853.51/327: Telegram
The Minister in Portugal ( Dearing ) to the Secretary of State
[Received February 15—11 a.m.]
10. Department’s No. 5, February 3, 6 p.m. Foreign Office and Ministry of Finance have reached agreement and former proposes the following which Ministry of Finance has promised to confirm on the 17th:
The Portuguese Government will open credit for . . . . . . . pounds sterling, February . . . . . , in . . . . . bank, New York, and requests the Department to inform all American holders of tobacco bonds known to it that upon presentation at their American branches abroad their bonds will be purchased immediately at face value and that all arrears of interest will be paid in sterling or its equivalent. If later on other bona fide bondholders as of today’s date appear, their bonds will also be purchased in the same way. The credit will remain open for . . . . . months until all bonds held by Americans as of today’s date will have been acquired.
Please cable whether this procedure, if carried out, will be satisfactory as final disposal of case.
Following points should be given consideration:
- 1.
- By purchasing, instead of paying or redeeming, I think that Portuguese Government expects to escape necessity of settling with other foreign bondholders. This treatment would not seem to be exactly equivalent to that accorded the British and may seem to make us a party to Portuguese plan.
- 2.
- The Foreign Office fears that unstamped and thus unidentified bonds may be transferred to Americans for collection. It is my impression that most, if not all, bonds held by Americans are stamped and identified, but I stated expressly that I could not guarantee this and that if unstamped bonds were held bona fide as of this date they would have to be taken up.
- 3.
- I pointed out impossibility of keeping action taken a secret, and the impropriety of our aiding secrecy. The Foreign Office accepted the situation.
- 4.
- I also pointed out that definite commitment to settle American claims was lacking, and received assurance that the official note stating the procedure outlined above would be adopted and would convey such assurance at the beginning.
- 5.
- Absence of such a decree as was assumed in Department’s number 4, January 23, 4 p.m., leaves us in a position somewhat dissimilar to that of the British, but if the proposed procedure gives the substance of our demands perhaps it would be unwise to insist upon the issuance of a decree that might complicate efforts now under way here, and are attracting much attention, to find solution for the tobacco regime, and might be criticized as undue interference.
- 6.
- Dr. Teixeira greatly desires that if the procedure outlined above is satisfactory our note of September 21, even in the revised form, be not presented at all. I assured him that I would inform the Department so that it might consider matter but that I could not say how Department might feel.
- 7.
- I emphasized the necessity of keeping the credit open as long as would be needful and the Department may indicate the period it deems desirable.
- 8.
- I said that I thought that the initial credit should be for 30,000 pounds sterling at least, but that I could not indicate how much might be necessary and that Government of Portugal should be prepared to furnish further credits; I drew attention to the 20 million escudos provided for by decree No. 11388 as providing an ample margin.
- 9.
- The settlement now of this question will open the way for various American concerns now interested in enterprises in Portugal and wishing to place bonds in the American market to go ahead.