816.51/319a: Telegram

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

28. In view of erroneous and misleading statements appearing in circulars advertising the Salvador loan, which have been made the basis for press statements to the effect that the United States had made a secret treaty with Salvador in connection with the loan and the carrying out of the loan agreement, the Department issued on October 18, the following statement to the press:

“The attention of the Department has been called to statements, both in the advertising of the recently concluded loan to Salvador and in the press, which have created an erroneous impression regarding the relation of the United States Government to the loan.

It has been stated that a secret agreement has been made by the Department of State. This is a misleading statement as the agreement was negotiated between the Government of Salvador and the representatives of the bankers concerned. It is in no sense a treaty.

The Department of State has no relation to the matter except with respect to facilitating the arbitration and determination of disputes that may arise between the parties, and the appointment of a collector of customs in case of default. It is manifestly to the interest of peace and justice that there should be an appropriate method of deciding such controversies as might arise, and at the specific request of the Government of Salvador and the interested bankers the Secretary of State has consented to use his good offices in referring such disputes to the Chief Justice of the Supreme Court of the United States, or if he is unable to act, to another member of the federal judiciary for appropriate arbitrament. Also, at the request of the Government of Salvador and the interested bankers, the Secretary of State consented to assist in the selection of the Collector of Customs, who, according to the loan contract is to be appointed in case of default. This was simply for the purpose of facilitating the choice of an entirely competent and disinterested person. The contract also provides that the Collector of Customs, if appointed, will communicate to the Department of State for its records such regulations relating to the customs administration as may be prescribed, and also a monthly and annual report.

The Government of the United States has no relation to the loan except in these particulars.”

[Page 825]

Should the misleading American newspaper articles be quoted in the local press you may make public the above statement.