The Department of State to the British Embassy

The Department of State has received the memorandum of the British Embassy dated December 2nd,7 regarding the intention of the Government of Salvador to raise a loan in the United States upon the security of the customs duties of the Republic. The memorandum states that a portion of these customs duties form the security of the Salvador Railway Company, under their contract of 1899, with the Government of Salvador, and furthermore, that a special customs duty of $3.60 United States gold, per one hundred kilogrammes of imported merchandise, forms a portion of the security for the bond issues of 1908 and 1915. It is indicated that His Majesty’s Government would regard with great anxiety any attempt by the Government of Salvador to raise a loan on the security of the customs duties which are already subject to the liens mentioned above.

[Page 856]

So far as the Department of State is informed in regard to the proposed loan by American bankers to the Government of Salvador, it is understood that the customs duties now pledged as security for other debts will not be pledged as security for the new loan unless the previous debts are paid in full. It is understood that the promoters of the loan intend that the debt to the Salvador Railway Company shall be paid in full and that the holders of the bonds of 1908 and 1915 shall receive in exchange for their holdings bonds of the new issue in accordance with the terms of an agreement which is now under consideration by the holders of those bonds.

  1. Not printed.