The Minister in Salvador ( Schuyler ) to the Secretary of State
[Received September 2—9:10 p.m.]
42. Referring to the Department’s August 30, 2 p.m. The loan situation as reported in my August 26, noon has changed. Considerable money, some of it available on signing preliminary contract, is being offered to the President who will have definite proposition today. I prefer larger loan under consideration by the New York bankers as the other will not afford permanent relief, is not enough refund existing foreign debt nor provide working capital for the future, and this is the time when the finances of Salvador should be put on a permanent basis with control of the customs as security. San Francisco project does not specify control of the customs except [Page 849] in the event of failure to make any semi-monthly payment. It will be 8 percent at 80, provides for redemption at any time at par and for giving $1 bonds for every 80 cents present indebtedness of Salvador to the local banks. These conditions I consider oppressive and have informed President and bankers I will not approve of [them]. Sliding scale of premium based on redemption date is the only just way.
… By my constant asking for extension of time the President has gained the idea that the New York group is not serious. If latter would cable immediately a quarter million or even $100,000 he would cease negotiations with anybody else. Department will understand that dollar in the hand looks larger than a million in New York.