The Secretary of State to the Minister in Colombia (Caffery)
26. Your 59, May 12, 7 p.m. The matter has been discussed with an official of the National City Bank of New York who said that the [Page 33]difficulty was that the budget was found to be unbalanced to the extent of $4,400,000. A balanced budget, he stated, was not a new condition now imposed by the banks but was the cornerstone of the whole agreement from the very beginning. The National City Bank has cabled to Bogotá suggesting that specific reductions be made in the budget, and this has been done by comparing the 1931 budget with the 1930 budget and suggesting that all increases in the former over the latter be scaled down to the 1930 figure. The increases in the 1931 budget over the previous budget amount to more than $4,000,000, so that if these reductions are made, they will have, in fact, a balanced budget. The Department does not know what items are on this list, but it has been told that there are few, if any, salary reductions involved.
The National City Bank stated that this information was cabled to Bogotá; that a reply was received inquiring whether, if these reductions were made, the last $4,000,000 would be paid over; the National City Bank answered that it would. Report further developments.