824.51/174: Telegram
The Minister in Bolivia (Cottrell) to the Secretary of State
[Received 11:30 p.m.]
18. Referring to the Department’s telegram of March 26, 4 p.m. Saturday evening I had an extended interview with the Minister for [Page 442] Foreign Affairs at his invitation when he said that President had instructed him to ask me to lay the following facts before the Department of State with the hope that it would use its good offices and influence with the New York bankers in behalf of the Bolivian Government in the following premises: That when the law was enacted and the contract made for the loan it was the sincere purpose and belief of the President and Congress that the bankers would loan additional two millions for completion of the Potosi-Sucre Railroad immediately after January 1st; that the President had promised residents of departments of Chuchisaca and Potosi in good faith that this sum would be forthcoming but now owing to different interpretation of option clause by bankers and failure to get additional loan the President is greatly embarrassed with his own people who in Sucre and Potosi are making direct issues against him an instance of bad faith when he is not to blame. The President is more interested in this improvement than any other administrative plan and can not easily negotiate loan owing to terms of contract and sincerely hopes the Department of State can see its way clear to communicate the foregoing to the bankers. Without comment I promised to communicate his views but took occasion to say that I had learned from Cahill now representing bankers here that the new power of attorney had not been issued to anyone to sign permanent bonds as required by Equitable Trust Company repeatedly and that I understood that unless this was granted at once bonds might depreciate and great loss result to bondholders in the United States and that before bankers could consider a further loan it would apparently be necessary that this power of attorney be issued to protect bonds already issued and sold. He gave President’s views of illegality of certain clauses of contract as the reason for failure to grant power of attorney.