The Secretary of State to the Minister in Colombia (Caffery)
65. Your 121, October 4, 4 p.m. It appears that President Olaya and Colombian public opinion are taking the view that the many praiseworthy and constructive measures taken by Olaya, both directly and indirectly benefiting American interests, constituted the execution by Colombia of its part of a sort of bargain with this Government and that now this Government is failing to carry out its part.
The Department realizes that you well understand its position, but it appears advisable in view of the foregoing to state as a matter of record that while the Department has at all times extended to Olaya every assistance that it appropriately could and sincerely appreciates Olaya’s great efforts to pull through the present world economic depression, at no time did it either directly or indirectly extend any sort of promise of a quid fro quo in the nature of financial assistance. This is clear to you and is the position the Department must maintain. (See Department’s telegram No. 22, April 20, 6 p.m.,44 in this connection). The Department’s efforts before the banking group last Spring were for the purpose of pointing out the necessity for the group to live up to its contract; these efforts were not designed to obtain an additional loan for Colombia as a reward for Olaya. Olaya apparently does not understand that not only can this Government not exert pressure on private banks but also that its relationship to the Federal Reserve system precludes it from exerting any pressure upon this independent institution. To all who might help the Department has strongly indicated its friendship with the Colombian Government and its appreciation of the strenuous efforts [Page 40]Olaya has made to preserve Colombia’s credit. Professor Kemmerer has strongly argued the Colombian case to bankers. It is likewise apparent that Olaya does not realize the extreme gravity of the economic situation throughout the world, with important effects in the United States recently greatly aggravated by the abandonment of the so-called gold standard by England and other European countries.
You may explain this to President Olaya, stressing the fact that it is not a question of letting him down but of world conditions over which the Department has no control. It would be most regrettable should Olaya publicly announce that Colombia’s present situation has been brought about “by the cancellation and reduction of commercial credits plus the failure of American entities to give him the assistance he asked of them”. The Department hopes that he will not take this or any other drastic and unreasonable step and that explaining his action by the extraordinary and rapid change for the worse in World Conditions, he will suspend only such Sinking Fund payments as are absolutely necessary and maintain interest payments in all events; that he will continue to work through Rublee in New York to take advantage of any possible favorable turn, to keep cool, and not to take impulsive measures in a moment of despair which may seriously and adversely affect Colombia’s future credit standing.