816.51/109: Telegram

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

58. National Park Bank of New York City cables asking me whether the Minister of Finance of Salvador has authority to sign in behalf of the Government contract undertaking to guarantee repayment of the credit opened by bank in favor of Banco Occidental, also whether Government can legally pledge as collateral for this repayment customhouse certificates and whether issue thereof is legal. Paragraph 2d, article 3d, law of Hacienda authorizes Minister of Finance to sign contracts for the Government with individuals as [Page 855] well as documents representing national credit. My opinion is that Acting Minister of Finance is acting within his rights and legally but there might be a question as to the rights of Salvador to negotiate with foreign bankers under the new Constitution of the Federation which went into effect October 1st. Government of Salvador holds that negotiations not affected by new Constitution since they were begun before October.

I have cabled bank that I have given you my opinion.