824.51/170a: Telegram

The Secretary of State to the Minister in Bolivia (Cottrell)

4. Representatives of Equitable Trust called at the Department today and informed it that they had received advices from La Paz to the effect that a special commission has been appointed to examine into the recent loan and that its report will be published Wednesday or Thursday containing various allegations as to the illegality of the loan, and that it is probable that the report will be published in full in the Bolivian newspapers. Bankers understand that the attack on the loan is purely a matter of Bolivian internal politics. They state that their attorneys studied the loan law and contracts carefully and are fully satisfied as to the legality of the loan. Bankers fear that if a report such as mentioned above is published it will very adversely affect the market in this country for this loan in particular, causing serious losses to the holders of recent issue, and will also very seriously affect Bolivia’s general credit; it might even make it impossible to issue the further installments authorized by the loan law and contract. The bankers feel very much alarmed at the situation and have expressed the earnest hope that no report attacking the legality of the loan will be published.

The above is for your information. You may, however, in your discretion orally and informally bring the bankers’ views in the matter to the attention of the President or Government of Bolivia.