821.51/1665: Telegram

The Chargé in Colombia ( Dawson ) to the Acting Secretary of State

58. Department’s telegram No. 55, June 12, 5 p.m. Discussed question at length with Olaya today. He expressed appreciation Department’s point of view and regretted conditions necessarily made his own stand differ. It may be expressed as follows:

Leticia incident has necessarily upset his financial plans and caused great abnormal expenditures. Commitments for emergency purchases already made will continue for some time as will added expenses. For most part these must be met abroad. Greatly decreased balance of trade makes exchange situation difficult. Interest on short-term banking loan was reduced by agreement (despatch No. 543536) but there was no organization with which he could deal regarding foreign bonded debt. Consequently he fell back reluctantly on scheme suggested by Hallgarten37 (despatch No. 5646)36 which Government will follow during current year. Rublee38 has full details regarding negotiations.

Olaya stated he is seriously considering refunding entire foreign debt including that of departments and municipalities, covering obligations of latter by assignment to national government of adequate revenues. He expressed frank hope such refunding would result in reduction of total capital and interest.

Olaya mentioned possibility of using proposed American semi-official bondholders’ committee in refunding operations. I told him I thought that still purely nebulous. As he has previously expressed marked interest could Department inform me of present status?

  1. Not printed.
  2. Hallgarten & Co., New York.
  3. Not printed.
  4. George Rublee, Colombian Government’s financial adviser in the United States.