Papers Relating to the Foreign Relations of the United States, 1921, Volume II

816.51/107

The Minister in Salvador ( Schuyler ) to the Secretary of State

San Salvador , October 21, 1921 .
[Received November 9.]

No. 58

Sir: Referring to my cable No. 52 of October 20, 9 P.M.,³ I beg to transmit an exact copy of the Note which I received yesterday afternoon from Doctor Arrieta Rossi, Acting Minister for Foreign Affairs, transmitting textually a note to him from the Acting Minister of Hacienda intended for me. … As the note reads at present it applies to any group of American bankers and not solely to those now interested. For this reason, if the present negotiations fall through, the same note would stand as a guarantee for any other American interests which might desire to take up the matter.

As there was much discussion of how the matter of disagreement and submission to arbitration of the Chief Justice might be brought about, and through what agency, I suggested the addition of the words “through the Secretary of State of the United States”, which I believe strengthens the arrangement, making it quicker and easier of execution in case of need.

I also advised the use of the words “the Salvadorean Government” throughout in place of “the President of Salvador” to avoid possible complications in view of the Union of Central America.⁵

. . . . . . . . . . . . . .

I have [etc.]

Montgomery Schuyler

[Enclosure—Translation]

The Salvadoran Acting Minister of Foreign Affairs ( Arrieta Rossi ) to the American Minister ( Schuyler )^5a

San Salvador , October 20, 1921 .

No. 1011

Mr. Minister: On this date I have received a note from the Minister of Hacienda which literally says:

“Mr. Minister: Referring to the negotiations now pending between the American banking group and the Government of Salvador relative to a loan up to sixteen million dollars, the Government of Salvador hereby formally assures the Government of the United States that if such loan shall be made it will maintain the office of Director and Collector General of Customs and the appointee therein in accordance with the stipulations to be made in the loan contract until the Bonds set forth in such contract have been fully paid and cancelled, and that the Government of Salvador in carrying out the terms of such contract will co-operate in every respect with the Government of the United States and the bankers. In particular the Government of Salvador agrees that the Director and Collector General of Customs shall be selected and appointed in the following manner: That the bankers making the loan submit to the Secretary of State of the United States a list of two individuals competent, in their opinion, to undertake the duties of Director and Collector General of Salvadorean customs: That said list be transmitted to the Salvadorean Government who will appoint the said Director and Collector General from the names submitted in said list.⁶ The Government of Salvador further agrees that should the said Director and Collector General prove incapable of discharging the duties laid upon him, or should so conduct his office as to discriminate unfairly against any nationals of the United States or any other country, the Secretary of State of the United States may request the Government of Salvador that he be replaced by another and in this case the Government of Salvador agrees to allow such replacement by another person whose appointment shall be made in the same method as outlined above. The Government of Salvador and the bankers consent and agree that in case of disagreements, questions, differences of whatever nature regarding the interpretation, fulfillment of this covenant, these disagreements, questions, and differences thus arising, whether on the part of one of the parties in interest or of both, shall be referred to the Chief Justice of the United States through the Secretary of State of the United States for his determination, decision or settlement, and such determination, decision or settlement pronounced upon the point referred to, it is hereby agreed shall be accepted by both parties as final and conclusive, and shall be, in accordance with the terms and specifications herein established, adopted in good faith and carried out by the Government of Salvador and the bankers. Begging you to transmit the above facts to the Minister of the United States of North America in our country, His Excellency Montgomery Schuyler, for such use as said diplomat thinks proper, I have the honor to subscribe myself your obedient servant, (S) Em. Arturo Gonzalez.”

In bringing the terms of the note quoted to the attention of Your Excellency, I take [etc.]

R. Arrieta Rossi

3. Not printed.
5. For papers relating to the Federation of the Central American Republics, see vol. i, pp. 143 ff.

6. A copy of the following letter, dated Oct. 18, 1921, from Mr. René Keilhauer to the Salvadoran Minister of Finance, was communicated by the Salvadoran Foreign Office to the American Legation, May 7, 1935:

   “Mr. Minister: Confirming my communication of the 14th of the present month, in which I furnished you with the conditions on which certain American bankers are willing to take the loan that the Government of El Salvador is trying to obtain in the United States of North America, may I inform you that the gentlemen mentioned desire that the Government of El Salvador make the following statement to the Government of the United States of North America, through the Minister in San Salvador:

   ‘The Minister of the United States of North America: With reference to the pending negotiations between American bankers and the Government of El Salvador relative to a loan amounting to sixteen million American gold dollars ($16,000,000), the Government of El Salvador hereby formally assures the Government of the United States that if the said loan is made it will support the post of Director Collector General of Customs and that his appointment will be made in accordance with the provisions to be established in the loan contract, and that it will maintain it until the bonds mentioned in the said contract are entirely paid and canceled, and the Government of El Salvador will always cooperate in the fulfillment of the provisions of said contract with the Government of the United States and the bankers. The Government of El Salvador agrees that the Director and Collector General of Customs shall be selected and appointed in the following manner: the bankers making the loan will select in agreement with the Secretary of State of the United States two persons whom they believe to be competent to assume the position of Director and Collector General of the Salvadoran Customs. The names of these persons will be transmitted through the Department of State to the Government of El Salvador, which will appoint the said Director Collector General, choosing one of them. The Government of El Salvador moreover agrees that if the said Director Collector proves incapable in the undertaking of the responsibilities entrusted to him, or if by his conduct in the said position he make undue distinction against any citizen of the United States or of another country, the Secretary of State of the United States can ask the Government of El Salvador for his replacement, and the Government of El Salvador, in this case, agrees to allow his replacement by another person whose appointment will be made in the same manner indicated above. The Government of El Salvador and the bankers consent and agree, in case of a disagreement, question or difference of any kind that may arise in respect to the interpretation or unfulfillment of their contract, whether on the part of one or both contracting parties, it will be referred to the Chief Justice of the United States of North America, through the Secretary of State of the United States, for his determination, decision, or settlement. It is agreed that such determination, decision or settlement rendered on the point submitted will be accepted by both parties as final and conclusive, and will be in accord with the provisions and specifications established herewith, adopted in good faith and executed by the Government of El Salvador and the bankers.’

   “I request you, Mr. Minister, to make this statement as soon as possible in order that the arrangements connected with the loan may be concluded immediately.

   “Assuring you [etc.]

   René Keilhauer”

6. The Department, in its instruction no. 31, May 16, 1922, stated, with reference to this sentence:

   “The correct translation would appear to be:

   ‘That the bankers making the loan will select, with the concurrence of the Secretary of State of the United States, two persons competent, in their opinion, to undertake the duties of Director-Collector General of Salvadorean Customs. The names of said persons shall be transmitted through the channels of the Department of State to the Salvadorean Government, which shall name the said Director-Collector General, selecting one of them.’” (File no. 816.51/146.)