File No. 814.51/251.
The American Chargé d’Affaires to the Secretary of State.
Guatemala , May 13, 1913 .
Sir: With reference to the matter of the solution of the British debt which has been pressed upon the Government of Guatemala by the British Minister, Sir Lionel Carden, I have the honor to report that on the 7th I asked President Estrada Cabrera, during a conversation which I had with him, to inform me in what state the matter then was. He replied that it was quite unchanged since our previous conversation. He again spoke most bitterly of the manner in which the British Minister was pressing his demands, stating that Sir Lionel flatly refused to discuss the matter or to listen to any arguments from him, that he merely repeated that he was there not to argue the question but to demand the rights which the British Government would insist upon. The President informed me that the British Minister had stated that on Saturday, May the 10th, he would present his threatened note at six in the evening.
On Sunday the 11th I learned that the note had been presented and an agreement reached between the British Minister and the Government. I at once called at the British Legation where Sir Lionel informed me that in accordance with his promise he had presented a note at six o’clock on Saturday evening stating that relations would be broken on Thursday the 15th if the Government of Guatemala failed to accede to his demands before that time. It seems that the employé carrying the note in question met the Minister for Foreign Affairs coming out of his office at six o’clock. The Minister requested the employé not to deliver the note as he had just finished arranging a counter proposition with Mr. Bickford, local agent of the bondholders, which he was on the point of transmitting to Sir Lionel. The employe telephoned to the British Legation for further instructions and was told by Sir Lionel that the time for listening to a counter proposition had passed, and that he was to present the note as instructed. That same evening, Mr. Bickford was again summoned, and the agreement as outlined by Sir Lionel, was signed.
I had the honor to report in my telegram of May 12 such information as I had been able to obtain as to the nature of the agreement. Yesterday afternoon the Minister for Foreign Affairs requested me to call on him. He stated that in view of the moral assistance that the Government of the United States had furnished the Government of Guatemala many times during the financial negotiations, and in view of the friendly interest that I had shown in the matter, he wished to explain to me what had taken place.
He stated that every effort had been made to come to a satisfactory arrangement with the American bankers, but that there seemed to be one point on which agreement was impossible, which wrecked the entire negotiations, namely the refusal of the bankers [Page 571] to admit the Government of Guatemala as a judge as well as the bankers, of when a sufficient number of foreign bonds had been bought in. This was the reason for the insistence on the part of Guatemala of the insertion of the words “and the Republic” in the contract which I had previously mentioned to the Department. Therefore there was no other recourse than to accept the demands of the British Minister.
According to the Minister for Foreign Affairs these demands consist merely in the restoration of the contract as it stood in 1895, providing for the payment of current interest and amortization. The matter of accrued interest will be taken up at the end of four years by the Government of Great Britain. The tone of the Minister was quite optimistic, a curious contrast to the attitude previously taken by both himself and the President in discussing the matter with me. He felt that the amount necessary to cover the current interest would not only not cripple the financial affairs of Guatemala, but would be so light a burden that it would be scarcely felt.
He stated that it was his belief that the resumption of interest payment would immediately cause a considerable increase in the value of the bonds, thus augmenting the foreign credit of Guatemala. The Government of Guatemala will therefore, at the end of some months, be in a much better situation to arrange a loan with American bankers on easy terms. The Minister assured me that the Government of Guatemala had still the fullest intentions of making such an arrangement.
I have [etc.]