 40 years ago, a left-wing military junta kicked Luis Huguet Nicolini, then 36 years old, off his farm near Barranca on Peru's Pacific coast north of Lima.
His 165 hectares (408 acres) of sugar cane had 10 months to go before harvest, but the dictatorship run by Gen. Juan Velasco, which had started to expropriate and break up land holdings, didn't give Mr. Huguet a chance to stay.
Mr. Huguet and thousands of others were instead issued "Agriculture Reform Bonds," paper with 20-, 25- and 30-year maturities, denominated in the now-defunct currency, soles de oro.
As you might expect, there is a trade in Peruvian Agricultural Bonds centered on a Connecticut hedge fund, which will buy your bonds for pennies on the dollar in the hope of someday winning compensation from Peru. Good luck with that.
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