814.51/584
The Minister in Guatemala ( Geissler ) to the Secretary of State
[Received May 23.]
Sir: Referring to despatch 1486 of May 3, 1927,10 and previous correspondence, I have the honor to report, that, on May 10, I accompanied British Minister Clark Kerr and Mr. J. P. Armstrong, representative [Page 37] of the Council of Foreign Bondholders, to Secretary for Foreign Affairs Matos to whom we said, that we are of the opinion, that it should be gratifying to all concerned, if the matter of the British Deferred Coupons and the matter of the debt of the Government of Guatemala to the International Railways is each of them settled at an early date, each of them regardless of the date of the conclusion of the other of those two matters, and I added, that as to each of them, the Department of State would be happy to see a suitable settlement in the interest of both parties.
Just previously, the British Minister and Mr. Armstrong had called at the Legation and had informed me, that they would be glad if I would now say to the Secretary for Foreign Affairs, that the Government of the United States would be pleased to see a settlement of the matter of the British Deferred Coupons.
Mr. Armstrong then handed me a copy of a letter, dated June 20, 1925, which he said was addressed by the then Secretary of the Treasury, Mr. C. O. Zachrisson, to the Council of Foreign Bondholders, saying that the Government of Guatemala would be grateful, if, for the making of an agreement concerning the form of cancellation of the deferred interest, the result of the monetary, economic and fiscal arrangements then in progress, and which it expected to conclude in the following year, be awaited. A copy of that copy is enclosed together with translation.10a
Mr. Armstrong said, that Secretary of the Treasury Palma had been showing a disinclination to negotiate with him, although it is rumored, that the Government is on the point of effecting a settlement with the International Railways. He added, that they consider, that an arrangement with the Council of Foreign Bondholders should be signed, before there is any settlement made concerning the debt of the railroad company. Mr. Clark Kerr concurred. I told them, that my own notion is, that an adjustment with the holders of the British coupons would probably make more valuable such securities as might be given to the railway company in settlement of its debt, and that, if it were to so happen, that the settlement with the International Railways is made first, it would tend to make more valuable such arrangement as the Government subsequently makes with the holders of the British coupons, and that it would indeed seem to be good policy for each of the parties to entertain best wishes for the success of the negotiations of the other. I said, that I had, within the past few days and as recently as yesterday expressed that view to the Secretary for Foreign Affairs.
After full consideration, the British Minister and Mr. Armstrong came to the conclusion, that my position is sound, but only after Mr. Clark Kerr had said, that they had heard a rumor, that I had urged, [Page 38] that no arrangement be made with the British bondholders until the Railway company’s debt had been settled, whereupon I told him, that I had been informed, by Secretary for Foreign Affairs Matos, that they had urged, that the arrangement with the British bondholders should in any event take precedence, in consequence of which I had said to Dr. Matos, that to me it seems that, in the interest of all concerned it is best that, as to each matter, there be an agreement reached as soon as practicable, without reference to the status of the other negotiation. In that connection, I read to them what I reported to the Department on page 3 of my despatch 1483 of April 30, 1927,11 including the statement that I had told the Secretary for Foreign Affairs, that I did not object to the conclusion of an immediate arrangement with the British bondholders. At my incidental mention of knowledge of the letter which the British Minister wrote Doctor Matos on April 21 (see page 3 of despatch 1483), Mr. Clark Kerr remarked, that they had forgotten to tell me about the representations they had made to the Foreign Office.
At my suggestion, we went, all three of us, to the Foreign Office, where we informed Dr. Matos, that, after full discussion, we had come to the conclusion, that it should be very gratifying to all concerned, if an arrangement were effected, at a very early date between the Government and the holders of the so-called British Deferred Coupons, regardless of whether the matter of the debt of the Republic to the International Railways has at that time been settled or not, and that, similarly, it should be gratifying to all concerned, if the Government settles, at an early date, the debt due the International Railways, regardless of the then status of negotiations between the Government and the holders of the British Deferred Coupons. I added, that my position with reference to the two matters is precisely the same, in that the Department of State considers, as to each matter, that a mutually satisfactory adjustment is desired by and desirable for each of the parties to the two respective negotiations. I had previously, at the Legation, told Mr. Clark Kerr, that I shall make the additional statement just quoted, and he had expressed himself much gratified.
Dr. Matos told us, that the Government desires to arrange each of the two matters as soon as possible, notwithstanding the financial difficulties which they present.
In other conversations, I have made it clear to Dr. Matos, that the interest shown in the matter by the Department of State does not indicate a desire to bring pressure to bear, but is inspired by a desire that the Government of Guatemala have the manifest advantage which would accrue from a settlement of this debt question on a fair and [Page 39] equitable basis. I have deemed it best not to discuss the subject with President Chacón for the present, leaving it to Dr. Matos to do that. He assures me, that he and the President are very appreciative of the interest shown in the matter by the Department.
I have [etc.]