821.51/871: Telegram

The Secretary of State to the Minister in Colombia (Caffery)

16. Your 36, March 12, 5 p.m. Department has taken this matter up energetically with the bankers and has now been advised that the $4,000,000 will be paid to Colombia today. This will bring the amount paid so far up to $16,000,000.

The bankers state that they acted as reported in your cable in order to preserve Colombian credit in the British market in order that the long time financing envisaged by the Colombian Government may not be impeded when the time comes to undertake it. Pressure was brought to bear on Lazard and Company by the British Foreign Office, a man named … in the Foreign Office they state being responsible. Department understands that Lazard was told that the Foreign Office would close the British market to further Colombian financing unless this claim was paid and Lazard then brought pressure to bear on the American bankers. … They realize that they should have told President Olaya frankly the situation at the outset and have asked him to straighten out the British end so that he would know exactly where the difficulty came from. The National City Bank is cabling its representative in Bogotá to explain the matter now frankly and fully to President Olaya and to ask him to take the matter up through the Colombian Legation in London with the Foreign Office in order to remove any difficulties regarding the second $4,000,000 in which Lazard will participate. Lazard is not participating in the $4,000,000 to be advanced today and the bank professes that Bogotá representatives confused the two $4,000,000 credits and made the settlement of the British claim a condition for the payment of the first $4,000,000 advance, whereas it should have been done in connection with the second $4,000,000. The bankers have asked that you help their local representatives in explaining the situation to Olaya. They state that if he can get on without the second $4,000,000, which they doubt, it will not be necessary to take any further steps, but if they are to advance the second $4,000,000, it will then be necessary for the Colombian Government to take steps with a view to relieving Lazard of the pressure now put on them by the British Foreign Office.

Your despatch No. 1779 of October 14, 193029 reports that the Colombian law in settlement of the Supía Marmato claim was in a principal amount of £300,000 with interest at 5 per cent from May 29, 1925 on £140,000. The bankers state that it is their understanding that the principal amount is £300,000 plus 5 per cent current interest from 1925 and that in addition there is a claim of £40,000 about [Page 30]which they are not at all clear. It is their understanding that it has something to do with back interest payments. Department has no record of this. Bankers state that cable received this morning informs them that President Olaya was suggesting the payment of this latter sum over a period of years and that this might definitely settle the matter. They also felt that Olaya was perhaps trading on this and that his attitude toward the American bankers was in order to make them help him out with this sum. Department has no information on this matter whatsoever and will be glad to have such comments as you may care to make.

Department will be glad to have you explain to President Olaya either directly or through supporting the bankers’ representatives in Bogotá the true situation regarding the Supía Marmato claim as set forth above.

  1. Not printed.